Briana Brownell, founder and CEO of Pure Strategy Inc., an AI tech company in Saskatoon, had a great experience with her first financial planner because they were patient and answered all her questions. That discussion paid off because she started to invest and now has a diversified portfolio.
When Briana Brownell was a teenager, her father ushered her into his financial planner’s office for a chat. She remembers entering a large room with rich wood panelling, dark leather chairs and a map on the wall.
She also recalls feeling intimidated. That is, until everyone started talking.
“The financial planner was so patient, and they answered all of my questions. It was a really good experience because they were kind,” says the founder and CEO of Pure Strategy Inc., an AI technology company in Saskatoon.
That early financial education paid off. Ms. Brownell invested a portion of her first paycheque and contributed to her RRSP as soon as she was able. Today her portfolio holds far more than your typical stocks, bonds and mutual funds: It includes alternative assets such as art, and she acts as an angel investor, funding promising start-up companies.
When you ask Ms. Brownell to describe her investments, she uses words like “bold” and “high-risk.”
“I made a conscious choice to really think about what my goals were and what I wanted to get out of investing,” she says. “Women live a lot longer (than men) and we have a longer time horizon, so you would think women would be more aggressive investors, right?”
While that seems to be the case for Ms. Brownell, ample research suggests many women feel far less comfortable investing and taking on risk in their portfolios. What’s more, according to a 2021 Fidelity Investments study, only one third of women see themselves as investors and 70 per cent say they think they need to know more about picking stocks before they become more active.
That lack of confidence can lead to playing it safe – even for those who can actually afford to take on more risk. While women in Canada will inherit an estimated $900-billion by 2026, only 62 per cent of women identified as high-net-worth feel financially secure.
But Cindy Marques, a certified financial planner and co-founder and CEO of MakeCents in Toronto, which offers financial coaching for millennials, is not convinced caution is necessarily a bad thing for some women. It makes sense to consider the whole picture, she says, before making decisions about what to invest in.
“It’s not because we’re fearful of risk, we’re just very aware of risk – we’re risk aware versus risk averse,” she adds, explaining that while men generally tend to focus more on returns and how to chase them, women have a more holistic view of investing. “For us, it’s about ‘what can this money do for me and my family?’ We’re not trying to gamble or chase that huge payout. We’re going to choose lower-risk options because we’re trying to be mindful of what can happen if things don’t go well.”
Many women feel the stakes are higher because they have less money to play with in the first place – generally they earn less than men and cumulative lifetime savings are lower when, for example, they step away from the work force to care for family, she says.
A strong portfolio can change that. Even earning a few percentage points more over the course of 20 years can mean the difference between travelling the world in retirement or vacationing closer to home. For instance, a $25,000 investment earning 3-per-cent interest compounded monthly is worth $45,518 after 20 years, while the same amount would be worth $100,968 if the investment earned 7 per cent instead.
For Ms. Brownell, adding alternative investments helps diversify her portfolio. If one investment tanks, the rest level things out – and she can sleep at night.
A good adviser can be key. Julie Cowan, a partner and relationship lead for Grayhawk Wealth in Toronto, says her own adviser has been invaluable over the years. Not only does she ensure Ms. Cowan, a single parent, has enough insurance to protect her small family, but she also holds her accountable by encouraging annual check-ins on insurance, investing and estate planning.
In her own practice, she says she can see that financial literacy is the key to making better investing decisions. If you’re meeting with an adviser and don’t understand the jargon, ask them to explain it, she advises.
“When women are educated, and they have a plan,” she says, “they do take appropriate risk.”
For women, the solution is not throwing caution to the wind and chasing windfalls or investing in the next hot thing. Instead, says Ms. Marques, when women create a strategy, they’ll make investing decisions based on facts – not fears.
Know your target numbers. If you don’t know how much money you need to fund your retirement, how can you decide how much risk to take on? Instead of aiming for an arbitrary number, work with an adviser and go over what you’ll receive from the Canada Pension Plan (CPP) and Old Age Security (OAS), corporate pensions, rental properties and other investments. Don’t forget to take inflation into account.
Assess continuing contributions. Can’t stomach the up-and-down swings of investment volatility? A more conservative investment might make more sense but know it could mean either putting more money aside in savings each month, rethinking when you’ll retire, or scaling back retirement plans.
Update annually. Crunching the numbers once isn’t enough, Ms. Marques says. Maybe your investments do incredibly well for years – or terribly – and it’s time to change contribution amounts or investments. Or maybe you decide travelling just isn’t as important to you after all and you’ll need less to retire on.