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Episode 44, Season 1

The financial power of women in Australia, with Alva Devoy

 

Alva Devoy: 00:00 Number one is raise awareness that women need to be approached differently in order to improve their engagement with the system, and that, you know approach, can be via language, it can be via the performance plus goals, you know, redressing that balance through there. So for me the number one thing at the minute is raising that awareness that there is a difference, that one size does not fit all.

Fraser Jack: 00:27 Hello and welcome to the Goals Based Advice podcast, where I have conversations with pioneers of the new world of financial advice. I’m your host, Fraser Jack. I want to thank you so much for tuning in today.

Fraser Jack: 00:36 A big shout out to all the peer back reviews I’ve received so far, and if you’re enjoying this podcast, please help me spread the word by sharing it with your friends and colleagues.

Fraser Jack: 00:44 I’d also like to thank our supporting partner, Advice Intelligence, for powering this podcast.

Fraser Jack: 00:48 In this episode I chat with Alva Devoy, who is the Australian Managing Director at Fidelity International, who are global asset managers. Recently Fidelity released a white paper called Financial Power of Women, which is a state of the nation report on the barriers to women investing. Just as importantly, it is an Australian study into Australian investors. Essentially the report shows we’ve got some way to go, and in this interview Alva and I dig deeper into the report.

Fraser Jack: 01:20 So if you have any female clients, and there’s a good chance you do, then you should know about this report. Let’s hit play on my chat with Alva now.

Fraser Jack: 01:30 Welcome to the show Alva.

Alva Devoy: 01:33 Hi there.

Fraser Jack: 01:34 How are you?

Alva Devoy: 01:36 I’m very well Fraser, thank you. Very, very, well.

Fraser Jack: 01:39 I thought we might quickly start with just a quick description. Do you want to give us an overview of you, and what you’re doing at the moment?

Alva Devoy: 01:45 Sure. So you can tell by my accent that I’m Irish, but I’ve been here over 10 years now at this stage. But started my career basically, in Engineering, way back when, but decided after doing a PHD, so obviously I take a little while to make decisions, but after doing a PHD that I wanted to move into finance.

Alva Devoy: 02:09 My first job was in a stockbrokers in Ireland, in the heady days just before the dot com boom. So I cut my teeth analyzing stocks at that point in time, and quickly became, you know, aware that I could talk about stocks and I could talk about a sector, but I couldn’t actually recommend to clients, how they make a decision around a buy or sell on a stock, i.e. what else they should sell as a funding opportunity to buy new stock etc. So quickly realized I didn’t know a huge amount about portfolio construction, so the best way to learn about something is to go and do it. So I moved from broking into asset management, and I had a fantastic 10 years managing assets in Europe for a large Belgian bank before coming to Australia. I went back to the broking side of life for a period of time with RBS. I setup their market strategy team here for them, and then moved to Fidelity, which is where I work now. So Fidelity is a large well known, active asset manager, and I’m their MD here in Australia.

Fraser Jack: 03:25 Yeah, amazing journey. Started out in Engineering?

Alva Devoy: 03:28 Yeah. I guess people ask me what the common thread is. If you can do research in one area, you can do it in another area, so the jump, the commonality piece was moving from research in molecular engineering across to research in finance, and in stock research.

Fraser Jack: 03:49 Yeah, and a lot of attention to detail obviously.

Alva Devoy: 03:52 Yeah.

Fraser Jack: 03:54 What brought you to Australia?

Alva Devoy: 03:57 I came out on holidays in 2003, 2004, for six weeks, and fell in love with the place, and started to do research on, you know, what sort of jobs might be available here. It was then that I actually switched on to the whole superannuation, because a lot of Australians, I guess, we take it for granted that system of forced saving here, but when you come from Europe where we have a lot of defined benefit pension schemes, that are not funded, with unfunded liabilities, some of the more corporate ones would have negative cash flows now, you know, problems that are pretty horrific for society. You look at Australia with legislated savings, putting a lot more people in better positions for their retirement and their future.

