Tag: Finance

The ABCs of ESG: What It Is, and What It Is Not

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

So, let’s say you’ve chosen one of the most accessible methods to make an impact: ESG investing. You happily buy some shares of an ESG mutual fund and think to yourself… what does holding this fund really do, anyway?

At face value, you’re buying a fund that has a specific framework for the companies it invests in, based on their environmental, social and governance practices. (We’ll discuss this in our next blog post and highlight some examples.) But there is a lesser known, equally important component to ESG investing. Investing in these funds also means that you’re supporting a significant level of dialogue between the mutual fund company and the companies it holds a stake in. Sometimes, that dialogue turns into much more overt pressure to incorporate more equitable and sustainable business practices.

Every asset manager is different, but it usually involves a combination of the following:

Shareholder Activism

Unlike traditional activism, shareholder activism doesn’t involve marches and boycotts, but like traditional activism, it does involve voting. You see, shareholders aren’t just entitled to quarterly dividends — depending on the class of shares, they’re also entitled to distinct voting privileges. And when an ESG mutual fund company owns a significant percentage of shares of a company, it leverages its rights as a shareholder to bring about sustainable and societal change. In addition to voting on a wide range of business decisions (such as board of director elections, environmental goals, executive compensation, among other issues), they may also propose their own recommendations to the board (called shareholder resolutions) that are voted on during the corporation’s annual meeting.

Engagement

If shareholder activism is analogous to voting in the political system, shareholder engagement most closely resembles advocacy. In this case, the “advocates” are the members of the mutual fund’s policy and research team(s), who meet directly with company executives and encourage them to adopt higher sustainability and governance standards. The asset managers will also share their expertise, research findings and other resources to support their demands. Depending on the willingness and progress that the company shows during the engagement process, the portfolio managers may change the fund allocation to invest more — or less — in that company.

What does this look like? Let’s look to Parnassus Investments as an example. Parnassus is a San Francisco–based firm and one of the first entrants in the world of impact investing, decades ago. Beginning in 2013, they voted in support of a shareholder resolution that called on Mondelez, which owns snack brands like Oreo, Ritz and Cadbury, to improve its packaging waste. Over the next five years, Parnassus also directly engaged with its head of sustainability and corporate security, and by 2018, the resolution grew to receive 31% of the shareholder vote. In October of that year, Mondelez announced that all the company’s paper packaging will be sustainably sourced by 2020, and all of its packaging will be recyclable by 2025. We love to see this kind of shareholder activism and engagement in action!

Advancing and Developing Public Policy

In addition to voting and appealing directly to executives to bring change within corporations, some ESG mutual fund companies broaden their advocacy efforts to influence policy. Portfolio research teams at Impax Asset Management, for example, serve as facilitators to help policymakers and investors understand how subsectors within industries operate. This makes it possible to identify the trends and components within industries that are needed to support sustainability.

Many mutual fund companies will also band together to expand their clout worldwide. In 2019 alone, Impax wrote or signed letters to at least 11 public entities, including the EPA, three state legislatures, the SEC, and the government of Bangladesh, on issues ranging from upholding air quality standards, to increasing funding for energy efficiency, to maintaining corporate disclosure requirements — just to name a few! Both Impax and PIMCO are also part of the Institutional Investors Group on Climate Change, a network of 240 asset managers and pension funds that works with policymakers to advance climate policy on the global stage.

The Power of ESG Investing

As wealth managers, we’re excited that ESG mutual funds have become uniquely positioned to serve as a link between investors, businesses, and government, and appreciate how they’re doing the legwork and research to identify a sustainable path forward. By investing even a small amount in ESG funds, you are promoting a dynamic discourse and advocacy between institutions that you couldn’t otherwise do on an individual level. But that’s just part of it! In our next piece, we’ll explore the more granular side of ESG investing: how fund managers actually put your dollars to work.

If you’d like to learn more about ESG investing, check out Part III of our blog series on the topic here.

The ABCs of ESG: An Introduction to Impact Investing

Published in: Resources |
By Hallie Kraus, CFP®, CRPC®

In the year that has brought us COVID-19, a nationwide reckoning with racial injustice and undeniable signs of climate change, many of us — often feeling otherwise helpless — have opened our wallets in an effort to help correct the inequities that have been laid bare in our country. This isn’t particularly unusual: whether we choose to make a donation to a local nonprofit organization, drop a bill into our church collection box or contribute to a GoFundMe page to help someone pay their medical bills, when life gets difficult, many of us have a natural inclination to use our dollars to make a difference in a way that we otherwise can’t. Of course, we don’t expect to see that money again, or to see it grow. We simply hope it will have an impact.

