INFLUENCE OF WOMEN ON INVESTING

I have thoroughly enjoyed teaching a series of investment classes exclusively for women. Their thirst for knowledge and desire to take control of their financial lives is exciting. As women continue to assert their economic power, the world in which we live and the investors who live in it, need to be prepared for the changes that will come.
 
Women now surpass men in obtaining new college bachelor degrees, and even more so with graduate degrees.  As they do so they are becoming an increasingly powerful force in business and in government. In 2015 I read a study by Morgan Stanley that found women, as investors, were interested in investing their money with companies they perceived as having a positive influence on society.
 
Along those lines I attended an investor forum focused on the relatively new concept of “Purpose Driven Companies.” We are all aware of the practice of posting a “Mission Statement” on a company wall. These statements often talk about promising great customer service, high quality products and integrity in operations. Sometimes they can become a bit repetitive with many feeling like they were written from the same template. I wonder how often a customer decides to do business with a company based upon the ubiquitous mission statement posted on the front lobby wall.
 
In the forum I attended the speaker went beyond a company mission and focused on a company’s purpose for existing. He pondered exactly what value the company actually brought to society over and above the obvious goal of keeping customers happy and providing profits to shareholders. He ended his message with this soul searching question. He asked, “If your company ceased to exist, would anyone care?”
 
I was fascinated with the concept. I started asking that question quietly to myself when I analyzed companies for potential investments. I began looking at companies differently, looking beyond their financial health and considering whether their products or services were even needed. And if not needed, how long could it possibly survive? Pet Rocks came to mind, along with a huge list of ridiculous products that seem to appear at Christmas time.
 
There are certainly many long standing and successful companies that produce products the world could do without, and several that produce products and services that the world would be better without. As women rise in economic power, and who by most estimates will dwarf men in a decade or so in their control of wealth, it would be foolish not to consider how this might affect the companies many are investing in today. If it’s true that women tend to favor companies that provide a positive influence on society, then a purpose-driven approach to business and investing would seem to make sense.
 
Women will change the way the world invests. Investors who cannot keep up with that change may one day find themselves holding a portfolio full of pet rocks, about which, though profitable for a time, no one cared when they faded away.