Alva Devoy: 04:47 So you know, it was two things I suppose. I’m not one to compromise on place for career. I love the outdoors, and then I got to come, gain all of that, but work for a growth industry in a country that’s as young as Australia as well.

Fraser Jack: 05:07 Yeah, fantastic. Now tell me about stockbroking when you first kicked that off. What was that like working in ... I reckon that would probably be pretty male dominated industry at that time when you were getting into stockbroking.

Alva Devoy: 05:19 Yep, absolutely. So I got into that area around ‘95, so a good 25 years ago. It was male dominated and even when I moved back into broking here in Australia with RBS, you know, a lot fewer women than men. Things have come a long way thankfully. The balance is getting better, as it is in asset management but we’re having to work to maintain the momentum behind redressing that balance.

Alva Devoy: 05:52 And look broking is it’s own unique environment. It’s a lot of fun, it’s high octane, very dynamic, but very, very transactional and for me, I guess, moving to the asset management side, life became more about investing and being held hostage to a degree, to your performance which is measured at the end of every single day.

Alva Devoy: 06:16 So you know, two very necessary components within financial services, but great to have seen both, to find ... and you know, and different environments suit different points in your career. For me being back in the asset management side with Fidelity for the last five years, has worked really, really well.

Fraser Jack: 06:36 Yeah nice. Now one of the things I really wanted to talk about today, was a white paper that you have produced recently, around the financial power of women. Do you want to tell us a little bit about the white paper, and what led to you deciding to produce this white paper, and a bit of an overview of the paper itself.

Alva Devoy: 06:59 Sure. I guess in focusing on diversity for the business here, for Fidelity, we have worked on a number of different facets of diversity. Last year we were privileged sponsors of Invictus Games where we were looking at inclusive behavior and working with, you know, all different types of people, different walks of life, but with the Invictus Games those who had obviously suffered through war etc.

Alva Devoy: 07:33 We moved forward into this year, with a view to focusing more on gender diversity for this current year. We took a look at how we might help the conversation move forward within financial services. So at one end we want to attract more women into the industry, so we’re involved with Mercer and their impact work, in raising awareness among female graduates, students and graduates, of the opportunities in asset management. Many actually just group asset management with investment banking and think it’s one in the same, where actually, the careers as a women that you can have in asset management, it works really, really well for you.

Alva Devoy: 08:16 So that’s one side, and then we thought, well what are we doing, you know, all the way at the other end of the spectrum, specifically for our end clients, and those women in investing. We have seen research offshore, which showed a disparity in the level of participation by women in investing, and also disparity in awareness, relative to men. So rather than take knowledge and data from other countries, we decided best to actually go back to basics here, and look at the actual baseline here in Australia.

Alva Devoy: 08:56 The report which we worked on with Core Data, we got that set up. We handled the major piece of work around January this year, and what we wanted to achieve was by surveying female respondents, you know a broad spectrum, work out the current state of play for women and investing. Ask them questions around, you know, what drives them to invest or to not invest. What are the major blockages and barriers to them, in an effort to have a baseline set of data from which to move forward.

Fraser Jack: 09:34 Yeah, now exactly right. Both sides of this conversation around consumers and investors, and then also people that are working in financial services, whether that’s asset management or advice or any particular area of our industry, and looking at all the different things. When you surveyed, were you surveying consumers, investors, or were you surveying people in the industry or both?

Alva Devoy: 10:00 We were surveying end investors. So one of the major criteria, you know, we had a survey of 1200 respondents, directly 800 women in January this year, a control group being the 400 men. Two focused groups also to get us up and running, in terms of the questions that we should ask, and they were grouped in age cohorts, to get us on the right track, so 18 to 35 and then 35 to 60. But we did specify a minimum of $20,000 in investible assets outside of super. So our level of knowledge, so that the questions that we could ask, were quite targeted for this particular piece of research.