For decades now, many in the world of finance have taken this traditional model of philanthropy a step further through what’s commonly called “impact investing.” While there are many flavors of this rapidly growing segment of the investment industry, they are all based on the desire to make money and do good at the same time.

Of course, we at The Humphreys Group heartily endorse the increased interest in investing to promote social good. It is one of the most effective ways we can vote with our dollars and have our money and values aligned — which we have seen results in better financial outcomes. Because 2020 has given us no shortage of causes that are deserving of our help, we decided to mark this year by focusing on what it really means to be an impact investor and explore a new strategy that can help you have the impact you seek.

Impact Investing Approaches

Let us start by acknowledging there are countless approaches to impact investing, and each depends on a variety of factors, including your resource level, your risk tolerance, your values and your goals. While we surely can’t cover each individual strategy, we think the best way to understand impact investing is to envision it as a spectrum, with direct strategies on one end, and indirect strategies on the other.

Direct Strategies: One End of the Spectrum

When we talk about direct impact, we’re referring to strategies you’re most familiar with, like charitable giving and political donations. They are approaches in which we often have a fair amount of control over where our money goes, generally know how the funds will be put to work, and rarely, if ever, expect a financial benefit.

Humphreys-Group-ESG-Chart-1

Less Direct Strategies: The Middle of the Spectrum

As we get closer to the middle of the spectrum, we lose some of that control, but we’re still quite aware of how we’re effecting change. Perhaps we choose to practice intentional spending, like supporting businesses that are women-owned, Black-owned, or certified as a B Corp. Maybe we choose to participate in a program that provides loans to underserved populations, like a microfinance organization or lending circle. Remember that these strategies are less direct because, for example, you cannot instruct how a loan recipient or business owner puts your money to use. But you are still broadly aware of how your money is reflecting and advancing your values. In some situations, like a lending program, you may expect some interest or a small return on your investment.

Humphreys-Group-ESG-Chart-2

Indirect Strategies: The Other End of the Spectrum

The best example of an indirect strategy is called ESG (environmental, social and governance) investing. It involves you (as an individual investor), buying shares of a mutual fund and essentially putting your trust in a number of intermediaries (portfolio managers, other shareholders and corporate executives) to use your money for good. In exchange, your investment is expected to grow over time. ESG investing is also one of the most accessible forms of impact investing, especially compared to those with a higher asset base, who might be better financially positioned to engage in more direct programs like microfinance or private foundation work. This indirect side of the spectrum is where wealth managers are most often engaged, and while ESG investing specifically can seem “hands off,” you may be surprised to know that it is an incredibly powerful way to bring about change.

Humphreys-Group-ESG-Chart-3

Why ESG Investing Is So Effective

The reason ESG investing is so effective is because it’s multifaceted. While enabling us to proactively use our money to support that which we want to thrive, this strategy also leverages research, financial support, shareholder activism and policy development to apply pressure on the private sector to become more equitable and sustainable. And it happens to be at an inflection point. According to Morningstar, the first half of 2020 saw a record $20.9 billion flow into ESG funds — almost as much as the $21.4 billion in ESG flows in all of 2019.

As we’ve seen ESG investing evolve, we’ve grown more excited about its potential. In the next three blog posts, we’ll take a deeper dive at why this indirect strategy may actually become the future of impact investing. First, we’ll take a look at how it can influence business leaders to act more equitably, then we’ll talk through what investment decisions are being made within the fund, and in our last post, we’ll share our specific perspective and investment approach. After a long, difficult year, we think it will give us all a much-needed renewed sense of hope.

If you’d like to learn more about ESG investing, check out Part II of our blog series on the topic here.

Q&A: What Does It Mean to Be a B Corporation?

Published in: Resources |

We recently shared the exciting news that The Humphreys Group is now a Certified B Corporation. We wanted to further explain what that means, especially since the issues of sustainability and social responsibility are so prevalent right now.

