For Financial Literacy Month, we are putting together a three part series on the national epidemic that is financial illiteracy. The first of the three parts will focus on identifying what the problem is, captured through statistics on financial literacy, particularly among females. Next week, the second part will focus on what the causes of the problem are. Lastly, the third part (which will be released in two weeks) will focus on what we can do, and are doing, to help combat this crisis.

Part 1: Identfying The Problem

As the old saying goes, the first step in solving a problem is acknowledging you have one. Well, cue Tom Hanks…

Except it’s not just Houston on alert, it’s the entire United States–and the rest of the world for that matter. In this article, we will take you through some of the most baffling and disturbing statistics on the matter, starting with the country as a whole, and then focusing on women specifically and the gender financially literacy gap. Without further ado… number one.

1. 40% of Americans don’t have enough cash to cover a $400 emergency.

While this may seem shocking, this is the reality for many Americans. Raise the $400 emergency to $1000 and the amount of people not prepared rises to 61% (see graphs below). It is not as if people are not being hit with financial emergencies either. According to CNBC, 34% of Americans faced a major financial emergency within the last year.

This leads me into stat number two, which certainly won’t make you feel better…

2. American financial literacy rates are DECREASING.

You would think with the amount of information readily available to the average American, he/she would have a better understanding of personal finance. Well, you would be wrong. Every three years, FINRA-the major US financial regulator-surveys the population. Below are their results.

Likely some of you out there, particularly those who have been around the block once or twice, might have the answer to this. “It’s those millennials,” you’ll say, and you’ll actually be right, well at least partially, because…

3. 76% of millennials lack basic financial knowledge

That’s right. While millennials may know how to ride hoverboards and do anything on their phones, over three out of four failed to demonstrate basic financial knowledge when tested. This matters a lot because of the rising student loan debt crisis that you may have heard about (see below).

So, what happens when you couple a large amount of debt with an individual who has a poor understanding of how to pay it off?

4. Over 40% of student loan borrowers are either not making payments or are late on payments.

This is from a WSJ article published back in 2016 as well, so we can only assume this number has risen with the increase in student loan debt. This will only contribute to more debt in the future because of interest, but the people paying these loans don’t have an accurate understanding of how interest works. Obviously, this greatly effects their ability to put away money for things like buying a home or retirement, which leads us to stat number five.

5. Nearly half of all Americans do not have a retirement savings account.

Now, as easy as it would be to continue to throw this at the feet of millennials, we cannot do that because the data tells a different story. In fact, nearly 40% of people aged 56-61 do not have retirement accounts! These are people who are likely to retire within the next ten years of their lives, and they do not have a retirement account.

And if we dive into the numbers, we see an even scarier picture. 

6. The median retirement savings account has only $5000 in it. 

Granted, you might assume that this number is low because of the amount of young people who have not started saving seriously yet. However, even for those approaching retirement (56-61), the median retirement account has only $17,000.

While these numbers are low across the board, data shows that some demographic groups are in much more dire straights than others come retirement.

7. Women, particularly married women, have far lower income throughout retirement (scroll down on graph).

As you can tell from the graphic, women, minorities, and those with lower education levels tend to have the lowest savings rates. As to why women have lower income in retirement, one only needs to look at a breakdown in the types of income to understand why.

8. Women are relying almost entirely on social security for retirement (scroll down on graph).

As you can see in the graph below, women, particularly unmarried women, are relying extensively on social security for their retirement income. For married and unmarried women alike, social security makes up the lion’s share of their retirement income.

Where did this disparity come from? Well…

9. Women live longer than men, work less time due to child raising, and earn less income when they are working.

These three factors are quite well known and well documented. The combination of the three factors means women will often earn significantly less money throughout their lives, and the money they do earn will have to last them longer. Further, many women outlive their husbands, which can make retirement even more challenging.