Fraser Jack: 10:42 Yeah, okay. Now the first thing that jumps out at me, without even thinking about the white paper, is the gender pay gap, and that could’ve had a big affect on the survey itself.

Alva Devoy: 10:57 Yup, and that’s a persistent issue, which we have to acknowledge. Again, great strides being made, but when you come to do the work, and I suppose the perceived wisdom that there are less women investing than there are men, and yet we know there is a gender pay gap, so you’re starting with a lower base of assets and fire power, and then at the other end of the spectrum, we know that the longevity is more on women’s side, we’re going to live longer than the average male, but also peppered within our working lives, for many women, they will have to take periods out of the work force, for family reasons as well on the other side. So you start at a disadvantage, compound that through your working life, and then you live longer, so actually the necessity for women to be more active with their investments, and making their money work for them, is more compelling.

Fraser Jack: 11:55 Yeah, you’re right. It’s a real triple whammy there and something that needs to be addressed. What were some of the main, I guess points, that came out of the white paper when you first saw it, or the research when you first saw it?

Alva Devoy: 12:09 Interestingly, women worry more about their financial positions than men do. So you see 42% of women worrying on a daily or weekly basis, and yet on the flip side of that more than half of them, about 52% don’t know or don’t think they’re actually on track to achieve their goals. You compound that with 35% of women don’t actually know what they’re going to need to retire, and of those that do, they think that they will need almost half a million, $460,000 less than men, who actually, you know, they think they need about $1,500,000 to retire. And that, you know, think about that metric, you know, the disparity. Women think I only need a million, men think I need a million and a half, even though they’re going to live longer. So in terms of a call to action, there it is, on the front page.

Alva Devoy: 13:08 A couple, I suppose, of the really interesting things to come out was around then, well if this is fact, what’s actually stopping women getting involved and actually investing. Many feel that they don’t actually have enough money. They, 50%, think that they don’t have the spare cash to invest and we would posit that maybe, you know and it’s come back to us, 46% believe they need a lot of money to invest in the stock market, so unaware that they can begin trading with very, very low levels of capital. That’s something that we can just grab hold of, and work with really, really quickly, to get the message up and out there, you know, in terms of you can open an online trading account as easily as you can set up your Iconic, your online shopping account. Just for AML or Anti Money Laundering and Know Your Client purposes you have to prove identity, which is easy now with scanned copies of passports etc, and you can be up and running with $100.

Alva Devoy: 14:19 So I think they’re two of the major things. The disparity piece and what I need, relative to a block, you know, I don’t have enough money to get going. We can turn that switch pretty quickly.

Fraser Jack: 14:34 Yeah, that’s a really interesting thing isn’t it, because the whole idea of setting targets and goals and you know, even setting goals that are slightly outside your reach, is the idea that when you reach for them, even if you fall short, you’re closer to the goal than ... If the goal, without thinking about it, is already $500,000 less, it’s ... And as you mentioned before, the longevity required out of that investment money is just crazy.

Alva Devoy: 14:59 It’s outstanding, isn’t it?

Fraser Jack: 15:03 Now, you mentioned before that the feeling of not having enough, and I noticed that sort’ve the idea around the feeling of not being able to, or not having enough or not having any spare money to invest, or not thinking they had enough money to invest, that’s really interesting, the idea of the uncertainty and the feeling about that without actually any reality kicking in.

Alva Devoy: 15:26 Yeah, and then on the other side, we do have to focus on what is actually going to trip switch female investors to get off the sidelines and begin to invest, and it’s engaging with women in a way that is different to men, because in terms of why women invest, much more will actually focus on goals. A lot of those goals are to do with ensuring family financial wellbeing, and or you know, you’re paying off mortgages etc, whereas for men, that’s not so prevalent as a driver on the other side. So you come down to this kind’ve, you know, I guess differential from the outset in terms of drivers to invest.

