How women and men approach money differently: risk, investment, and return
Women have different financial strategies and insight than men, argues Sallie Krawcheck, the co-founder and CEO of Ellevest, a digital investment platform for women.
Sallie Krawcheck is a financial feminist, CEO and Co-Founder of Ellevest, a recently launched innovative digital investment platform for women. She is the Chair of Ellevate Network, the global professional women's network, and of the Pax Ellevate Global Women's Index Fund, which invests in the top-rated companies in the world for advancing women. She is also the best-selling author of Own It: The Power of Women at Work.
Before becoming an entrepreneur, she was CEO of Merrill Lynch Wealth Management, of Smith Barney and of Sanford Bernstein. Krawcheck has also been named among the top ten of Fast Company's "100 Most Creative People" in business list, as well as one of Entrepreneur Magazine's Entrepreneurs to Watch. and she has also been referred to as one of the most successful and influential executives in financial services.
So if you think about investing today it tends to be all about outperforming the market. It tends to be about making more money and it tends to be about picking and choosing the right stock, the right mutual fund. Mutual fund versus an ETF. The right money manager.
And that has worked eh, I was going to say well for the population, but frankly it has worked okay for the population. Why? Because the goal that the industry set itself a long time ago of active management and outperforming the market…well less than one percent, well less than half a percent of money managers outperform the market consistently over any five year period.
Okay, so back up. When we did our research with women the concept of “beating the market” fell completely flat. The concept of “winning” fell flat. In fact, even the concept of “making more money” fell pretty flat—sort of surprising to me, it seemed like a pretty good goal.
What worked for women were actual goals. So okay, if I’m going to put my money aside and invest my money, I want to be able to in X number of years buy my dream home, have a child, start a business, retire well, take that trip around the world that I wanted to. And so we found that women tend to be more goals-oriented and focused than men.
Another finding for us: Men tend to, if you ask them the question about their risk tolerance—which, by the way, the whole industry does—men will answer. By the way, they don’t know what it is. We only ever learn what our risk tolerance is really when we go through downturns.
But women we found were, “Oh, oh my gosh. You know what, I’m going to think about that. Let me think about that and I’ll get back to you.” And they never do. It really shuts down the conversation.
And so we instead of asking a question we know people don’t have the wherewithal to answer, instead we say “Okay, let us learn about you through taking you through the product and the capability. Tell us what your goals are and then we’ll tell you essentially how much risk you can afford.” So for an example you and I are the same person. We make the same salary. We have the same level of education. We’re the same age. And you don’t have an emergency fund so you don’t have cash set aside for a rainy, rainy day and you want to have a baby in four years.
I just need to retire, right. It doesn’t really matter what I think my risk tolerance is. You don’t get a lot of risk. I get plenty of risk.
And so we tweaked things like that as well as really – so making it goals based, approaching risk differently, taking into account again that women live longer and salaries peak sooner, forecasting out their life curves.
And then the most important change we found is that most people think of and describe women as risk-averse investors. What we found, maybe a subtle point, is women are risk-aware investors.
And what they wanted was not hey, explain risk to be in standard deviation and “Let’s really go through that statistical analysis,” but more, “Hold on, how bad can it get?”
And so what we would do is we track you, track women to their goal and say in X percent of markets it could be this bad and in Y percent that bad. And if you fall off track, if you fall off track to reach your goal we’ll reach out to you, tell you you’re off track and tell you what you have to do to get back on. Deposit another thousand dollars, retire six months later. So those are a few of the differences, some of which are straightforward (and others of which are more subtle) that we found were barriers to keeping women from investing.
So I’m the co-founder and CEO of Ellevest, which is an digital investment platform for women. If you had told me a couple of years ago that I should build a digital investment platform for women I would have told you you were sexist. I would have told you it was a really stupid idea. And I would have probably been somewhat disdainful to you about it. And what I would have said was, “You know, women don’t need anything different from men. What do you think, our lady brains can’t handle the big man-brain numbers?”
But then one morning I had an insight, which is the retirement savings crisis in this country is really a women’s issue and a women’s crisis. We retire with two-thirds the money of men and we live six to eight years longer. Eighty percent of nursing home residents are women.