In this Q&A, President Diane Bourdo, CFP®, shares why earning this certification was so important to The Humphreys Group and the firm’s goals for 2021 and beyond:

1. Why did The Humphreys Group want to earn the B Corp certification?

Diane Bourdo (DB): I initially learned about the B Corp certification probably two decades ago. I’ve always aspired to run The Humphreys Group to serve the interests of all stakeholders, so validating that effort with a B Corp certification was a no brainer. I wanted to recognize and foster the idea (and my belief) that business success is not measured solely by the bottom line.

The world of wealth management is steeped in numbers and metrics, of course, and I wanted to explore other ways to measure value and success in a for-profit environment. I wanted to see (and felt challenged by) whether we could pass muster in this regard and earn the certification.

Joining a community of like-minded endeavors has great appeal. I want to add our voices to the growing belief that making money and doing good can happen at the same time.

2. What does the B Corp Impact Score mean?

DB:  From my perspective, the score measures how well we are doing when it comes to including the interests and concerns of all stakeholders in our business decisions and functions. Looking at the various groups of stakeholders:

  • Clients:
    • How well are we serving our clients?
    • Specific to our investment management services, how much of our managed asset base is invested in impact investments?
    • What are the fees that we charge and what is included in them? Are they reasonable and fair, considering the competition?
    • Do we hold ourselves (as we should) as fiduciaries? Do we put our clients’ interests ahead of our own? Yes, we do.
  • Staff:
    • What is the nature of the human resource component?
    • What is the difference between the salaries of the highest paid vs. the lowest paid employees?
    • Are we providing strong benefits including retirement account funding, paid time off, and the like?
  • Environment:
    • This process allowed us to take a close look at our environmental footprint. We are delighted that 60+% of the energy in our building is produced from alternative sources. We are committed to making the greenest choices possible, down to the hand soap and paper products we use.
  • Our Local Community: 
    • Everyone on the team lives in San Francisco, so we have no shortage of organizations we want to support — with our time, talent, and treasure. We commit to closing the office three to four days per year to do community service as a group. We provide financial support to organizations from the firm as a whole and at the direction of each of us, individually. We also regularly provide pro bono financial planning to underserved communities.
  • Our Professional Community:
    • Sisterhood was powerful in the ‘70s and it remains so today! In ways direct and indirect, we support our fellow female financial advisors and share our knowledge and resources.

3. How does being a B Corp change how The Humphreys Group is run?

DB: It formalizes what we already do and our commitment to it — and it also inspires us and motivates us to do better. It provides a much-needed morale boost (2020!) to know that our approach is valued and that we are part of a community of like-minded organizations.

4. What benefits do all stakeholders (clients, employees, communities, the environment) get from The Humphreys Group becoming a B Corp?

DB: They can see what we are committed to, and as it applies to them (see answer to question 2). We are putting our flag in the ground for what we believe in and are committed to doing — in a public, transparent, measurable way.

5. How does becoming a B Corp further The Humphreys Group’s mission of helping women own their financial power?

DB: We frequently urge our clients to align their money and values. We have seen that when that happens, our clients are more engaged in their own financial life, they gain confidence, they make better decisions for themselves, and they achieve better financial outcomes.

It is so important to us to show our clients that we believe this to also be true for ourselves, as a firm. Living by and espousing one’s values is easier said than done.

Becoming a B Corp is a way for us to demonstrate exactly what it means to align your values and your wallet. We all have power in how we deploy our financial assets and this is a way to show just how powerful that can be. We are setting the example — leading by doing.

6. How does the B Corp certification align with The Humphreys Group’s values?

DB: For most of my adult life, it’s been important to me to use my financial resources as a way to express my values. In addition to boycotting certain companies and products, I aim to direct my spending toward enterprises I wish to support and whose values are aligned with mine — and The Humphreys Group.

The metrics that go into a B Corp certification are extremely similar to our firm’s values and the ethic we strive to embody in our work with clients and each other. I have long believed that while the traditional metrics are crucial for business success, the broader business purpose must recognize and value the experiences of those it serves, those working within it, and the broader community.

7. What are The Humphreys Group’s goals for 2021 and beyond being a B Corp?

DB: We look forward to getting more involved in the B Corp community — learning from other B Corp organizations and offering our expertise and experience to the community as well.

We want to do our part in changing the narrative about “profit at all costs” in our own industry as well as championing those values more broadly.

Additional Resources

Miss our B Corp announcement? Check out the press release here! You can also learn more about what a B Corp is here.