10. Lastly, women are significantly less financially literate than men.

We will explore the reasons for this in part two of this series (they are quite complex and have everything to do with home life, schooling, and identity). For now, let’s consider the impact of this statistic, since it is vitally important and why RTSWS cares about increasing financial literacy among women. If women are making less throughout their lives, and then investing less due to financial illiteracy (both of these we know to be true), then the gender wage gap that we know all about actually COMPOUNDS throughout a woman’s lifetime, leading to a huge gender retirement gap (seen in statistics seven and eight). What is causing this? Read on in part two…

To cap Women’s History Month, we decided to look into the achievements of women in American financial history. This research turned up interesting stories about some women who we had previously heard of and some we had not. However, the research actually revealed a more interesting story and a startling trend. The trend? The amount of time between financial achievements for women. The story? Each woman (or pair of women, in one case) stood as lone successes bucking the predominant narratives of their time.

While we respect these women and want to pay our dues (we will tell you about them and their contributions), we wanted to change the narrative of the traditional women’s history post. We decided not to focus as much on what has happened, and instead to focus on what might happen. With that, we start our journey through female financial history.

The Road So Far 

1776

Abigail Adams, largely recognized for being the wife of one president and the mother to another, accomplished much more than that. She was one of the most important women in early U.S. history as her husband John frequently trusted and sought out her opinion, both during the American Revolutionary War and while he was president. She was an early women’s rights advocate and abolitionist.

She was also the first female investor in the United States. John not only trusted her opinion on political matters, but on financial ones as well. During the revolution and thereafter, John handed over the reins of the family finances with the charge of purchasing more farmland and renting it out for a profit. Proving that women don’t always “play it safe,” she instead invested significantly in government and war bonds–risky investments in the new country. Her risky but savvy strategy wound up nearly quadrupling her initial investment. Her success at investing played a large role in the Adams family’s wealth, compared to other presidents of the time, such as Thomas Jefferson, who died with roughly $2 million dollars of debt (in 2015 U.S. dollars).

1872

Yup, that’s right. It took almost another 100 years for another woman (or pair in this case) to break through as financial successes. Victoria Woodhull is a slightly lesser known name than Abigail Adams, though some feminists and history enthusiasts might recognize the name. Woodhull was a leader in the women’s suffrage movement, and the first women to run for U.S. President, way back in 1872. 

Shortly before running for president, Victoria Woodhull and her sister, Tennessee Claflin, became the first female stockbrokers in 1870 when they opened a brokerage firm on Wall Street. There was a lot of initial buzz around their firm, though most assumed they would fail in their endevours. Instead, “Society wives and widows, teachers, small-business owners, actresses, and high-priced prostitutes and their madams sought the company of the sisters (in the women-only backroom),” which made the firm “an immediate finanical triumph.” They made a fortune off of these investments, as well as on the money Cornelius Vanderbilt invested with them, contributing to his own large fortune.

Late 1800s

Flash forward another 20 years or so and you will stumble upon Hetty Green. Before there was a “Wolf of Wall Street,” there was a “Witch of Wall Street.” This was the nickname Hetty Green came to be known by for her financial prowess and notorious frugality (because of course a successful women is a witch). Green was likely the richest woman in America at the time, and was seen as an unusual occurrence, as she was one of very few female financiers. Fun fact about Green: after her first husband died and she had already built a sizeable fortune, she made her second husband sign a prenuptual agreement to ensure that her children’s fortune would be safe.

1967

Over half a century after multiple women had shown their financial capabilities, Muriel “Mickie” Siebert became the first women to own a seat on the New York Stock Exchange. Siebert allegedely asked ten men to sponsor her application, with the first nine denying her.

2017

On January 1, 2017, Adena Friedman assumed the role of President and Chief Executive Officer of Nasdaq, becoming the first woman to do so. This happened almost exactly 50 years after Siebert became the first woman to sit on the NYSE.

Present Day

Women make up:

35.5% of investment advisors
23% of CFPs
19% of Chief Investment Officers at institutional investors
18% of CFAs
11.7% of private equity executives
9% of mutual fund managers
8% of venture capital investment professionals
2.5% of hedgefund managers

This is progress. But it isn’t enough. We have known for 250 years that women are not just capable, but exceptional in financial roles.

Imagining A Brighter Tomorrow

Now let’s imagine the history lessons we will talk about 50 years from now. What if major occurences in women in finance didn’t happen every 50 years? What if they happened every five years? What if they happened day by day, incrementally? Let’s imagine what that would look like.