Alva Devoy: 16:22 And then the secondary piece that we’re going to have to be very cognizant of, is appetite for risk as well. So you know, about 46% of women want to minimize their risk. They say that that’s a priority when it comes to investing, versus men at 26%, you know, there’s quite a large disparity. And then if you were to look at the number of women, so 33.8% would actually describe their appetite for financial risk as very low risk, that’s more than twice men at 15% as well.

Alva Devoy: 16:57 So what we’re going to have to do, is engage with women where they sit, which is, you know, by investing you can achieve your goals, but you can invest and you can mitigate risk at the same time. So you’ve got to have that two layers in the conversation for female investors.

Fraser Jack: 17:19 Yeah, now this is obviously the Goals Based Advice podcast, so it’s music to my ears that you’re saying that there is a strong trigger amongst women to focus directly on the goal, rather than the investment and to then understand that they’re slightly less risk averse to or want to take a lower probability of a downside, really focusing on the goals. So that’s really interesting.

Fraser Jack: 17:47 When it came to those, as you mentioned before, what sort of stats were around that idea of women being very heavily into goal focusing?

Alva Devoy: 17:58 All right, I’m going to have to bring up my presentation to get you this-

Fraser Jack: 18:02 And sorry, just while you’re on that though, that actually brings me to another point that I’m thinking about when ... If females are very much more adverse to focusing on the goal, then there’s probably some bias when it comes to ... because this is the end user that maybe advisers, when advisers or planners are sitting with their clients, that a female adviser may be a bit more likely to focus on the goal as well. Would that also follow through do you think?

Alva Devoy: 18:32 I suppose intuitively you would expect that, but standing where we are in the industry today, I think, you know, certainly with the work that we’re doing, if we can actually raise the awareness that women need to be appealed to in a different way, whether that comes from a male or female adviser, ultimately shouldn’t matter. Obviously across all levels of the financial industry, you know, we do want to increase diversity so would be terrific to have more female advisers, but I think even just getting us to the point where all of the advisers in market now become more and more aware that not only do you have to shape, shift and have an adaptive style with your clients based on their age and where they are in terms of their saving and retirement spectrum, but you also have to shift your behavior to engage with women differently, help them on to a much more confident platform to invest and become engaged with stock markets and the financial markets.

Alva Devoy: 19:39 So right now, I think better off focusing on getting everybody aware of the differences, number one, so that there are differences, what those differences are, and then double down on three or four things that we can all do across the industry to engage better with women.

Alva Devoy: 19:59 Coming back to your previous question, you know, more than half of women, 53.8% of women say they invest based on goals for themselves and families, rather than focusing on performance, whereas for men, the majority of men focus on performance.

Fraser Jack: 20:15 Yeah, that’s real interesting and when I think about myself in the past, I think probably when I first started out I was a little bit more about achieving, you know, performance and outcomes and being markets and those sorts of things, and these days it’s all around goals. So it’s an interesting perspective isn’t it?

Alva Devoy: 20:34 Yeah, it is and that awareness just means you can engage differently and more appropriately with your client base.

Fraser Jack: 20:43 Yep. So we get the awareness and we understand this, then what? You mentioned three or four things that we can do. I mean obviously the best thing to commence is once we understand the difference, to then be able to take that forward and use it in a practical sense. What are your thoughts around that?

Alva Devoy: 20:58 Yip. So along with feeling they don’t have enough money and that higher level aversion to risk, their level of confidence for women in their financial knowledge is a lot lower. Less than a third, 28.3% would describe themselves as very or somewhat confident, and that’s relative to 50.8% of men, so that is a massive differential. A lot of women 58% would say they’ve got the right level of knowledge about investments, but 73% of men actually think they have. So we’ve got to close those two gaps up.

Alva Devoy: 21:36 And there’s certainly, one of the things that I think turns people away from improving their financial knowledge is that women would describe investment communications as complex, 52%, and then 20% would say it’s tailored to men.

