Female investors have a cautious view of equities. That is a problem—for women as well as the rest of the finance world.
3 min
“I think we’re a bit outnumbered, but we’re here.” So said one commenter on a Reddit thread about whether women joined in the recent WallStreetBets trading frenzy.
Female investors largely sat out the riskiest punts taken on stocks like GameStop. That may be no bad thing considering the videogame retailer’s stock is down over 80% from its late-January peak. But low female participation in stock-market investing more generally is a problem, for women and the finance industry alike.
Less than one-quarter of deposits into U.S. brokerage accounts were made by women in January, according to consumer-spending data analytics firm Cardify. Globally, the situation may be even worse: Israel-based brokerage eToro said that female investors make up just 14% of its registered users, most of whom are in the U.S. and Europe.
Some trading platforms did a good job of signing up women during the pandemic. Just over a third of Robinhood users were female at the beginning of this year, up from 20.5% a year before, according to Cardify. For the finance industry as a whole, though, attracting more female custom remains a frustratingly slow work in progress.
Women tend to be more conservative investors than men, preferring to put their wealth into real estate, cash or bonds while steering clear of equities. Credit Suisse surveyed a sample of existing clients and found that almost half of its female customers have 90% of their wealth tied up in low-yielding cash and fixed income—well over double the exposure the Swiss bank recommends.
That kind of caution has downsides, particularly when interest rates are as low as they are today. Since the global financial crisis, cash has returned a paltry 0.6% annually, while 10-year Treasury bills have returned 4.8%, based on Portfolio Visualizer calculations. By comparison, the U.S. stock market has averaged 12% a year.
Governments and companies are increasingly shifting the responsibility for a secure retirement onto individuals, raising the stakes for individuals’ investment decisions. Getting women to increase their exposure to equities is all the more important because they outlive men, so need their pension pots to last longer.
The underlying reasons for women’s caution as investors are complex. They are still paid less than men. Earnings and pension contributions can be disrupted when mothers take time out of the workforce to rear children, hampering their ability to put money aside for the future. Many women prioritize keeping what they have safe instead of investing in better-returning assets that could help offset these pay gaps. The wider issue here is that risk tolerance typically rises with wealth, for both sexes.
The finance industry also has a longstanding image problem with women. For some, investment jargon is the turnoff; for others it is the sometimes patronizing financial products targeted at them.
Warren Buffett once quipped that part of his investing success came from “only competing with half the population.” In reality, few people are benefiting from the status quo. Women are missing out on a share of stock-market spoils. Asset managers are losing out on the higher fees that come from higher-yielding assets. Robinhood needs female customers to maintain its blistering user growth as the startup prepares for a mooted initial public offering.
When they do enter the stock market, women’s investment behaviours often lead to good returns. They tend to think long-term, spread their risk by buying diversified funds and rack up lower fees by trading less frequently than men. That kind of steady capital might help to offset some of the excesses seen in the market this year.
Currently, women’s share of financial assets globally is estimated at 30% by Credit Suisse, or 40% including real assets such as property, which tend to be more evenly distributed. Those numbers should grow as women join the workforce in greater numbers and accept higher-paying jobs. That may automatically improve the situation, as they have more money to invest and can afford to take greater risks with it. Catering to women’s financial needs is likely to become a more competitive business in future.
Yet the finance sector also has a role to play. Robinhood makes much of its mission to “democratise” the industry, and has indeed turned more women’s heads in a matter of months than some traditional brokerages managed in years. With women still heavily outnumbered on even the most accessible apps, though, there is much further to go. Democratising finance needs to include a better pitch to the other 50% of the population.
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CIOs can take steps now to reduce risks associated with today’s IT landscape
3 min
As tech leaders race to bring Windows systems back online after Friday’s software update by cybersecurity company CrowdStrike crashed around 8.5 million machines worldwide, experts share with CIO Journal their takeaways for preparing for the next major information technology outage.
IT leaders should hold vendors deeply integrated within IT systems, such as CrowdStrike , to a “very high standard” of development, release quality and assurance, said Neil MacDonald , a Gartner vice president.
“Any security vendor has a responsibility to do extensive regression testing on all versions of Windows before an update is rolled out,” he said.
That involves asking existing vendors to explain how they write software, what testing they do and whether customers may choose how quickly to roll out an update.
“Incidents like this remind all of us in the CIO community of the importance of ensuring availability, reliability and security by prioritizing guardrails such as deployment and testing procedures and practices,” said Amy Farrow, chief information officer of IT automation and security company Infoblox.
While automatically accepting software updates has become the norm—and a recommended security practice—the CrowdStrike outage is a reminder to take a pause, some CIOs said.
“We still should be doing the full testing of packages and upgrades and new features,” said Paul Davis, a field chief information security officer at software development platform maker JFrog . undefined undefined Though it’s not feasible to test every update, especially for as many as hundreds of software vendors, Davis said he makes it a priority to test software patches according to their potential severity and size.
Automation, and maybe even artificial intelligence-based IT tools, can help.
“Humans are not very good at catching errors in thousands of lines of code,” said Jack Hidary, chief executive of AI and quantum company SandboxAQ. “We need AI trained to look for the interdependence of new software updates with the existing stack of software.”
An incident rendering Windows computers unusable is similar to a natural disaster with systems knocked offline, said Gartner’s MacDonald. That’s why businesses should consider natural disaster recovery plans for maintaining the resiliency of their operations.
One way to do that is to set up a “clean room,” or an environment isolated from other systems, to use to bring critical systems back online, according to Chirag Mehta, a cybersecurity analyst at Constellation Research.
Businesses should also hold tabletop exercises to simulate risk scenarios, including IT outages and potential cyber threats, Mehta said.
Companies that back up data regularly were likely less impacted by the CrowdStrike outage, according to Victor Zyamzin, chief business officer of security company Qrator Labs. “Another suggestion for companies, and we’ve been saying that again and again for decades, is that you should have some backup procedure applied, running and regularly tested,” he said.
For any vendor with a significant impact on company operations , MacDonald said companies can review their contracts and look for clauses indicating the vendors must provide reliable and stable software.
“That’s where you may have an advantage to say, if an update causes an outage, is there a clause in the contract that would cover that?” he said.
If it doesn’t, tech leaders can aim to negotiate a discount serving as a form of compensation at renewal time, MacDonald added.
The outage also highlights the importance of insurance in providing companies with bottom-line protection against cyber risks, said Peter Halprin, a partner with law firm Haynes Boone focused on cyber insurance.
This coverage can include protection against business income losses, such as those associated with an outage, whether caused by the insured company or a service provider, Halprin said.
The CrowdStrike update affected only devices running Microsoft Windows-based systems , prompting fresh questions over whether enterprises should rely on Windows computers.
CrowdStrike runs on Windows devices through access to the kernel, the part of an operating system containing a computer’s core functions. That’s not the same for Apple ’s Mac operating system and Linux, which don’t allow the same level of access, said Mehta.
Some businesses have converted to Chromebooks , simple laptops developed by Alphabet -owned Google that run on the Chrome operating system . “Not all of them require deeper access to things,” Mehta said. “What are you doing on your laptop that actually requires Windows?”