2019

The first cohort (2014) of RTSWS students graduated from college. They majored in finance, economics, and business degrees at significantly higher rates than their female peers because they had seen their mentors do it, and created lasting friendships with other women who dreamed of making an impact on the world of finance. They pushed each other to stay in the major, despite the fact that they were often one of only two or three females in their classes.

2026

The 2018-2019 RTSWS cohort graduated from college this year. An amazing 65% of them decided to major in finance or a related field. Some of their older friends and siblings who had completed the program had already begun financial careers. Motivated by this and having learned career advice from RTSWS, these young women pursued internships in these companies, using the connections they had to both their RTSWS mentors and other alumnae from the program as valuable networking resources.

2033

Women now make up 50% of investment advisors. Higher level positions were still largely held by men, but the culture in the world of finance started to change as more women entered the field. Almost no RTSWS alumnae dropped out of financial careers, as they did not feel the alienation their predecessors did. This was due to the amount of female colleagues they had to support them in pursuing their dreams.

2037

With fewer women dropping out of the profession, the amount of women in senior level financial positions started to climb. A RTSWS alum opens her own boutique firm. Women now make up 50% of CFAs. Many of these women decided to give back and volunteered with RTSWS to help inspire the next generation of girls.

2044

It is now 25 years since 2019. 100% of the women who participated in the RTSWS program invest in some manner. While only about half work in finance, the other half followed the advice from the program and made sure to set up savings accounts and retirement accounts they contribute to regularly. They used the skills they learned from RTSWS to budget in the money specifically for these accounts.

2051

50% of senior analyst positions are now held by women. RTSWS alumnae started to reach C-level positions at major financial institutions. Many RTSWS alumnae have decided to open their own firms, preferring the independence and the ability to set their own culture.

This Doesn’t Have To Be Fictional

The facts and figures used in the second half of this piece are speculative. They are optimistic outlooks on what women could do if we encourage them from a young age to believe in their own ability, whether in finance or any other field. While these figures are certainly optimistic, that does not mean they are unrealistic. We can create this history. But it starts with our actions today. 

Who Are They?

An asset management and financial planning company based in Overland Park, KS (Greater Kansas City area) and founded in 1937.

What Did They Do For International Women’s Day?

Quite a lot actually. They started the day off by announcing their new partnership with RTSWS, making Kansas City the latest city to join our family of chapters (with more to come in the 2019-2020 academic year). Waddell & Reed will sponsor a local high school, providing young women who join the program with a year-round curriculum involving financial projects in the fall, a field trip to the Waddell & Reed offices, and mentoring in the spring.

On top of that, CEO Philip J. Sanders signed the CEO Action for Diversity & Inclusion™ pledge (photo below), acknowledging that the organization will act to cultivate trust, diversity, flexibility and understanding. The CEO Action pledge currently has been signed by more than 600 CEOs nationwide, representing 85 industries and more than 50 academic institutions or associations. By signing the pledge, Waddell & Reed will take specific actions to advance an open and empowering environment.

Waddell & Reed also hosted a panel discussion featuring key female leaders at the company. The panel, livestreamed to all employees across the country, focused on mentorship, leadership, opportunities and challenges faced by women in the workforce and the importance of having a Culture of Belonging.  “Through understanding and leveraging our diverse experiences, we can build a stronger culture, which leads to an enhanced outcome for our clients across all aspects of our business,” said Sanders.

Who Are They?

What Did They Do For International Women’s Day?

Leading up to International Women’s Day, their Talent Acquisition team joined forces with the Women’s Networking Group to host a reception for Omaha-area college students and current TD Ameritrade interns. The event’s theme—A Woman’s Career—brought the topic of women’s advancement in the financial services industry to center stage. At the event, Judy Ricketts, managing director, Investor Services shared how she made her way to lead in the financial services industry. Lee McAdoo, managing director, Financial Resiliency, discussed the importance of having women succeed as financial services professionals. The event concluded with a panel Q&A where Associates from across the firm answered questions and gave their advice about work-life balance, career advancement and their experience at TD Ameritrade

On Friday, March 8, TD Ameritrade celebrated International Women’s Day by wearing purple, networking at location events, holding leadership panel discussions, and snapping photos together for social media to share their perspectives on this year’s theme #BalanceForBetter. Deb Baker, managing director of Corporate Security and their 2018 Impact Award winner, was this year’s featured keynote speaker to cap off the day. Live from Omaha and broadcast to their locations across the country, Deb shared her personal journey of striving to maintain balance while navigating through her “unconventional” career path.