So it really is, while we’re not used to thinking about it through a gendered perspective, it is really a women’s issue. That changes the solutions. They go from being all about tax increases and entitlement cuts to being about women having more money.
So how do we get women more money? Well there are a lot of people working on the gender pay gap and they gender work achievement gap, but it struck me at about the same time that there’s a gender investing gap.
That it costs women hundreds of thousands of dollars, some women millions of dollars over the course of their lives, because they don’t invest as much as men do. We women tend to blame ourselves. “Oh, I need more financial education. I really need to dig in and do this. I just have to find the right company.”
But it struck me as I sort of dug into it that maybe the problem is not ours as women. Maybe the challenge is that it’s an industry that’s by men, for men. That 86 percent of financial advisors are men, and that number has head steady for forever. And as a result it just fits men better.
And the words they use: Beat the market, outperform, pick a winner are words of war and sports. The investing TV is like watching sports Sunday, and the industry symbol is a bull, so it’s a phallic symbol. So in every way it’s sort of set for men.
Include the fact that men will invest through jargon and women won’t.
And you have an industry that doesn’t feel right for women. So we decided to dig in and change not just the marketing. Lots of people market to women, but the underlying product as well to take into account what we were learning about women and how they invest. And to take into account the fact that we live longer. That’s important when you’re forecasting how much income you need for retirement. Our salaries peak sooner. That’s completely unfair, but is important when putting together financial and investing plans.
Women have different financial strategies and insight than men, argues Sallie Krawcheck, the co-founder and CEO of Ellevest, a digital investment platform for women. Female investors have a different sense of why they want to make money, pursue specific goals more readily, and show a unique sense of risk awareness. Krawcheck says it's important for women to play the market and plan financially because there is a real retirement savings crisis in this country which disproportionately affects them.
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Northwell Health is using insights from website traffic to forecast COVID-19 hospitalizations two weeks in the future.
- The machine-learning algorithm works by analyzing the online behavior of visitors to the Northwell Health website and comparing that data to future COVID-19 hospitalizations.
- The tool, which uses anonymized data, has so far predicted hospitalizations with an accuracy rate of 80 percent.
- Machine-learning tools are helping health-care professionals worldwide better constrain and treat COVID-19.
The value of forecasting<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTA0Njk2OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMzM2NDQzOH0.rid9regiDaKczCCKBsu7wrHkNQ64Vz_XcOEZIzAhzgM/img.jpg?width=980" id="2bb93" class="rm-shortcode" data-rm-shortcode-id="31345afbdf2bd408fd3e9f31520c445a" data-rm-shortcode-name="rebelmouse-image" data-width="1546" data-height="1056" />
Northwell emergency departments use the dashboard to monitor in real time.
Credit: Northwell Health<p>One unique benefit of forecasting COVID-19 hospitalizations is that it allows health systems to better prepare, manage and allocate resources. For example, if the tool forecasted a surge in COVID-19 hospitalizations in two weeks, Northwell Health could begin:</p><ul><li>Making space for an influx of patients</li><li>Moving personal protective equipment to where it's most needed</li><li>Strategically allocating staff during the predicted surge</li><li>Increasing the number of tests offered to asymptomatic patients</li></ul><p>The health-care field is increasingly using machine learning. It's already helping doctors develop <a href="https://care.diabetesjournals.org/content/early/2020/06/09/dc19-1870" target="_blank">personalized care plans for diabetes patients</a>, improving cancer screening techniques, and enabling mental health professionals to better predict which patients are at <a href="https://healthitanalytics.com/news/ehr-data-fuels-accurate-predictive-analytics-for-suicide-risk" target="_blank" rel="noopener noreferrer">elevated risk of suicide</a>, to name a few applications.</p><p>Health systems around the world have already begun exploring how <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7315944/" target="_blank" rel="noopener noreferrer">machine learning can help battle the pandemic</a>, including better COVID-19 screening, diagnosis, contact tracing, and drug and vaccine development.</p><p>Cruzen said these kinds of tools represent a shift in how health systems can tackle a wide variety of problems.</p><p>"Health care has always used the past to predict the future, but not in this mathematical way," Cruzen said. "I think [Northwell Health's new predictive tool] really is a great first example of how we should be attacking a lot of things as we go forward."</p>
