Sunday, February 23, 2014

Women & Money: My Rant Starts Here

An interest of mine that I haven't talked much about: Financial Literacy.  I am becoming increasingly interested in this subject as I travel my journey from financial ignorance to empowerment.  It may be hard to make it sexy, but financial literacy is absolutely critical for anyone who is responsible for any sum of money.

I'm a beginning learner, but I've worked hard over recent years to get my money shit into shape. I read a lot, and the picture that emerges as I transition from consumer magazines to "financial page" coverage to books is a shocking one. Only the beauty industry, perhaps, profits so shamelessly by spreading lies and distortions and preying on our insecurities.

That's important enough that I'll say it again:

financial industry = lies and distortions and preying on our insecurities

Nearly everything I have to say on the subject applies to everyone, men and women alike, but hey, I'm here for the sisters so I'm not going to bother with inclusive language for now. I'm picturing us in my living room, with the coffee on, and this dialog is going to be ongoing, so I invite you to join in.

Let's introduce the subject by looking at  a recent essay in the NYT by M.P. Dunleavey titled "Mars, Venus and the Handling of Money." Dunleavey, a financial writer and founding editor of DailyWorth, gets a number of things dangerously wrong.  A gentle summation of the essay is that women have different learning styles and financial strategy styles than men, which isn't a bad thing, but one that purveyors of financial products should attend to and address.

But here's the core flaw in that view, which I plan to return to over and over until all of you take your money out of high-churn, high-fee vehicles: we (women) don't need different handling by people trying to sell us money management. We need to simply walk away, straight to simple investment and management techniques that we can do *almost by ourselves* without the dubious "assistance" of people earning a cut on every decision we make.

Take a look at some of the sources quoted in the article--and the true source of this data:

“The reality,” Nicole Sherrod, managing director of active trading at TD Ameritrade, told me, “is that women gather information about money differently and process it differently than men do, not that we’re less intelligent.” [TD Ameritrade makes money when you buy and sell--churn--your investments, often at a cost to you in fees, tax effects, and poor timing and decision making.]

Nearly 75 percent of women want to learn in a “welcoming” environment with other women, new data from Allianz Life shows. [Allianz Life is an insurance company, among other things a purveyor of one of the most enduring and egregious scams sold today, the whole life policy.]

Ameriprise says it’s retraining more than 10,000 advisers to be more responsive to female clients — and doubling its training budget this year to do so. [Really??? Ameriprise, another company that makes its money on your financial back, is not doing this out of any sense of sisterly solidarity or respect: this is a money grab, pure and simple. "Responsiveness" in this context means "more likely to talk you into investing.]

Shame on those who participate in this continuing misinformation campaign. I suppose it's a bit much to expect a news source that basically sells coverage of this industry to go rooting out the poison within, but I expect better.

Wow, I didn't realize I felt *quite* so strongly about this. More to come, friends.

P.S. In fairness to Ms. Dunleavey, much of what she says in the article is of value and merits discussion. Some of her best advice can be found here.


Mysti said...

I think there is a grain of truth in what they are trying to say--many more women than men are fearful of any risk at all, and that can kill you when trying to invest money.

That said, the issues you raise are far more dangerous! There are lots of people looking to separate me from my investment money, and staying alert and informed is absolutely required!!!!

Thanks for a great post!

Wayne Pullam said...

OK, not just for women, but I think the best financial book I ever read was "The Wealthy Barber", by David Chilton. Not so common, common sense. Chilton points out that there are a lot of people that make high incomes but are poor. It isn't how much you make, but what you do with it.

I think an awful lot of people get in trouble with investing when they try to hit home runs every time. With a lot less risk (and a lot lower fees) you can get just as many runs, just shoot for singles. An Index 500 fund is cheap, and over any reasonable period will go up. Could all the stocks in one of these go to zero? Yes. But in that case you are dealing with a world like that of Aftertime, and money won't mean much anyway.

Mike Cooper said...

Excellent post! Even The Economist (!) is attacking actively-managed funds -- this article is brief, lucid and well worth reading.

By facilitating the destruction of traditional pensions, and encouraging DIY retirement investing, Congress has simply thrown regular Americans to the wolves. By all means learn how to manage your money -- sure as shooting no one else will take care of you. But fundamental reform of the system is also necessary.

Too bad Washington is completely owned by Wall Street.

Terry Shames said...

Great topic, Sophie!

Years ago I took a course on women and money--this was during the high feminist time and these kinds of courses were easy to find.Afterwards, I viewed money as a resource to be worked with. I found that hoarding just isn't useful. The old adage to spend money to make money really has a lot of truth to it.

Five years ago I joined an investment club so I could learn about investing. It's a complicated learning curve, and the bottom line is nobody really knows exactly what works best. But I've had fun and...yep, made money. And I feel relaxed about investing, which was the goal.

Sophie Littlefield said...

thanks for weighing in,you guys, and for the book and article recommendations. I'll check them out. Meanwhile, I'm planning a skinflinty week after a parking ticket, several doctor visits and a few extra nights out. Budgeting is a drag...but a necessary one!

Beth said...

Interesting timing -- just closed a tab on the NYT article where Warren Buffet recommends investing 90% of your retirement in a low-cost S&P 500 index fund and 10% in a low-cost bond fund. Can't get simpler than that.

At its heart, personal finance is pretty simple:
1. Spend less than you earn.
2. Start saving early.
3. If you don't understand the investment, it's probably because someone is going to make a lot of money off you.
4. Invest for the long-term; don't panic and sell AFTER the market drops.

We don't need "special" advertising or classes to teach us wimmin-folk how to invest. Pretty sure the money in my IRA account doesn't have a gender.

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