How to Improve Your Financial Literacy During the COVID-19 Pandemic

Published in: Resources |

The financial literacy gap between men and women is from structural, systemic and societal inequalities and barriers over time. (One example: It wasn’t until 1974 — with the passage of the Equal Credit Opportunity Act — that women won a legal right to apply for credit cards separate from their husbands.)

Why the Financial Literacy Gap Is So Important

The financial literacy gap — also known as the  “secondary gender wage gap” — is so important because without financial literacy, women can’t build their wealth. They feel less confident being in control of the household finances, and this becomes an even bigger issue when their spouse passes away or if they go through a divorce. Women also may feel less confident about investing in the stock market. And women already earn less than men — without the financial knowledge about investing, they are at even more of a disadvantage.

Other financial hindrances? Women tend to live longer than men, which can make them financially insecure during retirement. Women are also often expected to leave the workforce during their high-earning years to take care of their children or aging parents. The COVID-19 global health and economic crisis, and how it has disproportionately affected women, has further underscored these issues.

Steps You Can Take to Improve Your Financial Literacy

Now that we know what we’re up against and understand why it’s so important to arm ourselves with financial knowledge, what steps can we take that are in our control?

  1. Listen to podcasts and books about personal finance. You don’t have to read a dense tome about finance. Listen or read something that you would enjoy.
  2. Find out what financial wellness programs are available at your workplace. Many employers offer workshops and programs on financial topics, such as understanding your 401(k), health savings accounts (HSAs), and flexible spending accounts (FSAs).
  3. Research financial advisors. As we say at The Humphreys Group, it’s not just about the numbers. Find a financial advisor who you feel comfortable with and can connect with.
  4. Attend a Conversation Circle. The Humphreys Group regularly hosts Conversation Circles where we have authentic conversations about money. Let us know if you’d like to join us at our next one!
  5. Talk about money with your family and friends. We as a society are conditioned to not talk about money. But money affects everything in our lives — why should something so pivotal in our lives be taboo to talk about? Have an honest conversation with your family and/or friends about money. As CNBC Make It suggests, host an event and 1. invite friends who are comfortable around each other, 2. set expectations ahead of time, 3. have topics ready (but let the conversation flow naturally), 4. ask questions, and 5. be open to new perspectives.

Continue the Conversation About Financial Literacy with The Humphreys Group

The Humphreys Group is passionate about empowering women in their finances and giving them the tools and resources they need to succeed. If you’d like to continue the conversation about financial education, reach out to our team today.

The Importance of Impact Investing

Published in: Resources |

The global COVID-19 crisis, social unrest, and economic inequality have highlighted how connected we all are and how deeply we need more efficient systems.

This is where impact investing — also known as SRI (socially responsible investing), ESG (environmental, social, governance), sustainable investing, or socially screened investing — comes in. While impact investing is not new, investors are now starting to fully understand its significance. Investors want to make a difference in the world with the capital they are investing.

Impact Investing By the Numbers

Supporting a sustainable future is not only good for the world — it’s good for your wallet. There’s a common perception that by investing in sustainable companies, you pay a price for more “moral” investments — but data suggests that sustainable investments are actually financially rewarding. Here are a few key stats:

  • The COVID-19 pandemic crashed the market, yet sustainable investments performed better than their counterparts during the first quarter of 2020. According to BlackRock, investment funds tracking the performance of companies with better ratings on ESG issues lost less money than those including worse performers in 94 percent of cases during the COVID-19 crisis.
  • Last year, shares of the 100 companies on Barron’s America’s Most Sustainable Companies” list had average returns of 34.3 percent, while the S&P 500 had 31.5 percent.
  • 2019 saw a total of 479 green bonds issued worldwide, up by a quarter compared to the previous year. 2020 is set to be a “bumper” year for green bonds.
  • According to Global Impact Investing Network (GIIN)’s 2020 Annual Impact Investor Survey, the global impact investing market is estimated at $715 billion.
  • For the past one-, three-, and five-year periods, ESG stock and allocation fund strategies lost less money than non-ESG funds during market declines and displayed less volatility, Morningstar reports.
  • According to a Nuveen study of high-net-worth investors and financial advisors, 54 percent said they would invest their entire retirement balance into a responsible investment portfolio.

But the push for impact investing is not just about potential returns: As The Business Times notes, people worldwide want companies to reduce their impact and are becoming more aware of the role that financial institutions play when it comes to creating a sustainable future.

