Women in Investing: Strategies for Financial Empowerment

Oscar Pulido: Welcome to The Bid, where we break down what's happening in the markets and explore the forces changing the economy and finance. I'm your host, Oscar Pulido.

In the ever-evolving landscape of finance, women investors are overcoming historical barriers to embrace the world of investing and secure their financial future. A significant shift is underway as women increasingly recognize the importance of financial independence and long-term wealth creation. They also recognize the unique challenges they face in the workforce and are bringing issues like wage and resume gaps to the table. Today on this International Women's Day episode, we shine a light on the ways in which female investors are redefining the investing landscape.

Today I'm pleased to welcome back two phenomenal women in the world of finance, Anne Ackerley, head of BlackRock's Retirement Group, and Gargi Pal Chaudhuri, head of iShares Investment Strategy and Markets Coverage at BlackRock, Anne and Gargi will help us understand some of the unique challenges women face investing for the future, and how women's improving prospects can benefit the wider economy.

Anne and Gargi, thank you so much for joining us on The Bid.

Anne Ackerley: Thanks for having us.

Gargi Pal Chaudhuri: Great to be here.

Oscar Pulido: I always look forward when both of you are on The Bid - I'm not used to having both of you on at the same time. So, this is a special treat, and it really is a special occasion because we're celebrating International Women's Day.

And so, we want to talk about the state of women in investing. And Gargi, maybe I could start with you. Every year you write a progress report for your own weekly newsletter, about the state of women in investing in the workplace. Can you give us your report card? What is the state of women in investing that you're seeing?

Gargi Pal Chaudhuri: I'll start off by saying I have very happy International Women's Day to everyone listening. And to your point, as I think about the progress of women in investments and in the workplace, there are a couple of things that I look at every year and this year we have a ton to be really excited about when we look at women and the progress they have made on a few different fronts.

So, the first one is, participation in the labor market. Now, we all know that the US economy right now, especially when we look at the jobs market, is doing very well. And a big part of that is because women have come back to the labor force in droves. . So that's something that we are really excited about. And why does it matter for the economy? The more people that come into the labor force, the more productive, an economy can be, and the more job growth and the more growth for the economy we can have.

The other thing that I look at is of course, unemployment rate. And again, here, the unemployment rate for the overall US economy is fairly low. But what's also exciting is looking at women's unemployment rates specifically, which is, currently, for prime age women sitting very close to multi-decade low.

Comes to wages, the good news is wages are rising for everyone in the entire US economy. last year when we look at women's median wage gains, one thing that's very exciting to me as a woman, and it should be to anyone listening, is that every single quarter of 2023 women had higher wages than the previous quarter.

That is something that we want to celebrate absolutely. However, what we also have to recognize is that there is a wage difference, between women and men. And currently, as of the data that we got from the Bureau of Labor Services- the BLS- we are seeing about an in terms of where, median wages are for women versus men. So, we have to take that into consideration, the good news along with the bad.

And then I think another big focus that I have, the concept of a wealth gap. Thinking about where that comes from in terms of women not investing enough, in terms of women staying in cash and missing out on this incredible rally over the last decade, last two decades that the US stock market has been able to have. Also, in terms of women having higher student debts, living a little bit longer, and therefore having higher healthcare costs. All of that lead to the wealth gap.

Oscar Pulido: So, it sounds like there's definitely good news recently, you mentioned more participation, wage growth, low unemployment, but still a lot of progress to make. And it seems like when you're on the podcast, Gargi, we have to ask you about inflation, what your outlook is for inflation, but also how is it impacting women in investing?

Gargi Pal Chaudhuri: As of the last print of inflation, we are seeing a lot of progress on inflation. So, back in 2022, we'll remember, and I know there were many Bid podcasts about this, where inflation was very high, and of course the central bank was combating that with higher rates. And from a high which is absolutely magnificent, and something we should all celebrate.

Having said that, obviously this conversation here is much more about how inflation specifically impacts women. And I think one of the things here to think about is what is commonly known as the pink tax. Do women pay somewhat higher prices on equal quality and equal amount of goods and services than men?

And you know what's very interesting when I was researching this. that was written about in New York City, how Pink Tax Impacts Girls in Women from Cradle to Cane. So, from when they're born, all the way till when they're older and using canes. And what that report found was the difference in the similar goods if you're a man versus a woman, how things were priced differently. And of course, that was about a decade ago. So, my team went and looked at something similar for now to see if some of those discrepancies and prices still existed.

Two examples that we quickly looked at one, was for razors. for the same product, and I don't want to name the company, but women paid more for fewer blades. The same product for women was with, men having five blades versus women having four. And yet there was a cost difference.

Similarly with deodorant, same company, but women are getting for the same cost, a smaller, deodorant versus men so it the cost is the same, but you're getting more.