Who Are They?

One of the largest commercial and investment banking institutions in the world, headquartered in New York, NY.

What Did They Do For International Women’s Day?

Leading up to and after the event, JP Morgan promoted their “Women on the Move” initiative,  a global, firm-wide initiative that empowers female employees, clients, and consumers to build their careers, grow their businesses, and improve their financial health.

They promoted internal dialogues around what it means to support women in the workplace through a series of interviews on social media as well as open forums at their offices around the globe.

Who Are They?

What Did They Do For International Women’s Day?

Honda took to social media to share its support for International Women’s Day. They created the #WomenTakeTheWheel campaign, where they showcased some of the female leaders around their company and asked them how they “take the wheel.”

Who Are They?

A national life insurance company that offers annuities for retail investors and fixed income products for institutional investors, based in Lansing, MI.

What Did They Do For International Women’s Day?

On International Women’s Day, Jackson promoted this article on social media. The article, titled “The Math Of Being A Woman: How To Beat The Gender Retirement Gap,” was written by one of Jackson’s own female employees. The article details the many factors causing women to typically have lower retirement savings, from living longer, to spending lest time in the work force due to maternity leaves, and explains how the financial services industry can help solve the gender retirement gap.

Latest news from Rock The Street, Wall Street

RTSWS Welcomes New Board Member

Anders is the fourth new board member to join RTSWS this year, following the addition of three new board members in January.

Board Member Covered by Financial Blog

Read The Belle Curve’s Latest Article on the charismatic speaking of Meredith Jones and some eye-catching statistics about women in finance…

Strong 2018 Shows Promise For 2019

RTSWS more than doubled the number of its cities from 6 to 13 in 2018. Since its founding in 2013, more than 1,750 girls have gone through the RTSWS program (750 girls in the past year alone). Since our inception, students’ comprehension of financial concepts improved by an average of 97%; 67% report being “very” or “extremely” likely to pursue a major or minor in finance, economics, or business.

Rock The Street, Wall Street’s latest addition, Kansas City, is one of several new cities scheduled to join our programming ranks for the 2019/20 academic year. This, coupled with more schools and sponsors in existing cities, mean RTSWS is on track to have its greatest impact yet in the upcoming 2019/20 school year.

Weekly Spotlight

We’re bringing attention to the rock stars who help make RTSWS the success it is. This week, we’re starting with a student who tells us how we changed her opinion on math and her course selection. 

Lillian Dacke, Student at VR Eaton High School, Ft. Worth, TX

“Rock the Street, Wall Street has helped me understand that math is extremely important, not only just in accounting and applying it into anything that TD Ameritrade does, but also in everyday life.

I’ve taken a lot of new classes this year that, because of Rock the Street, Wall Street, I already knew what I was going to be doing and I could prepare and study for them properly.”

How Are You Celebrating International Women’s Day?

Email logan.r@rockthestreetwallstreet.com and let us know what your companies are doing to celebrate International Women’s Day. We want to promote all the amazing ways we are building a better tomorrow for our girls.

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LISTEN IN

Dr. Mary Daugherty, Senior Fellow in Applied Finance, University of St. Thomas, St. Paul, MN., shares what she has seen in her undergraduate and graduate MBA classrooms for the past thirty years.

• How few female students enroll in the investment classes.
• How the loss of girls in math classes starting in middle school results in a brain drain of women in math classes at high school and university levels.
• How current societal norms in the U.S. suggest it’s ok for girls to say “I can’t do math”.  
• Women and pricing risk – How it leads to them taking “safe” jobs in finance.
• Pitching – How the men in the room are “… just spewing it out!”
• In 30 years, I have never seen…
• How RTSWS gets to the girls earlier to learn about the power of being financially literate and how diverse a career in finance can truly be.

WE BREAK STEREOTYPES

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