For instance, the movements Fridays for Future and Extinction Rebellion demand action from political and business leaders. And as Barron’s writes, “How a company treats essential workers has become a measure of how responsible it is. … Then came the deaths of Ahmaud Arbery, Breonna Taylor, and George Floyd, and the widespread protests about police brutality and inequitable treatment of people of color. Top-level executives, who once took a hands-off approach to such issues, began speaking out.”

Employees also want to work for businesses that put sustainability as one of its core values. As we’re seeing, impact investing is not just a fad — it’s an investment strategy that is here to stay for the long-term.

Interested in Impact Investing? Reach Out to The Humphreys Group Team Today

The Humphreys Group supports the increased interest in investing to promote social good. It’s one of the most effective ways we can vote with our dollars. Many of our clients are invested in ESG funds, such as the Pax Ellevate Global Women’s Leadership Fund, the Pax Global Environmental Markets Fund, Dimensional Fund Advisors’ Social Investment Funds, and Dimensional Fund Advisors’ Sustainability Funds. If you’re interested in learning more about impact investing, reach out to our team today for additional fact sheets and materials.

The Idea that Women Need “Extra Help” Understanding Their Finances is a Myth

Published in: Resources |

For 20 years, Annamaria Lusardi, an Italian-born economist and researcher, has been testing people all over the world on their financial knowledge. She has become especially well-known for constructing a financial literacy test composed of three basic questions on inflation, diversification, and compound interest. Unfortunately, only about 30 percent of Americans could answer all of them correctly. Even more alarming, however, is a sizeable gender gap: While 38 percent of men provided the correct answer to all three questions, only 22 percent of women did the same.

Research like this has fueled a newfound crusade within the financial services industry to educate women on their finances. While we submit that the gender gap in financial literacy exists, let us be clear: The idea that women need extra help understanding their finances is a myth.

A key reason why women performed worse than men on Lusardi’s financial literacy test? They disproportionately answered the test questions with “do not know.” To determine if this was truly the result of a lack of understanding, Lusardi and her research team decided to remove “do not know” as an answer option. When they did, women’s correct responses increased significantly. In fact, Lusardi estimates that half of the gap was the result of women underestimating their own knowledge!

An Unfair Advantage: The Correlation Between Financial Knowledge and Wealth

While this simple change sheds light on how often women underestimate themselves, it did not eliminate the gender gap entirely — which means that yes, men still do appear to have more financial knowledge than women. But it’s not because women are less capable of understanding financial concepts; it’s because they’re rarely given the opportunity to learn about them in the first place.

Across the world, those with the most financial knowledge are also the most wealthy — and it turns out men are significantly wealthier than women.  As a result, a college-educated man is 45 percent more likely to understand diversification than a low-income woman with less than a high school education.  And because financial literacy is a major predictor of behaviors that accumulate money (like investing in the stock market), this lack of knowledge only exacerbates economic disparities.

Where the Financial Services Industry Gets It Wrong

The financial services industry views this disparity as an opportunity to “swoop in and rescue” women from the unfortunate situation in which they find themselves. Advisors cite less financial education, a longer life span, and lower salaries as evidence that women need help understanding and managing their money, and proudly present themselves as the solution. Large firms, eager to build their clientele, now offer internal workshops on how to deliver “female-friendly” financial advice, complete with patronizing sales pitches. And a new flock of financial gurus have now made a living off of selling books that are unhelpful at best, and sexist at worst.

Women Are Taking Initiative and Fixing the Financial Literacy Gap Themselves

Fortunately, women already know they need to learn more about money and are taking it upon themselves to fix it. Financial wellness programs have seen an encouraging uptick in female participants in recent years. In 2014, Financial Finesse found that women completed two-thirds of their financial evaluations, up from one-half three years before.

Many instructors have also observed that women’s willingness to seek out financial education makes them easy to teach compared to men, who are usually less likely to admit what they don’t understand. And we’re already seeing the gap closing across generations: A recent study found that the financial literacy gap between genders for those under age 35 is much smaller than the general population. Women are taking initiative, proving they do not need to be coddled and cajoled into understanding their finances.

Learn More about Money Myths with The Humphrey Group’s eBook

Of course, because this problem is largely rooted in systemic issues, many argue that education alone won’t make the financial literacy gap disappear.

