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Unlocking the Power of Women in Investing

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Unlocking the Power of Women in Investing

Unlocking the Power of Women in Investing

The financial services industry is undergoing a dramatic shift.

The next generation of investors will be younger and much more diverse, with women taking an increasingly prominent role in building and growing family and personal wealth.

Today’s infographic comes to us from New York Life Investments, and it showcases how this new paradigm will shape the future of products and services on offer in the industry, as well as how wealth managers can cater to these changing needs.

Growing Economic Might

Women are underrepresented in the investing world, but this is changing fast. While various cultural and societal reasons are contributors to this, there is also a more simple driver: rising economic might.

  • Women-controlled wealth in the U.S. will increase from $14 trillion to $22 trillion between 2015-2020
  • Women control 51% of all personal wealth in the United States today
  • Women are set to inherit $28.7 trillion in intergenerational wealth over the next 40 years

Women are becoming more important drivers of income and wealth for their families, as well:

  • Women are now the primary breadwinners in 40% of U.S. households – a 4x increase from 1960.
  • Women own 30% of all private businesses in the U.S.
  • Women now hold the majority of management, professional, and related positions (52%)

Finally, women now make up the majority of recipients of Associate’s degrees (61%), Bachelor’s degrees (57%), Master’s degrees (60%), and Doctoral degrees (52%) in the United States.

The Wealth Management Gap

As women increase raise their level of economic influence to new levels, how will they manage this wealth?

Interestingly, studies show that women think about money and wealth differently than men – and differently from precedents already set in the financial services industry:

The Good NewsThe Bad News
Women are better savers, saving 9.0% of their salary in comparison to men (8.6% of salary)
Women consistently tend to score lower on financial literacy tests
Some research points to women generating better returns (+0.4%) off of investmentsSome research points to women investing up to 40% less than men

Changing Concerns

Data from a recent survey by New York Life Investments sheds light on why women may be underserved by the financial services industry.

Reasons why women switch financial advisors:

  • 33% poor performance
  • 29% lack of personal connection
  • 27% poor customer services

In other words, women don’t switch investment advisors simply because of poor performance – there are other, more complex factors involved. Part of this is likely because 62% of women say they have unique investment needs and challenges:

Perceptions of women and investing:

  • Financial professionals treat women differently – 40%
  • Women feel patronized by financial advisors – 36%
  • Financial advisors are less likely to listen to investing ideas from a woman – 30%
  • Financial advisors push women out of financial conversations – 28%
  • Women have less access to financial education – 26%
  • Financial professionals find it hard to relate to women – 26%
  • Financial advising is a man’s world – 24%

A Deeper Dive

It is crucial for advisors to understand that women are not one large, homogeneous group.

In fact, research shows that there are four unique segments of women that each approach investing differently – and they all have different sets of needs.

Stay tuned for Part 2 of this infographic series, which will detail the differences between these segments.

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Demographics

Mapped: The World Divided Into 4 Regions With Equal Populations

This simple map visualization will change how you think about global population, and how people are distributed throughout the planet.

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World Map: Divided Into 4 Regions With Equal Populations

View the full-size version of the infographic by clicking here

At the most basic level, a standard world map tells us almost nothing about human population.

While the borders on a map may give us an idea of political boundaries or even aspects of continental geography, in reality they have little to do with showing population density.

That said, it is possible to apply one simple alteration to the world map so that we can make it more interesting from a population perspective – and it turns out that doing so can help us gain insight on where regional population density is the greatest.

Splitting Up the Map

Today’s map comes from Reddit user /u/OrneryThroat and it breaks up the world by grouping countries into four equally populated regions.

While both simple and crude, this mechanism does have some profound results:

RegionPopulation
North America, South America, and West/Central Africa1.9 billion
Europe, East Africa, Middle East, and Northern Asia1.9 billion
South Asia1.9 billion
Most of Southeast Asia, China, and Oceania1.9 billion

More specifically, there is one area that stands out from a visual standpoint, and it resides clearly in the southern portion of Asia.

Home to 1.34 billion people, it’s well-known that India already holds roughly 20% of the global population – but add Pakistan (195 million) and Bangladesh (165 million) into the mix, and you’re already closing in on one quarter of the global total.

Meanwhile, to get to a similar number, you’d need to add the entire populations of North America, South America, Europe, and Oceania together to even come close.

Shown Another Way

While splitting it into four equal portions is one way to transform the world map, here is another geometric route to conveying a similar idea about the world’s population density:

Circle population

On a previous Chart of the Week, we showed that 22 of the world’s 37 megacities are located in the small circle above, putting into perspective the region’s population density in a similar but different way.

These simple transformations of the world map are not only memorable, but they also give our brain an easy heuristic to better understand the planet we live on.

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Demographics

The World Population Pyramid (1950-2100)

The world is in the midst of a notable demographic transition. Here’s how the world population pyramid will change as we close in on the year 2100.

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The world is in the midst of a notable period of demographic transition.

Back in the 1960s, global population growth peaked at a 2.1% annual rate, but since then it has been on a historic downtrend.

In fact, according to the most commonly cited United Nations projection, which is based on a medium fertility rate scenario, it’s expected that annual population growth could drop all the way to 0.1% by the end of the 21st century.

Visualizing a Demographic Transition

Today’s powerful charts come from Our World in Data by economist Max Roser, and they show how global demographics will shift over the next 80 years.

Below you can see one major catalyst of this change, which is the peaking (and then falling) population growth rate:

Growth in world population from 1950 to 2100

Why has population growth been dropping since the 1960s?

A variety of explanations factor into this, including:

  • Falling fertility rates:
    Birth rates tend to fall as nations get richer. First, this happened in the developed world, but as the century progresses this phenomenon will impact more and more developing nations.
  • Government policy:
    China’s “One Child Policy” in particular had an effect on global population growth, and the aftermath of the policy is still contributing to a shrinking Chinese population over the long term.
  • Rural flight
    Urban dwellers tend to have fewer babies – and by 2050, there will be an additional 2.5 billion people living in cities globally.

Fewer births combined with improving healthcare – especially in developing nations – will dramatically alter the composition of the world population pyramid, creating both economic opportunities and challenges in the process.

The Changing World Population Pyramid

The following graphic charts how these changes affect the makeup of the world’s population.

World Population Pyramid transition

Over time, the shape of the world population pyramid is expected to shift from Stage 1 (high birth rates, high death rates) to something closer to Stage 4 (low birth rates, low death rates).

As the population distribution skews older, here is how population size and global median age will change:

YearGlobal Population SizeMedian Age
19502.6 billion23.6 years
20187.6 billion30.0 years
20509.7 billion36.1 years
207510.7 billion39.0 years
210011.2 billion41.6 years

Dates past 2018 are projections by the United Nations

Global median age is projected to surpass 40 years by the end of the century, and it will be considerably higher in many Western nations, especially in Japan and Europe.

With the future demographic composition looking very different than today, it will be fascinating to see how the economy responds to these potential tailwinds. Further, it will be even more interesting to see what role automation will play as the old-age dependency ratio hits historic highs.

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