Even with clothes. Like sometimes I go shopping with my husband and he'll buy a pair of shorts and I'll look at a pair of shorts and his shorts is slightly bigger, and it'll still be that his shorts will be, cheaper than mine. So again, these sound like small numbers, but it all adds up.

Oscar Pulido: I'd never heard of the pink tax, and it sounds like you've not only relied on government data, but your team got their hands dirty and did.

Gargi Pal Chaudhuri: Some due diligence!

Oscar Pulido: Anne maybe coming to you now, and the last time, we spoke was about retirement and the five forces shaping retirement. Things like people are living longer, there's a move from defined benefit plans to defined contribution. but talk about with respect to women, what are some of the barriers that. Exist for women saving for retirement, and what are the implications of those barriers?

Anne Ackerley: Sure. Well, first, let me say, happy International Women's Day as well, and how excited I am to be on The Bid podcast with my colleague and friend Gargi.

And one, I do think we should all celebrate the success that women are having in the labor force, as Gargi pointed out, that's really exciting news. My news might be slightly less, inspiring. When we look at retirement what women have when they get to retirement. . And that's in the United StatesNow, there are countries where that number is smaller, but according to Mercer, there's no country where it's actually zero. And there are a number of reasons that factor into why this happens. I sometimes call it the triple whammy.

First, we have the wage differences between men and women, which Gargi pointed out, if you're making 82 cents on the dollar, and even if you're saving the same percentage as a man, that's less absolute dollars and that's going to compound over your lifetime.

The second thing is, even though women's labor participation has increased, which is great, women often have gaps in their employment. They are often the primary caretaker, whether it's for children or adult parents. And having those gaps means often women aren't saving consistently through the course of their lifetime. We know women live longer on average of five years, and so that money actually has to last longer. All of this adds up to women when they get to retirement and maybe not being as in good a shape as men.

Oscar Pulido: What about, the other side of that coin? Are there areas of success that you see for women? There's an assumption, for example, that women are more risk averse and perhaps that means that they're saving more. Is that a correct assumption to be making?

Anne Ackerley: So, I think the data on whether women are more risk averse is mixed. I think what is often said is that women, do keep their money maybe more in money markets or cash. When they actually do invest, they're not as risk averse as men. But what I would say, and if I put my retirement lens on this, there are things definitely to celebrate. . Women actually contribute a greater percentage of their salary than men do. What we find is, and I think this is a good thing for retirement investing, is women tend to look at their investments less frequently, which may sound, oh, that might be a bad thing, but when you're in a retirement plan, if you're defaulted into the target date, you're getting the right asset allocation, not checking it, being able to live through the market volatility is probably a really good thing.

So, the fact that women tend to do it less frequently than men do trade less frequently than men do, I think, accrues to their benefit.

Oscar Pulido: And just listening to the two of you, you've diagnosed some of the problems that women face, whether it's maybe a different inflation rate or an employment gap. So, what are some of the solutions, I imagine they don't take place overnight, but if you think about the longer term, what are things that women investors can be doing to correct some of these issues that you've mentioned?

Gargi Pal Chaudhuri: So first of all, it is a recognition, an acknowledgement that no matter where you are on your investment journey, if you haven't started at all, or if you have been investing very well for the last 30 years, that there is still progress to be made. It's never too late to get invested in the market, that's true for everyone!

But, just looking at a couple of the numbers and recognizing that there's a lot of data that has shown that, if you stay invested in the market, to Anne's point earlier, if you don't churn your portfolio around too much, that you can have a really good outcome if you stay invested in the market.

But if you just stayed in cash, we actually ran the numbers, if you, over the last 10 years, if you stayed in the s and p 500, earning %. There is a big cost in terms of not putting your money in the markets.

The numbers that I just, said to you were over a 10-year period, if you looked at over a So again, anytime that you're staying away from the markets, you're missing out.

So, number one is a recognition that you need to do this, but don't worry, it's never too late. The second one. And I feel very strongly about this because even as an investor myself, there were periods in my life and when I was, new to the business, I didn't invest as much as I should have. And I think just recognizing that you don't need to know everything about everything to get invested or to start investing.

And I think there's a lot And I wonder if that also translates to the markets where you feel comfortable to invest. So even if you do, that's wonderful, but even if you don't, if you just invest in a diversified manner- And do so consistently, it pays off.

The other thing I would say is, and this is really important, and Wells Fargo did a survey on this, is women are often more reluctant to share their financial information. On average, . I remember when I was starting out my career at BlackRock, I came to Anne once, and I don't know if you remember this, but I came to Anne to ask for advice on how to talk about money because I didn't know how to do that.

And Anne, you taught me how to talk about getting a raise, getting a promotion, it was an uncomfortable moment for me. But I had Anne, and I'm very thankful that I did, but recognizing that if you are reluctant to talk about your financial health, you're not alone. but you have to be able to do that.

