FIFI PETERS: The world has dealt women lemons in many instances, particularly when it comes to wages. We earn less than men for doing the same they do, and sometimes even more. But we have an opportunity to turn our lemons into lemonade when it comes to investing. A 2019 study by the Warwick Business School has found that women outperform men by 1.8% on investment returns. Here to tell us how women can use their natural-born talent for investments is a woman who has built her career in this field herself. She is deputy CEO of JSE-listed financial services group Momentum Metropolitan, and she also heads up its investments division. I’m talking about Jeanette Marais. Jeanette, welcome to the show.
JEANETTE MARAIS: Oh, thank you so much.
FIFI PETERS: In terms of this inequality, this financial gap between men and women, I imagine that it’s something that you’ve witnessed throughout your entire career. Are we making progress?
JEANETTE MARAIS: Well, from a personal perspective, I’ve been in the financial services industry my entire career, which is close to 30 years, and I can honestly say that I have never had a woman more senior than me in any of the organisations where I’ve worked. That means that, even today, we are still kind of trail-blazing to try and open up the path for more women. I think that’s from a career perspective.
From an investment perspective, I’m getting more and more encouraged by how I see our women-client numbers picking up. It is quite interesting to see that men still control the larger assets, but women are certainly starting to save a lot more and own their own investment portfolios. That really is very encouraging.
FIFI PETERS: Encouraging indeed, especially as I think science or studies show that we outlive men, and therefore our money needs to work harder and longer for us. You do say that one area in which it can do so is through investments, so let’s talk about that. What are the advantages that women have over men when it comes to investing?
JEANETTE MARAIS: What a great topic to talk about, especially in Women’s Month. I think we do need these advantages if we have them, and sometimes someone needs to point that out to us.
So I would say the first thing is that often women are prevented from taking charge of their own finances owing to a lack of self-confidence. So, before I get to the positive traits, maybe just something about self-confidence. I think it often is because women don’t have enough knowledge. At Momentum Metropolitan we do an annual Financial Wealth Index Study and our study last year found that only two out of 10 women actually seek financial advice. When we asked our clients why they didn’t seek advice, it came out that they often felt that they didn’t have enough knowledge and self-confidence to face an advisor. Secondly, they felt they didn’t have enough money.
Now that in itself can be a Catch-22 situation because, in order to seek advice, you don’t need to have a lot of money already, because advisors can help you to make more money. I think that’s the first part. But the great parts of the study, which you referred to right at the beginning of our conversation, have actually shown that women have these traits.
The first one is that they generally take a longer-term or a longer-view perspective on investments.
They tend to stick a lot closer to what their investment goals and outcomes are, and they trade a lot less than men.
Men actually trade 45% more than women. Now, we often say ‘avoid the switch itch’ – that itch to kind of make changes to portfolios. Now, if men on average switch just about half as much more than women, it means that guys have to get it right both ways, because you switch out of something into something else. And if you don’t get that timing right, you’re going to make a mistake. And, just by doing that or not doing that, women have actually managed to outperform men by quite a lot.
The study also said that women do a lot better research. They take a little longer, they do more research. That means that women don’t chase hot tips or trade on whims. Again, they consider a lot more, and take a much longer-term view. Those together actually have added up to help women outperform in terms of their investments.
FIFI PETERS: You can imagine what the investment community in terms of a client’s perspective would look like if we had a lot more women in charge of these big assets, in terms of the returns that we potentially can make. But we will wait for that day to eventually come.
Jeanette, just harnessing the traits that we have as women to become good investors, how do we do that?
JEANETTE MARAIS: I think there are quite a few things that we should do. I would say the first one is don’t wait.
Start tomorrow, start as soon as you can if you haven’t yet started to save. Again, you don’t need to have tens of thousands or millions of rands. You can start with as little as R500 a month. Just start.
Don’t wait too long. Don’t wait until you have knowledge or wait until you have money. You’ve got to start with a little to make a lot over time.
And then second – we talk about this so much – is the power of compound interest. That’s the day when your money starts to work harder for you than you work for your money, because you have time on your side and you start to earn interest on interest. It’s often called the eighth wonder of the world, which is the wonder of compound interest.
And then I think in your household – and this is something I’m very passionate about – I often see how women are just not knowledgeable about what goes on in joint households where often, maybe because of our self-confidence, maybe because these are kind of tougher conversations to have, we tend to leave it to our spouses and partners to take care of the finances. You know, life happens. Life is unpredictable.
And if you find that you have no idea whether you have debts, whether you are properly covered in terms of your retirement plans or life cover, anything like that, you are going to be in deep trouble.
FIFI PETERS: I imagine that these are quite difficult conversations to start having with your partner, especially if you know the status quo is him managing the household, finance being in play. Where do you even begin to try to tackle it?