Making machine-learning tools openly accessible<p>Northwell Health has made its predictive tool <a href="https://github.com/northwell-health/covid-web-data-predictor" target="_blank">available for free</a> to any health system that wishes to utilize it.</p><p>"COVID is everybody's problem, and I think developing tools that can be used to help others is sort of why people go into health care," Dr. Cruzen said. "It was really consistent with our mission."</p><p>Open collaboration is something the world's governments and health systems should be striving for during the pandemic, said Michael Dowling, Northwell Health's president and CEO.</p><p>"Whenever you develop anything and somebody else gets it, they improve it and they continue to make it better," Dowling said. "As a country, we lack data. I believe very, very strongly that we should have been and should be now working with other countries, including China, including the European Union, including England and others to figure out how to develop a health surveillance system so you can anticipate way in advance when these things are going to occur."</p><p>In all, Northwell Health has treated more than 112,000 COVID patients. During the pandemic, Dowling said he's seen an outpouring of goodwill, collaboration, and sacrifice from the community and the tens of thousands of staff who work across Northwell.</p><p>"COVID has changed our perspective on everything—and not just those of us in health care, because it has disrupted everybody's life," Dowling said. "It has demonstrated the value of community, how we help one another."</p>
New research suggests you can't fake your emotional state to improve your work life — you have to feel it.
What is deep acting?<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNTQ1NDk2OS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxNTY5MzA0Nn0._s7aP25Es1CInq51pbzGrUj3GtOIRWBHZxCBFnbyXY8/img.jpg?width=1245&coordinates=333%2C-1%2C333%2C-1&height=700" id="ddf09" class="rm-shortcode" data-rm-shortcode-id="9dc42c4d6a8e372ad7b72907b46ecd3f" data-rm-shortcode-name="rebelmouse-image" data-width="1245" data-height="700" />
Arlie Russell Hochschild (pictured) laid out the concept of emotional labor in her 1983 book, "The Managed Heart."
Credit: Wikimedia Commons<p>Deep and surface acting are the principal components of emotional labor, a buzz phrase you have likely seen flitting about the Twittersphere. Today, "<a href="https://www.bbc.co.uk/bbcthree/article/5ea9f140-f722-4214-bb57-8b84f9418a7e" target="_blank">emotional labor</a>" has been adopted by groups as diverse as family counselors, academic feminists, and corporate CEOs, and each has redefined it with a patented spin. But while the phrase has splintered into a smorgasbord of pop-psychological arguments, its initial usage was more specific.</p><p>First coined by sociologist Arlie Russell Hochschild in her 1983 book, "<a href="https://www.ucpress.edu/book/9780520272941/the-managed-heart" target="_blank">The Managed Heart</a>," emotional labor describes the work we do to regulate our emotions on the job. Hochschild's go-to example is the flight attendant, who is tasked with being "nicer than natural" to enhance the customer experience. While at work, flight attendants are expected to smile and be exceedingly helpful even if they are wrestling with personal issues, the passengers are rude, and that one kid just upchucked down the center aisle. Hochschild's counterpart to the flight attendant is the bill collector, who must instead be "nastier than natural."</p><p>Such personas may serve an organization's mission or commercial interests, but if they cause emotional dissonance, they can potentially lead to high emotional costs for the employee—bringing us back to deep and surface acting.</p><p>Deep acting is the process by which people modify their emotions to match their expected role. Deep actors still encounter the negative emotions, but they devise ways to <a href="http://www.selfinjury.bctr.cornell.edu/perch/resources/what-is-emotion-regulationsinfo-brief.pdf" target="_blank">regulate those emotions</a> and return to the desired state. Flight attendants may modify their internal state by talking through harsh emotions (say, with a coworker), focusing on life's benefits (next stop Paris!), physically expressing their desired emotion (smiling and deep breaths), or recontextualizing an inauspicious situation (not the kid's fault he got sick).