This is certainly true — rather, large-scale economic change would make a huge difference in helping women become more educated about money.

But for now, we can move the needle by focusing on what we can control and take financial literacy into our hands. If you’d like to learn more about common money myths and how we can dispel them, download our free eBook Rewriting the Rules: Telling Truths About Women and Money.

Why You Should Frequently Revisit Your Estate Plan 

Published in: Resources |

We’ve written on the blog before about the importance of estate planning, especially for women.

Estate planning is a woman’s issue: Women often live longer than their partners — meaning that they might find themselves having to determine their partner’s financial destiny and decide how their finances will be allocated to family members, taxes, and charities.

Also, women today lead dynamic and complex work lives, building fulfilling careers but also having to step out of the paid workforce for periods of time to raise their children or take care of their parents. Such variances in employment can potentially impact a woman’s financial well-being. Therefore, estate planning plays an important role in ensuring every woman’s long-term economic security. 

Today, we’ll be taking the topic of estate planning a step further and discuss why you should frequently revisit your estate plan. 

Estate Planning: Not a “Set It and Forget It” Matter

You should revisit your estate plan every three to five years, and also after major life events, such as birth, marriage, or death. You shouldn’t just revisit your will — you should review everything in your estate plan, including the following:

  • a last will and testament;
  • revocable living trust;
  • a durable power of attorney;
  • a healthcare power of attorney;
  • living will;
  • life insurance beneficiaries;
  • retirement plans’ beneficiaries;
  • and business plans.

There are several reasons why you might want to update your estate plan — from moving to another state, to wanting to incorporate philanthropic giving in your estate plan, to wanting to include your growing family. Updating your estate plan requires serious thought — LegalZoom provides a great list of questions you might want to consider. These include: 

  1. Is there a new marriage? 
  2. Is there a new domestic partnership or a common law marriage? 
  3. Have you changed the guardian you chose for your children? 
  4. Is there a new baby or an adopted child?  
  5. Do you want to disinherit a spouse or a child? 
  6. Do you want to add or change beneficiaries, including a charity?  
  7. Have you divorced since your estate plan was made? 
  8. Do you have a blended family? 
  9. Has one or more of your beneficiaries predeceased you? 
  10. Do any of your beneficiaries have special, or changed, needs that you want your estate plan to address? 
  11. Have you moved to a new state? 
  12. Do you want a new trustee for your trust? 
  13. Have you received an inheritance or additional assets?  
  14. Do you want a new person to have power of attorney? 
  15. Do you have a living will? 
  16. Did you open a business or do you currently own one? 
  17. Are there new tax laws in place?

By answering these questions, you can ensure your wishes are clearly defined and will be carried out in the future.

Estate Planning with The Humphreys Group

In a survey by Wells Fargo, one in six older Americans said their financial documents are out of date. Many said they put off these tasks because of a lack of urgency. Yes, it can feel easier to procrastinate than have to take the time to review your estate plan, especially since it’s such an emotionally charged topic. But by putting it off, it will only create more problems later on.

The Humphreys Group understands the role of emotions in estate planning. We provide wealth management for women that blends empathy with expertise — because we know that both carry an equal amount of weight when it comes to handling money matters. 

If you’d like to discuss updating your estate plan, reach out to our team todayWe look forward to hearing from you.

The Truth About Gender Stereotypes and Mathematics

Published in: Resources |

Back in 2005, Larry Summers — then, the president of Harvard University — was asked to speak about the underrepresentation of women in science and engineering. In his remarks, he suggested that women have difficulty finding success in these fields because of innate gender differences in our mathematical abilities — he called it our “intrinsic aptitude.”

This prompted a massive outcry, in and outside the world of academia. Even after issuing an apology, the comments led to his resignation the following year. Summers likely didn’t know it at the time, but he was echoing one of the oldest gender stereotypes in the book.

And although we have decades of research disproving it time and again, one need look no further than James Damore’s 2017 Google memo — which asserts that “women are biologically less capable of engineering” — to confirm the stereotype is still alive and well.

We are officially adding our voices to the chorus: The idea that women are inherently bad at math — and anything it involves — is a myth!

Looking at the Numbers

Of all the myths we’ve chosen to bust, this is probably the one you’re most familiar with. For generations, women have been told they aren’t as skilled at math as their male peers, and as a result, they’ve been steered toward pursuing careers in the humanities rather than science, technology, engineering and finance.