JEANETTE MARAIS: Well, hopefully we have as many men listeners tonight as we have women. I want to appeal to those of you, whoever you are, who are almost solely in charge of things like finances and investing and so on in your household, because often it is the woman who takes care of it, just imagine for a moment that something happens to you tomorrow – and with Covid now, I think it’s even more of a reality than it’s ever been in all our lives, because who knows what can happen – imagine something happens, will your spouse or partner know where your will is? Do you have a will? Can you imagine how devastating would be the effect of the loss of you as a person in your household? And, while all of that tragedy has happened, your wife or spouse or partner doesn’t even know where to find desperately important information about your finances. Would they have access to bank accounts? Would they know where to find your investments?
Start a file, and start it together. Sit down tonight if you can, and say, “Let’s have this conversation. What if something happens to either one of us in the next week or month? Where will you (the other partner) know where to find things?” It’s not an easy conversation. It’s not one we like to have, but imagine the devastation that you leave behind if you haven’t had the conversation while you could have had it?
FIFI PETERS: Gentlemen, I hope you were all listening. But, going back to the topic of the investments specifically, and the fact that there is research that has shown that women fund managers can and tend to outperform their male counterparts, what are you saying to us here? Are you saying that if you do seek financial advice you need to make sure that you get it from a woman?
JEANETTE MARAIS: Oh, that’s a wonderful question. This actually is true for all women. So whether it is just someone managing her own finances – you have these traits and it’s true for you – it also means that we see in the financial services industry that often an older client seeks the advice of older advisors; women often tend to try and find themselves a female advisor and so on. It’s a little bit that we seek someone who looks and feels like we do. I like it. Yeah. That is true.
Unfortunately – and this is just an interesting number – in the world only 17% of all funds are managed by female professional fund managers. In the last week I read that in the US a certain firm has now started a hedge fund that is managed only by females, and they invest only in companies with female CEOs to try and prove to the world that it’s time for women to find their rightful place and space in this environment.
But I guess I’m talking to every individual person saying, “Harness these traits. You have them, even if you’re not a professional investment advisor or professional investment person yourself.”
FIFI PETERS: And for the listeners who are listening to you as the deputy CEO of Momentum Metropolitan – you head up the investment division there – I’m wondering what Jeanette is doing to ensure that more opportunities are opened up for female fund managers at her business. What would you say?
JEANETTE MARAIS: Well, I’m very, very proud to say that our chief investment officer Sonja Saunderson is a woman, and that we actually have several young very promising women in our fund-management team. That is interesting. It often takes a woman to open up doors for other women, and it’s something that I’ve taken a lot of pride in over my career. I’ve actually worked for more than two or three companies in my career, and I’ve often wanted to leave the company a better place than when I joined for women who will follow in my footsteps. Whether it is something as simple as looking at how policies sometimes are not very favourable to women, whether it is during pregnancy or raising kids or trying to have more flexible work hours, or whatever it is, I see it as my role to make sure that I leave every company I’ve been at a better place for women.
But specifically I think I have an eye for women and spotting that brilliant talent and giving it an opportunity to develop and flourish.
FIFI PETERS: And, just lastly, on the investment-management side of it, I hear you when you say you should avoid the ‘itch to switch’, But, given what the pandemic is doing and how it has accelerated the death of some businesses and some industries, and the transformation of these new businesses and new industries, when should you switch?
JEANETTE MARAIS: Fifi, that is a brilliant question. I want to say that investing is a long-term game and you should only change your investment portfolio, hopefully with the help of a professional financial advisor, when your goals change or when your life changes. If we start investing when we are young and we have a lifetime of time and investment opportunity in front of us, there’s almost no reason to ever switch. It really is about making the right choices and then sticking to them, and giving the professional fund manager that you’ve entrusted your money to the opportunity to deliver for you.
So I almost want to say that there is very seldom a real reason, unless your circumstances or your goals have changed. That’s often the great reason or the most important reason why we should all have the help of a professional financial advisor because we are all emotional about our own money. You would think that money is rational.
There’s actually very little rational behaviour when it gets to our own money.
And then advisors are often wonderful because they are less emotional. They can remain rational and they can keep on reminding us of our long-term goals. Like I say, unless those change or it comes with good advice from a good qualified advisor, there’s almost no reason to ever switch.
FIFI PETERS: Jeanette, thank you so much for your time. I think that the message that has resonated in terms of investments and investing is that it doesn’t matter how much or how little you start off with, the job of your financial advisor or fund manager is to make you a lot more. But we’ll leave it there, ma’am, thank you. That was the deputy CEO of JSE-listed financial services firm Momentum Metropolitan, Jeanette Marais.