</p><p>Conversely, surface acting occurs when employees display ersatz emotions to match those expected by their role. These actors are the waiters who smile despite being crushed by the stress of a dinner rush. They are the CEOs who wear a confident swagger despite feelings of inauthenticity. And they are the bouncers who must maintain a steely edge despite humming show tunes in their heart of hearts.</p><p>As we'll see in the research, surface acting can degrade our mental well-being. This deterioration can be especially true of people who must contend with negative emotions or situations inside while displaying an elated mood outside. Hochschild argues such emotional labor can lead to exhaustion and self-estrangement—that is, surface actors erect a bulwark against anger, fear, and stress, but that disconnect estranges them from the emotions that allow them to connect with others and live fulfilling lives.</p>
Don't fake it till you make it<p>Most studies on emotional labor have focused on customer service for the obvious reason that such jobs prescribe emotional states—service with a smile or, if you're in the bouncing business, a scowl. But <a href="https://eller.arizona.edu/people/allison-s-gabriel" target="_blank">Allison Gabriel</a>, associate professor of management and organizations at the University of Arizona's Eller College of Management, wanted to explore how employees used emotional labor strategies in their intra-office interactions and which strategies proved most beneficial.</p><p>"What we wanted to know is whether people choose to engage in emotion regulation when interacting with their co-workers, why they choose to regulate their emotions if there is no formal rule requiring them to do so, and what benefits, if any, they get out of this effort," Gabriel said in <a href="https://www.sciencedaily.com/releases/2020/01/200117162703.htm" target="_blank">a press release</a>.</p><p>Across three studies, she and her colleagues surveyed more than 2,500 full-time employees on their emotional regulation with coworkers. The survey asked participants to agree or disagree with statements such as "I try to experience the emotions that I show to my coworkers" or "I fake a good mood when interacting with my coworkers." Other statements gauged the outcomes of such strategies—for example, "I feel emotionally drained at work." Participants were drawn from industries as varied as education, engineering, and financial services.</p><p>The results, <a href="https://psycnet.apa.org/doiLanding?doi=10.1037%2Fapl0000473" target="_blank" rel="noopener noreferrer">published in the Journal of Applied Psychology</a>, revealed four different emotional strategies. "Deep actors" engaged in high levels of deep acting; "low actors" leaned more heavily on surface acting. Meanwhile, "non-actors" engaged in negligible amounts of emotional labor, while "regulators" switched between both. The survey also revealed two drivers for such strategies: prosocial and impression management motives. The former aimed to cultivate positive relationships, the latter to present a positive front.</p><p>The researchers found deep actors were driven by prosocial motives and enjoyed advantages from their strategy of choice. These actors reported lower levels of fatigue, fewer feelings of inauthenticity, improved coworker trust, and advanced progress toward career goals. </p><p>As Gabriel told <a href="https://www.psypost.org/2021/01/new-psychology-research-suggests-deep-acting-can-reduce-fatigue-and-improve-your-work-life-59081" target="_blank" rel="noopener noreferrer">PsyPost in an interview</a>: "So, it's a win-win-win in terms of feeling good, performing well, and having positive coworker interactions."</p><p>Non-actors did not report the emotional exhaustion of their low-actor peers, but they also didn't enjoy the social gains of the deep actors. Finally, the regulators showed that the flip-flopping between surface and deep acting drained emotional reserves and strained office relationships.</p><p>"I think the 'fake it until you make it' idea suggests a survival tactic at work," Gabriel noted. "Maybe plastering on a smile to simply get out of an interaction is easier in the short run, but long term, it will undermine efforts to improve your health and the relationships you have at work. </p><p>"It all boils down to, 'Let's be nice to each other.' Not only will people feel better, but people's performance and social relationships can also improve."</p>
