Money & Millennials: Q&A with Barbara Stewart, CFA

Regarded internationally as a personal finance expert, Barbara Stewart has initiated an important dialogue around women and investing. This past March, Barbara released the seventh instalment of her Rich Thinking series, coinciding with International Women’s Day.

Designed to instigate conversation and industry engagement, Rich Thinking acts as a think tank for women and money, collecting research to better understand the trends and evolving relationship between women and their personal finances as well as promoting general financial literacy. The Rich Thinking conclusion? Women manage their finances with great aptitude and there is a lot of momentum with younger generations who are looking for a more modern approach.

A contributor to the CFA Institute’s Enterprising Investor, Barbara is a frequent keynote speaker at global events, having participated in events across four continents. As a former portfolio manager with 25 years experience in the investment industry, Barbara has witnessed and participated in a great socio-economic change amongst Canadians, and we’re grateful for her perspective and contributions.

Here, Barbara shares with us her experience and thoughts on the state of female and millennial investors today.

Voleo: You’ve had the opportunity to speak with many millennials about their feelings regarding investing. What was the majority sentiment around investing, the stock market, and preparing financially for the future?

Barbara: In the first quarter of this year I hosted millennial focus groups in North America, Europe and Asia. The most common sentiment globally was the need for clarity and simplicity around both investor education and the investing process. Most of the millennials that I spoke with (across all cultures) are interested in learning more about financial matters but there is a great deal of frustration with the current offerings with the major financial institutions.

Most of the millennials that I spoke with (across all cultures) are interested in learning more about financial matters but there is a great deal of frustration with the current offerings with the major financial institutions.

For example, the online user experience (UX) came up time and time again in my discussions. It is critical that banks ensure that their online experience is simple. As one of the participants said “Dealing with money conjures up fear, nervousness, and a sense of complexity for many people. Intuitive design could calm many of these emotional responses.”

Additionally, there needs to be much more focus on financial literacy. Millennials feel strongly that education should be part of any financial offering. It is the responsibility of the institutions to do their utmost to ensure that people make informed financial decisions. There needs to be a duty of care for the financial education of the public.

Additionally, there needs to be much more focus on financial literacy. Millennials feel strongly that education should be part of any financial offering.

And when it comes to advice, millennials want to do business with genuine, well-qualified, intelligent people who can cut through the noise and offer real help in a timely manner. They want to be treated as equal customers, and by someone who can truly relate to them and focus on giving them a useful experience.

What was your advice to them?

In terms of dealing with the major financial institutions, it could be a while before we see big changes in their service offerings. But meanwhile, millennials feel (rightly) that their time is valuable and they don’t want to have to spend two hours in someone’s office discussing what “could” work. They also have strong ‘B.S. detectors’ so if they sense any kind of sales pitch it is a non-starter. So what to do?

Millennials have strong ‘B.S. detectors’ so if they sense any kind of sales pitch it is a non-starter.

In my Toronto focus group one of the female participants shared her approach to dealing with the status quo in the banking system. She takes it upon herself to ‘manage’ the conversation with her banker. As she suggested to the group, it is their right as a customer to go in and advocate for themselves: “Here is exactly what I need – these five things – and I need these five things to get done by the end of today.” This direct approach can be very effective and the advice they receive will be more customized to their needs.

My advice to millennials who are looking to educate themselves about financial matters is to jump right in and get started investing. Don’t overthink it. Don’t wait for the perfect type of advice.

My advice to millennials who are looking to educate themselves about financial matters is to jump right in and get started investing. Don’t overthink it. Don’t wait for the perfect type of advice. Take 5% of your investable assets and practice. Use real money. Fully participate in the investing process and learn by doing. There has been an explosion in the growth of new trading platforms around the world and many of them offer excellent financial education and they also provide the user with a clear, concise experience. Whether you choose to invest on your own or via a more social platform (like Voleo!) the important thing is to just get started.

Whether you choose to invest on your own or via a more social platform (like Voleo!) the important thing is to just get started.

For the millennials who tell me that they are looking for sophisticated investment advice, my strong suggestion is not to worry so much about the institution, look for a person who has the CFA (Chartered Financial Analyst) designation. There are so many different certifications in the investment industry but most are relatively easy to acquire and none have the same rigorous focus on ethics. I can also tell you that it isn’t possible to simply memorize some textbooks and pass the CFA exams: this designation is the gold standard internationally for the investment industry.

