Investing With Her

TriLinc Global, LLC

By Gloria Nelund,
Chairman & CEO of TriLinc Global, LLC

 

Gloria Nelund

In 2001, at the age of 40, I became the CEO of Deutsche Bank’s $50B North America Private Wealth Management division, where among 200 executives across the Bank, I was the only woman. As I had done for the majority of my career on Wall Street, I found myself focusing on finding underlying commonalities with my male counterparts – shared values, a strong work ethic, judiciousness – rather than on gender differences that separated us. I worked hard, loved my job, and was rewarded well for my success. So, when asked about how I overcame gender inequity in the workplace, I have to honestly say, that with one exception early on in my career, I never really experienced it. That being said, the facts are that until very recently, in the finance industry, you would find very few women in executive positions, and there were generally big differences in pay for men and women.

I find the new trends in finance encouraging, and I believe that the boundaries historically faced by women in finance, will soon be a part of our past. Women in the US have made substantial economic gains as a result of increased access to education, widening income generation opportunities and significant policy developments that have reshaped the trajectory for women in society. Today, approximately 60 percent of all college graduates are women,[1] and, upon graduating from college, women now tend to out-earn men – according to some estimates – by eight percent.[2]

Never in our history has the time been so ripe and the opportunity so great for women to chart their own destinies, lead the way, and be the flag bearers – both with their professions and their pocketbooks – of a new era of capitalism.

We often hear about the inter-generational wealth transfer on the horizon as the largest wealth transfer in history (widely cited to be ~$41T). What is often less talked about, however, is the amount of wealth women stand to gain within the next four decades. Around 70 percent of the generational wealth transfer – a resounding $28.7T – will be transferred to women.[3]

It’s not just that women are coming into wealth. Women are increasingly creating wealth of their own. In one study by the Task Force for Talent Innovation, 63 percent of women respondents said they were the source of their household’s assets.[4] This vibrant growth in personal and inherited wealth is leading to a seismic shift in our financial landscape. By 2030, two-thirds of all private wealth in the US will be held by women; within just over a decade, women will control more aggregate wealth in the US than men.[5]

This rise in wealth has consequently led to the emergence of a more aspirational and sophisticated woman investor. Women no longer serve as the passive bystanders of their household’s accounting and finances but rather are transforming into active managers of their household’s wealth.[6] An estimated 66 percent of women today serve as the primary driver and influencer of their family’s wealth management.[7]

Despite the apparent emergence of the woman investor, the financial services industry – wealth managers, planners and advisors – has not yet evolved to meet the needs of this new investor group.

The modern woman investor is increasingly forming her investment decisions based on her own financial acumen rather than the expertise of a financial professional. Almost 70 percent of women in the US do not currently retain the services of a financial advisor – and for women under forty this figure is closer to 75 percent.[8] Perhaps most concerning to the financial services industry is that these numbers are declining. While 48 percent of women engaged the services of a financial advisor in 2008, only 31 percent do so today.[9]

With fewer and fewer women utilizing traditional financial planning services, the financial services industry is missing out on a sizable market opportunity – by some estimates of over $5T. With so much money left on the table, this begs the question, why has this industry been so slow to engage women? One institutional challenge may be the lack of female representation in financial services – only 30 percent of all financial advisors in the US are women. Yet when asked whether women prefer to work with men or women financial advisors, of those who stated a gender preference, over 70 percent selected women.[10]

If the financial services industry hopes to stay current amidst a shifting landscape, in addition to attracting and retaining more women financial advisors, it must also reposition its service and product offerings to attract the new female investor. This will require an overhaul of business as usual in an effort to create stronger alignment with the investor and gain a better understanding of what women investors need. For many women, it is the ability to assert their financial independence, grow their wealth and provide long-term planning for themselves and their families.[11] For most firms and financial advisors, this will involve adopting a new philosophy and approach toward women investors – and a change from investing for her to investing with her.

Investing with her requires an advisor who takes the time to get to know her…her personality, her lifestyle, her values, her goals, her priorities, and who can patiently communicate on her terms. Also, it may require an advisor to step out of their comfort zone of traditional investment products to find investments that are aligned with her values. In addition to return on investment, 76 percent of women believe that investments should incorporate a social and environmental lens.[12] Women are also more likely to involve ESG and sustainability screens in their investment decision-making, and want to invest their wealth in a way that will help them advance the causes and issues they care about.[13] Financial advisors who help their clients align their investment goals with their personal goals are 41 percent more likely to build satisfactory and lasting relationships.[14]

One tangible way we’ve seen this investment philosophy play out is through the addition of alternative investment products. According to a study by MainStay Investments, a US-based investment management firm, 60 percent of women responded that they expected alternatives to become a core part of their investment portfolio over the next five to 10 years, and 27 percent of women indicated they were already allocating investments to alternatives, compared to 20 percent of men.[15] When asked why, women responded that alternative asset allocation gives them the opportunity to invest with their values, as well as diversify their portfolio, generate income and grow their capital.

My firm, TriLinc Global, an impact investment management firm with over $100M in Assets Under Management (AUM), is responding to this notion that women, and yes – many men too – want to invest in a way that reflects their values. Our products seek to align investors’ values with their investments so that they don’t have to make an either/or choice. We provide retail investors the opportunity to access specialty products that generate income while pursuing positive impact in communities across the globe.