You'll be glad ya' decided to smile<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="88a0a6a8d1c1abfcf7b1aca8e71247c6"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/QOSgpq9EGSw?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span><p>But as with any research that relies on self-reported data, there are confounders here to untangle. Even during anonymous studies, participants may select socially acceptable answers over honest ones. They may further interpret their goal progress and coworker interactions more favorably than is accurate. And certain work conditions may not produce the same effects, such as toxic work environments or those that require employees to project negative emotions.</p><p>There also remains the question of the causal mechanism. If surface acting—or switching between surface and deep acting—is more mentally taxing than genuinely feeling an emotion, then what physiological process causes this fatigue? <a href="https://www.frontiersin.org/articles/10.3389/fnhum.2019.00151/full" target="_blank">One study published in the <em>Frontiers in Human Neuroscience</em></a><em> </em>measured hemoglobin density in participants' brains using an fNIRS while they expressed emotions facially. The researchers found no significant difference in energy consumed in the prefrontal cortex by those asked to deep act or surface act (though, this study too is limited by a lack of real-life task).<br></p><p>With that said, Gabriel's studies reinforce much of the current research on emotional labor. <a href="https://journals.sagepub.com/doi/abs/10.1177/2041386611417746" target="_blank">A 2011 meta-analysis</a> found that "discordant emotional labor states" (read: surface acting) were associated with harmful effects on well-being and performance. The analysis found no such consequences for deep acting. <a href="https://doi.apa.org/doiLanding?doi=10.1037%2Fa0022876" target="_blank" rel="noopener noreferrer">Another meta-analysis</a> found an association between surface acting and impaired well-being, job attitudes, and performance outcomes. Conversely, deep acting was associated with improved emotional performance.</p><p>So, although there's still much to learn on the emotional labor front, it seems Van Dyke's advice to a Leigh was half correct. We should put on a happy face, but it will <a href="https://bigthink.com/design-for-good/everything-you-should-know-about-happiness-in-one-infographic" target="_self">only help if we can feel it</a>.</p>
Archaeologists discover a cave painting of a wild pig that is now the world's oldest dated work of representational art.
- Archaeologists find a cave painting of a wild pig that is at least 45,500 years old.
- The painting is the earliest known work of representational art.
- The discovery was made in a remote valley on the Indonesian island of Sulawesi.
Oldest Cave Art Found in Sulawesi<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="a9734e306f0914bfdcbe79a1e317a7f0"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/b-wAYtBxn7E?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
"You dream about these kinds of moments when you're a kid," said lead paleontologist David Schmidt.
- The triceratops skull was first discovered in 2019, but was excavated over the summer of 2020.
- It was discovered in the South Dakota Badlands, an area where the Triceratops roamed some 66 million years ago.
- Studying dinosaurs helps scientists better understand the evolution of all life on Earth.
Credit: David Schmidt / Westminster College<p style="margin-left: 20px;">"We had to be really careful," Schmidt told St. Louis Public Radio. "We couldn't disturb anything at all, because at that point, it was under law enforcement investigation. They were telling us, 'Don't even make footprints,' and I was thinking, 'How are we supposed to do that?'"</p><p>Another difficulty was the mammoth size of the skull: about 7 feet long and more than 3,000 pounds. (For context, the largest triceratops skull ever unearthed was about <a href="https://www.tandfonline.com/doi/abs/10.1080/02724634.2010.483632" target="_blank">8.2 feet long</a>.) The skull of Schmidt's dinosaur was likely a <em>Triceratops prorsus, </em>one of two species of triceratops that roamed what's now North America about 66 million years ago.</p>
Credit: David Schmidt / Westminster College<p>The triceratops was an herbivore, but it was also a favorite meal of the T<em>yrannosaurus rex</em>. That probably explains why the Dakotas contain many scattered triceratops bone fragments, and, less commonly, complete bones and skulls. In summer 2019, for example, a separate team on a dig in North Dakota made <a href="https://www.nytimes.com/2019/07/26/science/triceratops-skull-65-million-years-old.html" target="_blank">headlines</a> after unearthing a complete triceratops skull that measured five feet in length.</p><p>Michael Kjelland, a biology professor who participated in that excavation, said digging up the dinosaur was like completing a "multi-piece, 3-D jigsaw puzzle" that required "engineering that rivaled SpaceX," he jokingly told the <a href="https://www.nytimes.com/2019/07/26/science/triceratops-skull-65-million-years-old.html" target="_blank">New York Times</a>.</p>
Morrison Formation in Colorado
James St. John via Flickr
|Credit: Nobu Tamura/Wikimedia Commons|
The Persian polymath and philosopher of the Islamic Golden Age teaches us about self-awareness.