Alva Devoy: 21:56 So there’s two things that we can look at straight off the bat in terms of our comms, our advertising etc. What are we doing or saying to women, that makes them feel that it is complex or intimidating, or that it is, you know, tailored to men.

Alva Devoy: 22:18 There have been studies done in other industries where this happens, in the recruitment industry. The language that’s actually used in advertising for a position, can turn women away from actually applying for a job and so many companies now, would actually run their employment ads through specific services, who work to mitigate that barrier coming through in language. I think if we become aware that our language, whether it’s advertising, brand etc actually pushes our female investors away, then we will look at ways to actually make sure that doesn’t happen.

Fraser Jack: 22:59 Now you mentioned competence there, competence around the financial knowledge. Is some of it confusion and some of it understanding, or is it ... Like are we being too complex in a lot of the investing products?

Alva Devoy: 23:17 I think possibly we are, and so we can dial that down but if the language and the way we’re engaging with women immediately switches women off, they’re not going to continue to read to improve their actual knowledge of financial services and of the upside from investing for them. I think it’s not, this is a personal view, that it’s almost like the language itself is contributing to this view that it’s complex and so if we get the language right where they don’t, women don’t feel this is unappealing or complex etc, the engagement levels will rise.

Alva Devoy: 23:59 Again from our perspective, you know, one of the best ways to learn is to get involved and to try it, and to decide, you know, I am going to set up my online trading account. I am going to begin with $100, that I can afford to lose, and I’m going to buy stocks in companies that I understand the industries, I understand the dynamic, or maybe for women as well, where there is a compelling rationale to investing from a societal perspective, ESG etc. I think just the whole nudge, if you like, to getting off the sidelines, getting involved and playing with a small sum of money, there’s no substitute for that in terms of learning, pushing through perceived complexities etc. Learning the language of finance.

Fraser Jack: 24:57 Yeah, and so encouraging people to just give it a go.

Alva Devoy: 25:00 Try it, yeah.

Fraser Jack: 25:02 Yep. Now just on another point too I wanted to chat about was the idea that sometimes people feel that investing’s just not for them.

Alva Devoy: 25:15 Yeah, and I guess for many it may be “Well I didn’t study it either in school or university and therefore why or how should I get involved in investing.” I do think that we can actually lean on superannuation as a tool to show people, well you actually already are investing. You know, your legislative savings of 9.5% per month are ultimately, even if you’re in the default scheme of either an industry super or on platform etc, you’re already engaged and involved in investing, and for most in this country, that experience has been an exceptionally positive one.

Alva Devoy: 26:08 The second thing that we can lean on is property investment, you know, which is very, very close to the hearts of all Australians, and has been a super source of investment returns. Whether you’re only invested in the current house that you’re living in or you have an aspiration to buy into the property market, that is another area we can lean in and say, that’s real asset investing and begin to ... well you’re already invested. If you’re invested in a house, it’s a real asset. That has a particular place to play in hedging against inflation. Why does it hedge against inflation? Well real asset prices generally move upwards with inflation. Already in four sentences you’ve brought potential investors a long distance on the journey, just by using that as an example.

Alva Devoy: 26:59 So super and property investing I think we can actually lean on. I do think then, in terms of emphasis and focus, see it from an active asset manager, such as ourselves, or an adviser offering services to women, it’s how can I make this easy. In terms of, if you think about our purchasing experiences now, there is a science behind our last best experience is now the bar. So if we’ve had a very good online purchasing experience from let’s say Amazon, to use an example and I use this quite regularly. I want to order a leaf blower. I want it to be delivered on Tuesday and I basically do not care whether Amazon uses FedEx or DHL or whatever. I just want my product that I paid a specific price, to arrive on time, with all the bells and whistles that I paid for. If you have that good frictionless experience, you just keep going with that experience. You probably move more of your shopping to online etc.