This sort of investment approach is still nascent in the financial services industry but it is gaining traction, especially as new entrants such as women and millennial investors come into the fold. It is time for the financial services industry to recognize that the investor profile is changing and start to adapt to this new investor’s needs through the development of tailored service and product offerings that align values with investment. Whether we’re fund managers, financial advisors, or brokerage houses, it is time to stop investing for her and begin investing with her.

Article by Gloria S. Nelund is Chairman and Chief Executive Officer of TriLinc Global (http://www.trilincglobal.com) and is Chairman, Chief Executive Officer, and President of the TriLinc Global Impact Fund (http://trilincglobalimpactfund.com). Prior to founding TriLinc Global LLC in 2008, Ms. Nelund spent her career as a high level executive in the international Asset Management Industry. Most recently, Ms. Nelund served as Head of the U.S. Private Wealth Management Division at Deutsche Bank, the world’s fifth largest financial institution. In this capacity, Ms. Nelund held fiduciary responsibility for more than $50 billion in investment assets, including more than $20 billion in emerging markets and credit instruments. In addition to this role, Ms. Nelund served as the only female member of the Global Private Wealth Management Executive Committee. Ms. Nelund had served as the Managing Director of Scudder Kemper Investments, prior to its purchase by Deutsche Bank.

Prior to her tenure at Deutsche Bank, Ms. Nelund spent sixteen years as an executive at Bank of America /Security Pacific Bank, most notably as President and CEO of BofA Capital Management, Inc., an investment management subsidiary managing $35 billion in assets for both retail and institutional investors. In addition to managing fixed-income and equity mutual funds in both the U.S. and internationally, Ms. Nelund’s division was responsible for managing assets on behalf of public funds, common trust funds and corporate funds. Ms. Nelund also spent five years as Manager of Worldwide Sales and Marketing of BofA Global Asset Management and three years as CEO of InterCash Capital Advisors, Inc., a $15 billion investment management subsidiary of Security Pacific Bank.

Ms. Nelund has been a pioneer in the development of Social Impact products for institutional and high net worth investors. While at Scudder, she supported the development and growth of one of the industry’s first socially responsible investment (SRI) products. In addition, Ms. Nelund was instrumental in making Deutsche Bank a major institutional supporter of microcredit, creating multiple programs for Private Wealth Management clients.

FOOTNOTES:

[1] “Degrees of Equality.” Economist. September 13, 2011. http://www.economist.com/blogs/dailychart/2011/09/female-graduation-rates

[2] Rouso, Matthew. “Childless Women In Their Twenties Out-Earn Men. So?” Forbes. February 24, 2014. http://www.forbes.com/sites/realspin/2014/02/24/childless-women-in-their-twenties-out-earn-men-so/

[3] 3P Contributor. “Women Rule: Why the Future of Social, Sustainable and Impact Investing is in Female Hands.” TriplePundit. April 30, 2015. http://www.triplepundit.com/2015/04/women-rule-future-social-sustainable-impact-investing-female-hands/

[4] Hewlett, Sylvia Ann, and Moffitt, Andrea Turner, and Marshall, Melinda. “Harnessing the Power of the Purse.” Sisters Capital. Extracted September 2015.

[5] 3P Contributor. “Women Rule: Why the Future of Social, Sustainable and Impact Investing is in Female Hands.” TriplePundit. April 30, 2015. http://www.triplepundit.com/2015/04/women-rule-future-social-sustainable-impact-investing-female-hands/

[6] Hewlett, Sylvia Ann, and Moffitt, Andrea Turner, and Marshall, Melinda. “Harnessing the Power of the Purse.” Sisters Capital. Extracted September 2015.

[7] Ibid.

[8] Ibid.

[9] Fairley, Juliette. “Number Of Women Using Financial Advisors Is Declining.” FA Magazine. July 16, 2014. http://www.fa-mag.com/news/number-of-women-using-financial-advisors-is-declining-18618.html

[10] “Female Financial Advisers Sought as Boomers Need Planning.” Bloomberg News. November 17, 2014.

http://www.bloomberg.com/news/articles/2014-11-18/female-financial-advisers-sought-as-boomers-need-planning

[11] Sykes, Samantha. “Wealth Planning For Women: An Insider’s Look At Where To Start.” Forbes. May 22, 2015. http://www.forbes.com/sites/rbcwealthmanagement/2015/05/22/financial-planning-for-women-an-insiders-look-at-where-to-start/

[12] “Sustainable Insights.” Morgan Stanley. February 2015. https://www.morganstanley.com/what-we-do/institute-for-sustainable-investing/a>

[13] Hewlett, Sylvia Ann, and Moffitt, Andrea Turner with Marshall, Melinda. “Harnessing the Power of the Purse.” Sisters Capital. Extracted September 2015.

[14] Ibid.

[15] Tasman-Jones, Jessica. “Female Investors More Interested In Alternative Assets Than Men Are.” Campden FB. August 21, 2014. http://www.campdenfb.com/article/female-investors-more-interested-alternative-assets-men-are

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