Tuesday, 30 June 2009

How To Raise A Rich Daughter

Brown Heidi,
06/29/09 19:00:10 GMT

How To Raise A Rich Daughter

Women hold half of the investable wealth in the U.S. and account for 43% of all Americans who have a net worth of $1.5 million or more. Yet only 10% of asset managers are female, says a new report from the National Council for Research on Women.

Recent studies show that, as with other areas of business, women make investment decisions differently from men. They consider contradictory information and study company fundamentals more carefully before investing. Over the long term, funds run by women, who tend to be more risk-averse in general, outperform those of men. The Hedge Fund Research Diversity Index, for example, which has 50% female managers, returned an annual average 8.21% since 2003, while the broader index returned 5.98%.

That's all well and good, until you consider that many women simply aren't going into finance. The NCRW says a major cause of the dearth of women in finance is the "pipeline"--the supply of future finance professionals. Not enough girls and young women even consider finance as a career choice, so there are fewer candidates for finance jobs and even fewer women-run funds. In part, this stems from girls' lack of interest in science and math--even though studies have shown they have the same aptitude as boys.

The problem starts early, explains Barnard College President Debora Spar, who spoke at a NCRW conference earlier this week.

Part of this might be due to computer games used in schools. Math-based games, noted Spar, are almost always of the "shoot-em-up" variety which appeal to boys; whereas games which the girls prefer such as "Dora the Explorer" are not math-based. Multimedia math tools and early learning toys that appeal to girls are needed, said Spar.

Anecdotally, she said, years ago she taught an elementary school math class; both sexes did equally well at the subject. But within eight months, she saw girls' interest in math wane, while boys remained engaged.

Once in high school, most female students "tend to focus on application-based information," she said. "They think, 'How will trigonometry help me in the real world?' A guy, by contrast, might take finance classes because his friend is doing it or his father's golf buddy is on Wall Street."

To engage girls in math, Spar thinks more female math teachers, from elementary school through college, would help enormously. The National Bureau of Economic Research released a study in May that looked at the difference in math and science performance between male and female students at the U.S. Air Force Academy and found that women who have female math professors tend to stick with the subject until graduation.

But many math departments have few, if any, women math teachers.

A brief survey of three schools show this playing out: At Caltech two of 18 math professors are women, at the University of Virginia four of 28 math professors are women and at the University of Chicago zero out of 32 math professors are women.

With so few women in the pipeline, investors are losing out by not benefiting from women's prudence and women are losing out by not gaining access to the basis of power: big money.

Keep reading at ForbesWoman.


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