Alva Devoy: 28:16 I guess there’s a space that active managers own in terms of the language we use and the education we can do around our strategies for investing. There’s the language the advisers can use. Let’s step up the emphasis on goals, let’s step up the emphasis on risk mitigation in actually investing, but then the brokers, be it online trading platforms or other methodologies like platforms etc to actually invest our money, they need to reduce the friction in the system as well. Make this a good experience and that will be another, I guess, shot in the arm to get women investing.

Fraser Jack: 28:59 Yeah, absolutely, absolutely. Make it easier, make it more accessible, and as you mentioned make it [inaudible 00:29:06]. Give us something-

Alva Devoy: 29:08 Accessible.

Fraser Jack: 29:08 A small, like you mentioned, a small step towards the bigger thing and have a little try scenario, so that they can get some confidence. And that’s just not for women too, that’s for anybody looking at getting into investing.

Fraser Jack: 29:24 Now you mentioned, we talked about goals a little bit. Were there specific goals in the survey that came out a lot?

Alva Devoy: 29:32 Yep, absolutely. The top one, would you believe, is paying off the mortgage. So women over 35 want to finish off paying their mortgages, because they don’t want to pay the bank any more, and so women who have financial goals, rate paying off the mortgage 8.7 out of 10 in importance, so exceptionally high. Many understand and aware and actually contribute as much as they can to their super even if they don’t know how much they’re actually going to need, they’re still, the vast majority of women are aware that this is a good thing. So again we can use that as a hook and lean on that to improve knowledge.

Alva Devoy: 30:15 Many actually want to look after their families. They put family security at the top of their list of priorities, but they’re also very, very conscious of setting long term investment goals. Within that we’ve actually found that buying an investment property is a very common objective and while a good one, we would bring in here, if that’s a great one to lean on in terms of engagement and getting people interested, helping women understand that they need to diversify their holding and therefore engage with capital markets, i.e. buy stocks and shares on exchange, that’s good diversification. Not to have all of your eggs in one asset class because you probably have the house that you live in, and if you’re doubling up your exposure to the Australian housing market by buying an investment property, really good idea then to diversify that with shares and other assets.

Fraser Jack: 31:15 Yeah, nice. Now one of the things that I liked about the report, and this is just a thing about me I suppose, is the myths busted section, where you start talking about the idea of, we have these pre-conceived ideas in our heads, then when we do some research, all of a sudden some of these ideas just get thrown out. Well some get proven I guess and some just get completely busted. Do you want to talk a little bit about-

Alva Devoy: 31:41 There’s a lot of really insightful information to come through. I’m just going to bring those up. Right let’s have a look.

Fraser Jack: 31:48 So I’ve got one here that said women prefer to keep money in the bank as it’s safer rather than make it in investments.

Alva Devoy: 32:00 Yeah, and then what we actually found was although there wasn’t a huge gender difference in terms of believing the bank provides safety, some women did talk about keeping money in the bank as a safety net, but this was a separate pool of money to the money they were using for additional investments. Again a really good thing to know and understand that if there’s a war chest there, you know, what we used to call the running away money, they’re much more I suppose confident around using excess money then to invest elsewhere. So yeah, that was one of the myths that we did, I suppose, bust if you like.

Alva Devoy: 32:43 And then the other one as well, is perceived wisdom. Women are more likely to look after the house while men deal with the finance. That may have been true of older generations, but a lot less prevalent now, with many women in the work force needing to look after their own financial affairs as well.

Alva Devoy: 33:05 The other two that actually came up as true, is another thing to be aware of is women are more likely to give any extra money they have to their kids or parents. So there’s that kind’ve looking after the broader family, is higher on their list of priorities, but then the one which we’ve discussed already, women investing based on goals for themselves and their family, rather than important, that being absolutely true on the other side.

Fraser Jack: 33:32 Yeah, it’s really interesting all these stats that are coming out of it. As you mentioned, there’s a few things that the industry can do. What about you at Fidelity? What have you been doing since this report came out? Apart from bringing the awareness to the market, are you looking at doing anything for the market, and for women investing?