So, another thing that we can do is really making sure that you are able to have those conversations. And finally, I'll say. get the financial help you need. Think about if you need a financial professional that can help you, that understands your goals. And think about other ways in which you can, become more financially savvy. So, if there's a podcast that you want to listen to, such as this one, or if there is financial outlets, financial news, that you want to start incorporating into your daily life and bite-size pieces. So read one article a day and spend five minutes on it. That's it. And just start there.

Oscar Pulido: Anne, do you remember that discussion with Gargi?

Anne Ackerley: I actually do. Yes. And I'm glad it paid off.

Oscar Pulido: Anne, what else would you add to Gargi’s comments about, maybe just behaviors. I think Gargi touched on a number of points that seemed like good common sense, and maybe just hearing it from you, Gargi, is one of the most powerful things that you've followed some of this advice. But, Anne, what about you? You've had a long career in finance as well. what advice would you give? 

Anne Ackerley: I think Gargi gave amazing advice, and I think those are all things that, women and actually men can do to invest. I might pull out just a broader thing to say that not everything that we talked about today can be solved by women themselves.

And so, when I think about solutions, And I might just focus on two things that we think a lot about here at BlackRock.

One is access to 401k plans. don't have access to a workplace plan. That's almost half the private sector workers, and it falls disproportionately on women and people of color. So, I think one of the things the industry needs to do is to help get people more 401ks where they work. So one is, let's try to get everybody a 401k plan at work.

The second thing that we talked about is women live longer, and probably the number one financial fear for women is the fear of outliving their savings. and so, we as an Industry really need to work on how do we help everybody, take their savings and convert that into a stream of income that they won't run out of for however long they live.

Oscar Pulido: I mentioned at the beginning the pleasure is to have both of you in the studio. at the same time. There was a lot of, folks in finance, men and women that, look up to you and admire the careers that both of you have had. So, who are the people who inspire you, whether it's female business leaders, within finance or elsewhere? who are some of the folks that you've looked up to throughout your career?

Anne Ackerley: I'll go first. So, one, Gargi! Absolutely, I'm just inspired when I'm with her and inspired as she gets out there and talks to people in, in real words about how to invest. Other people that I think about, I always talk about my mom, maybe not a business leader, but somebody who widowed young, worked really hard, but told me I could do whatever I wanted to do, and so she inspires me. And then there are people like Ruth Bader Ginsburg, who have worked their whole lives fora society where men and women are equal. I think about people like Serena Williams who's the absolute best at what she does. So, I can take inspiration from a lot of different places, but those are just some.

Oscar Pulido: Gargi, you had some good company there.

Gargi Pal Chaudhuri: Thank you, Anne. And I was going to say that when I first got here, you were a managing director and you let me put time on your calendar and gave me sage advice that I use to this day. And I will never forget how meaningful that conversation was. So, I send a lot of people your way and I really deeply respect what you have done for women and retirement for the US. I also think about, this paper that Janet Yellen wrote that talks about the GDP of the country of us can increase by 5% if women were to participate in the economy and the labor market in the same way that men do.

Which goes to show how when you have leaders like Janet Yellen, treasury Secretary, but of course, chair of the Fed before that, how much research can be influenced. And she's someone that I have looked up to my whole career. And, Indra Nui, as a woman of color, when you're young and you are an immigrant in this country, your parents want you to be Indra Nui. So, I was sent to America and told that you have to be her one day. So, I have let my mom down. And lastly, my mother. Anne to your point, I think many of us, we are a reflection of who our parents are, and my mom is a doctor, and she was a doctor in India in the sixties. Having a mother do that in the sixties, seventies, eighties, nineties, and now in India has been such a source of inspiration for me. All of that to say that there are so many women to draw inspiration from.

Oscar Pulido: Well, I'm happy to talk to your mom if you think you've let her down, and I'll let her know that every once in a while, when I look up on the TV and see you talking about markets, on live television, I think it's-

Gargi Pal Chaudhuri: -yes, but I'm not a CEO of a big company….

Anne Ackerley: Not yet! Watch out Larry!

Oscar Pulido: Thank you both for joining us. Gargi, you talked about it's never too late to start investing and just some of the practical advice you gave is about starting sooner than later. So hopefully, on International Women's Day, we have, women and men, frankly, following some of this advice and enjoying more financial security. Thank you, Anne and Gargi, for joining us on the podcast.

Anne Ackerley: Thanks for having, us.

Gargi Pal Chaudhuri: Thank you for having us.

Oscar Pulido: Thank you for listening to this episode of The Bid. If you've enjoyed this episode, check out the episode on Five Forces Shaping Retirement, featuring Anne Ackerley, and subscribe to The Bid wherever you get your podcasts.