People who echo Summers’ claim say research is on their side, but since the 1980s, a litany of studies have thoroughly debunked this notion. One well-known meta-analysis found that female students have consistently earned slightly higher grades than their male counterparts in all fields of study since 1914.

Yes, you read that correctly — for more than a century! And when you look at a combined high school grade point average for math and science specifically, girls have been outperforming boys for at least 25 years.

Although the gender differences are generally small, one team of researchers stated the sheer consistency of female achievement suggests their findings “should not be ignored.”

To be clear, although we earn better grades, boys still do receive higher math scores on standardized tests like the SAT, ACT and advanced placement exams. But the gap has grown smaller over time — in the early 1980s, there were 13 boys for every girl who scored above 700 on the SAT math exam. That ratio has now shrunk to about three to one. Clearly, it won’t be long before this gap is closed entirely.

When We Reinforce Gender Stereotypes, Everyone Loses

The bad news is that despite their impressive gains in test scores, girls are still internalizing the message that they aren’t as smart as the boys around them. Researchers at Dartmouth College and Northwestern University found that reminding women of gender stereotypes before an exam not only heightened their anxiety but also caused them to underutilize the regions of the brain associated with mathematical learning.

Even the mere acknowledgement of gender can hamper girls’ achievement — when female students were asked to identify their gender before taking an AP calculus exam, they performed worse than the female students who were asked to identify it after the exam. This little box is estimated to keep nearly 5,000 female students a year from earning advanced calculus credit!

Unfortunately, the consequences of these stereotypes endure long into adulthood. When those female students become adults and start to face questions about personal finance and investing, they often assume those topics require high-level mathematical expertise and doubt their ability to handle it. A 2016 survey found that when tested on financial literacy and diversification, women were much more likely than men to choose the answer “do not know.” But when researchers removed this option as a potential answer, the chances of women choosing the correct response increased significantly.

So, how do we make sure this myth stays in the past, where it belongs?

In Our Experience

Mathematical expertise is not an innate characteristic; it’s a skill set that improves with effort and practice. Even if you still have nightmares about your high school algebra class, you are capable of learning about the fundamentals of investing.

That said, you don’t have to know it all. The financial media is full of superfluous terminology and analysis, which can give a lot of women the false impression that they’re too dimwitted to understand the field. In truth, there are only a few key principles you need to understand to be a good investor.

On a personal note, Diane Bourdo, president of The Humphreys Group, was an English major as an undergrad and refined the art of avoiding math and science during her tenure at the University of Wisconsin. Fast forward to a few years later, and she discovered the absolute joy and certainty of calculus! The precision of math came as a relief after so many years of free-form essay exams.

Want to learn more about money myths? Download our free eBook Rewriting the Rules: Telling Truths About Women and Money and/or reach out to us today.

Rewriting the Rules: Dispelling the Myths Around Women and Investing

Published in: Resources |

When a Washington, D.C-based nonprofit held a series of investment seminars for women nurses at a local hospital, only one or two nurses showed up. But when the nonprofit team changed the names of the seminars, emphasizing the words “financial security” instead of “investing,” suddenly the room filled up with attendees.

This story highlights that women are interested in investing. They just see the concept in a different light or associate it with a different name.

That’s right: The idea that women aren’t interested in investing is a myth.

The Investing Industry Was Created “By Men, For Men”

Sallie Krawcheck, Wall Street veteran and CEO of Ellevest, likes to say that the investing industry was created “by men, for men,” and therefore defaulted to their preferences and characteristics. She points out how the industry places special importance on trading to beat a market index, rather than doing so to accomplish a specific goal, and is overrun by the financial media, which closely resembles sports networks.

Until recently, most firms seemed to focus primarily on male clientele and often relied on financial jargon that men seem to have a higher tolerance for. And then there’s the industry symbol of a bull — a figure that is literally masculine by definition.

Given all this, it makes sense that women haven’t been particularly enthralled with what most investment firms are offering.

Other Industries Have Also Historically Omitted the Female Perspective

The investment world isn’t the only industry that’s designed this way, of course. Design, business, media and technology have also historically omitted the female perspective. Some female entrepreneurs argue that as a result, men move through the world unaware that it’s been designed for their comfort, while women move through the world encountering small, daily points of friction or discomfort. The pain points they encounter in the investment world are especially detrimental, however, because their financial wellbeing impacts their livelihood.