Alva Devoy: 33:54 Yep, so we will actually ... We’re giving this report, it’s freely available up and out to you know, if our competitors want to take it onboard, post it on their websites, clients etc, it’s all freely available because the first thing that we wanted to do, was raise the awareness that there is a difference, both in the level of investing, but also the appetite, that’s the baseline. Now pick a few things that we can actually get on with doing.

Alva Devoy: 34:22 So we’ve been talking to super funds about potentially using the research because they in industry, member engagement is obviously a big issue for many, with a lot of members saving into the default option. If there is knowledge that women need to be engaged with differently, to improve that cohort’s experience, could a super fund or multiple super funds, take some of the learnings onboard through here and look to engage with their members differently.

Alva Devoy: 34:56 The same with advisers on the other side of it. Now looking at ways that we can engage better with women across the advice industry. We were happy to fund additional research from here. We’re very happy to be out talking in the market and working with advisers, and those engaging with clients on the findings from this research.

Alva Devoy: 35:21 For our part, we are looking to continue this journey, monitoring our language and our advertising etc on the other side of it, so that we actually build in the knowledge here around I guess being conscious of using, which this industry has done for a long time, performance as the hook. We need to now balance that “Well if you make the returns, what can you do with that money on the other side.” That’s something for us that we can do straight off the bat here, but it would be great to see the industry and all industry participants continue this conversation to the point that we have it nailed in five or ten years and we have actually closed the gap in terms of the number of women actually investing.

Fraser Jack: 36:15 Yeah, that would be great. So firstly, how can people get a hold of the report if they want to get a copy? We’ll just start with that.

Alva Devoy: 36:24 Sure, it’s available on our website, and that’s www.fidelity.com.au. So that full report is up there, available to all.

Fraser Jack: 36:35 Great and the next thing around the language, because this is the ongoing conversation off the back of it, right. How do we make sure we get the language right and it sounds like you’re leading the way there, and I guess we need to keep an eye on what can come out of these things, for especially for advisers to start using the language that advisers can use in their practices and their documentation, all those sorts of things. Can we still look to you for that?

Alva Devoy: 37:00 Yep, and I think it’s just number one, that we have to balance the focus as I said on performance being the number one hook as to why somebody would look to invest either in a fund or with an adviser who would be providing a portfolio of funds to an end investor. We need to now be very cognizant of thinking about performance is once side of the coin, but if you actually achieve returns, what can you actually do with that money. That’s where the goals based investing comes in.

Alva Devoy: 37:32 The other side then, which we started off the conversation talking about, was being very, very careful to educate on mitigating risk. In terms of offering strategies that do protect on the downside, what we call downside capture, that’s something that the industry is going to have to get way better at. That lends itself to retirement.

Alva Devoy: 37:58 I’ll get a little bit technical here. When you’re saving and you’ve got monthly accumulation happening, when you have, and this is one of the reasons possibly that women worry a lot about investing in stock markets, is that volatility factor. It seems to bounce around, prices etc that makes me nervous. Volatility when you’re actually saving can work to your benefit because say you’re investing in a fund that has 10 Commonwealth Bank shares, and they were $10 in June and they dropped to $9 in July. If you’re continuing to save into that fund, you’ve averaged down the price of your shares, so you now own 20 Commonwealth shares at an average price of $9.50. And you’re also, if you’re saving, you’ve got time to make back up losses through time as well. When you’re in retirement, volatility is your enemy, right. You do not have usually, long periods of time to make up losses, but also because you’re not saving every month, you’re actually taking, decumulating from your fund, you don’t get the benefit of that averaging, that dollar cost averaging. And so protecting on the downside is very, very important.