CFA charterholders will be able to speak the language of millennials – the curriculum now incorporates study in the areas of machine learning, artificial intelligence, big data, and robo-advisors. Finally, I am happy that the ratio of male-female CFA exam candidates is now nearly 50%!

What was your entry point into finance; what led you into a financial sector career?

I was working for Xerox in sales and as I progressed I earned the opportunity to sell to the coveted Bay Street territory of foreign banks and brokers. I first walked into a trading room in 1991 and let’s just say it “had me at hello.” 😊

I was drawn to the excitement, the fast pace, the adrenalin, and the vivid personalities.

I was drawn to the excitement, the fast pace, the adrenalin, and the vivid personalities. I knew then that I wanted to work in international finance and a trading room was the ideal environment to learn about stocks, bonds, interest rates and currencies. It took me 47 interviews (with six different banks or brokers) and finally someone took a chance on me and I started in the world of foreign exchange trading.

From there I became more and more interested in deepening my understanding of how markets work from a technical perspective so I decided to pursue the CFA designation. As my breadth of knowledge expanded, my interests evolved and I then opted for a career in wealth management as a portfolio manager.

With there being such a focus on gender equality, why do you think it is that women still invest less and view it as less of a priority?

It is widely known that the broader female population tends to be under-exposed to exchange-listed equities. But let’s take a look at why that was the case and why this won’t be the case for much longer in my view!

Historically, relatively few women knew much about finance because they didn’t need to! They often didn’t have jobs, they didn’t make money and if they inherited money someone else would manage it for them (usually their brother, husband or father.) But today, in the era of women as money makers, women as executives, and women as financial decision-makers, most women, both young and old, now need to know about finance.

We are on the cusp of a massive shift in socialization and millennials in particular are driving the change.

In short, we are on the cusp of a massive shift in socialization and millennials in particular are driving the change. All around the world I see young women who are interested in buying stocks, they are becoming knowledgeable about investing and they are talking (in some cases bragging!) about their performance returns. And women love to share so this excitement around investing is catching.

What is the most commonly held misconception about investing in the stock market?

Many people think that investing is mysterious, complicated and equivalent to gambling. But as with everything it depends on the context. If you buy companies with a business model that you understand and that align with your personal values, you will be more likely to have a comfort level with your investment. As I said earlier, the best way to get comfortable is to practice. Keep it simple. Buy a stock. Sell a stock. It won’t take long before investing becomes a habit.

How have you decided where to allocate your investments, and what do you consider your investment priority?

Although I have a CFA designation and I have had close to 25 years experience working in the investment industry, my passion these days is my Rich Thinking research. It is important to be honest with yourself and decide how much involvement you want to have with day-to-day investing.

I am very comfortable with my “hands-off” decision to invest for the long-term in three different ETFs (exchange traded funds) that effectively provide me with broad exposure to global markets. My investment priority is to “be in the market.”

How often do you check your stocks or portfolio?

About once a month. After so many years of working in the industry I am hyper-aware of what global markets are doing in general so staring at my portfolio isn’t really going to tell me much that I don’t already know.

When do you do the majority of your investing?

Anytime, anywhere. My lifestyle is such that I make sure that I am set up to invest any time I feel like it, using an online platform, and from wherever I am in the world.

How much research do you do, and what kind of research do you do, before clicking “buy” on a stock?

My focus is ensuring that I remain invested in a broadly diversified global portfolio so that I meet my long-term objectives. I don’t do any research. I want to be as hands-off as possible at this stage of my life.

And on a more personal note, what is your morning routine?

My routine varies quite a bit depending on where I am in the world. The one commonality is coffee! I have my regular coffee spots in all of the cities that I visit and this in fact is a great source of comfort. When I’m home in Toronto, I get up early, grab my cup of coffee and take Hank (my Bernese Mountain Dog) out for a walk around the park near my house. In Stockholm, there is a chain called Espresso House that I love, but no dog to walk!

What do you wish you could tell your 25 year old self?

Don’t spend your time and effort trying to please your parents. There is a great big world out there. Create your own life!

Thank you to Barbara for taking the time to share her experience, and candid answers, with us! Read her Rich Thinking white papers here and follow her on twitter here.

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