Recently the internet has been flooded with news coverage about the bronze "Defiant Girl" statue placed in front of the iconic bull on Wall Street in honor of International Women's Day. Being a woman in finance I must admit that I was excited that attention is being called to the gender disparity both with regards to wages and C-suite executive positions in the financial industry.
This symbolic gesture got me thinking about what we could do as women to take matters into our own hands, so that we do not have to wait for big corporations to make space on their executive boards for women.
Many of us speak about the gender wage gap, but few have heard of the greater gendered shortfall: the investment gap.
Women on average have 50 percent less in their retirement accounts than men do. By not investing at early stages, women miss out on thousands of dollars from compound interest lost over time. So, while it's great for a woman to make an equal salary to her male counterpart, he will presumably continue to be much wealthier if he invested even 10 percent of that salary, while a woman puts hers into a traditional savings account.
For example: Let's say Joe and Mary are both 25 years old and both earn $100,000 a year. They make the same salary in the same position. Joe adds $10,000 of his salary into an investment account and it grows at a hypothetical 8 percent per year with annual compounding.
By the time Joe retires in 45 years, he will have saved approximately $4.17 million. Meanwhile, Mary who simply put away $10,000 annually in her savings account ends up with $450,000 in 45 years, roughly $3.7 million less than Joe.
Of course, wages and investment are not a zero-sum game. The purpose is not necessarily to outperform your male colleague, but rather, to achieve financial independence. Until women are financially equal to men, we cannot be discnering in our job choices, in our familial and reproductive choices, and in our relationship choices. Most importantly, as the age-old saying goes "money is power," and until women reach a similar net worth to men, we will be hard-pressed to see an equal amount of women land C-suite positions.
You might ask yourself why more financial professionals aren't speaking directly to women about the investment gap. The fact is, the industry has been dominated by men, with women representing only approximately 15 percent of financial advisors in the United States.
Like at many other points in history, we as women must carve out our own space within the financial world.
Women need more representation in the industry. Women often approach investing differently: We are more goals-oriented rather than simply looking to "beat the market." We often must take a leave from our careers to care for children or aging parents. We are our family's planners, wanting to leave a nest-egg behind for future generations.
Just think of where all of us defiant women and girls can be if we carve out our piece of financial power and hold it in our own hands.
Magdalena G. Johndrow is an associate financial advisor at Farmington River Financial Group. She recently joined Farmington River Financial Group from Wall Street, where she most recently worked at JPMorgan.