Fortunately, now that women’s economic influence is growing, it appears investing is the next hurdle they are ready to jump. In 2015, Merrill Lynch found that just over 50 percent of women said they wanted to participate in making changes to their investment approach — nearly mirroring the 55 percent of men who said the same.

And when Fidelity asked what women would most like to learn with 60 minutes of professional financial advice, the first choice listed by women in every age group was “learning more about how to invest my money.” It’s clear that women are more ready than ever to carve out their place in the world of investing.

Like the nurses who attended the educational workshops referenced earlier, we’ve also found that women become especially engaged in financial planning when they realize investments can serve as a vehicle to care for their families, reflect their values and give them peace of mind.

Call it what you will — investing, financial security, asset management — but when women make this connection, chances are they’ll enjoy it more than they ever expected.

Keep The Conversation Going About Money Myths

If you’d like to learn more about money myths and how we can rewrite the rules, download our free eBook Rewriting the Rules: Telling Truths About Women and Money. Also consider attending one of our Conversation Circles, where we have authentic discussions about money and everything that comes with it — our fears, our successes, our memories, and the attitudes, behaviors and legacies we’ve adopted over the years.

Easing Tensions Around Family Inheritances 

Published in: Resources |

At The Humphreys Group, we know how much our early personal experiences, family histories, and backgrounds can affect how we view money in adulthood. This is especially true when it comes to handling family inheritances.

Sibling Dynamics and Family Inheritance

Let’s say your grandparents tended to show favoritism toward your older sister. Or your brother got a new car for his sixteenth birthday, and you didn’t. Or your parents always went to your sister’s soccer games, but not yours. This longstanding sibling tension and resentment can play itself out in family inheritance discussions 

As Amy Castoro, a family wealth coach and president and chief executive of the Williams Group, aptly said in the New York Times, “So if one son is designated as the executor of a parent’s estate, the other son or daughter are looking at him saying, ‘That guy cheated at Monopoly our whole life. Why would I trust this guy now?’” 

In a 2019 TD Wealth survey, nearly half of estate planning experts identified family conflict as the biggest threat to estate planning. Designation of beneficiaries was the most common cause of conflict. Other sources of conflict included not communicating the plan with family members and working with blended families. 

How Gender Plays a Role in Family Inheritances

At The Humphreys Group, we also know that family conflicts can arise from issues related to gender, too.

Parents might have gender biases around who manages the inheritance or legacy, thinking their sons are more up to the task. But, as we’ve noted in our eBook Rewriting the Rules: Telling Truths About Women and Money, women are smart and responsible with money, and they have the financial confidence and insight needed to be a trustee. Unfortunately, these gender biases and unfair treatment can start when we’re youngSeveral studies reveal jarring differences in the ways parents talk about money with their sons vs. their daughters.

But it doesn’t just stop at hidden gender biases. Women are also more likely to be their parents’ caregivers, and it can be frustrating when they don’t see their unpaid caregiving work reflected in their parents’ inheritance plans. 

Tips On Navigating Inheritance Tension

So how can family members navigate these challenges? Here are some tips.

1. Parents should clearly communicate their plan. Why do most generational wealth transfers fail? It’s often because of poor communication. Don’t leave your arrangements a surprise until your death. Have a family meeting — quarterly or annual meetings — so your family members completely understand how much of the wealth they will or will not receive. Explain what you’re trying to accomplish with your estate plan. 

2. Listen to each other and respect one another. This applies to both the heirs and the executors. Listen, don’t interrupt, don’t be judgmental, and try seeing things from their point of view

3. Parents should draft an estate plan. If you pass away without a will, then all the decisions are left up to the state in which you reside. By drafting an estate plan, you can ensure the assets are divided the way you want.

4. Hire a financial advisor or other professional to mediate and facilitate these conversations. With an unbiased, objective financial advisor involved, you will be able to create a broad plan that covers everyone’s concerns.

5. Revisit your planIt’s important to revisit your estate plan when there’s new tax legislation or a change in your family situation — such as a birth, death, marriage, or divorce. Keep everyone up to date on these changes. 

Want to further discuss how to navigate difficult conversations about estate planning? Reach out to our team today, or attend one of our Conversation Circles, where we have authentic, personal conversations about money — beyond the numbers.