Alva Devoy: 39:20 So I think, as the conversation around retirement builds up a head of steam in Australia, we can link in with that for female investors as well because particular strategies that limit downside risk may be appealing to women. What you should be looking for then if you’re looking to buy a fund, is when the market goes down, does this fund go down less than the market, and that is your downside capture. When you’re in stock markets and you’re investing directly in shares, diversification is key to managing through periods of volatility. Rather than putting all of your money into one stock, even if it’s just $100 that you’ve got, split it out into four very different types of industry, diversify your exposure, so you don’t get the big lift, the upcycles on one side, but you also won’t get the big downdrafts on the other side. Ultimately what you’ll experience is a smoother ride. That diversification piece, very, very important in terms of managing volatility and perception of risk for female investors.

Fraser Jack: 40:36 Yeah, very good thank you. Thank you so much for that. Now, and I couldn’t agree more too on the measuring of success and I think for far too long I think we’ve been measuring it too much on returns and comparing it to itself and comparing it to others and even comparing fees. This seems crazy to me when the measure of success for the actual end user, the client is all around whether they can make their payments or they get their goals. So absolutely if we can bring that intangible item back in. Is it difficult as a fund manager to really be able to grasp on to that goal setting ability for the end consumer, because I imagine it’s quite a competitive world, where everyone competes on that performance?

Alva Devoy: 41:19 Yeah, and performance has been the major hook. I would say that with an increased level of sophistication and knowledge around investments in this country, there’s certainly the appetite for a more complete picture has definitely stepped up. So clients don’t just want to know about this is the best performing fund. What does that actually mean at the end of the day? Does it really matter to the end client, that an asset manager has outperformed a benchmark, i.e. the ASX 200, or that over a three, four or five year period, they’ve had very, very good investment returns, and they’ve been able to sleep at night.

Alva Devoy: 42:04 I think we’re coming into a phase now, where we’re moving well beyond performance being the only hook. It’s certainly important. Under performing funds are to the detriment of the end client, so it certainly is important but the second thing then, would be around linking in to “Well what’s it going to feel like?” Can an asset manager provide quite a smooth journey? Are you going to sleep at night through the thick and thin? Understanding that ultimately on a medium term view, I am going to generate positive returns in excess of fees, that those returns are going to compound over time, and I’ve been able to sleep at night.

Alva Devoy: 42:51 The other thing, the industry has been pretty good at various points, in linking in to why people are actually investing, and whether it’s for coming back to that family piece for women, you are saving for your children’s education etc. We can certainly tap into that with our advertising and show where the benefits of actually generating the returns can go directly to the family on the other side.

Alva Devoy: 43:24 There is an interesting just, this is an aside, but where technology meets, the digital age meets financial investing on the other side of it. We have a capability in the US where in order to try and help clients empathize or engage with their future selves, which is what investing and saving especially for retirements is about, and where most of us struggle, especially when we’re younger, you just don’t tend to think about the future self. There’s loads of apps which show you, if you invest $10 today, on average returns how much would you have in 10 years, how much would you have in 20 years, and that’s nice, but it goes back to that one dimensional performance piece. There now is technology, like it or not, where you can have your face move with that money, and basically age along with the money. So if I save $10 today, it’s going to be worth X in 10 years, and that’s what I’m going to look like, and probably you look happier, maybe fresher if you’ve saved a lot more money.

Alva Devoy: 44:36 But that is where the digital marketing piece and technology will have a part to play, helping our end investors engage with their future selves.

Fraser Jack: 44:46 Yeah, I love the idea of a little bit of gamification in there and a few little simple things that just cause a bit of engagement, you know like, actually people go “Oh that’s a bit silly, or a bit fun,” but it actually gets them engaged in a small way. They’re just small steps towards giving it a serious look down the track a little bit further. Wonderful.

Fraser Jack: 45:08 Now if we could jump forward 10 years, and we’ve solved a whole lot of these problems, and it’s amazing picture we’re looking at, what were the few things that we did? What were the main things we did today to make that happen?

Alva Devoy: 45:22 If I was looking on a five year view, I would love us to be doing this research and see a massive jump in the number of women investing, and I don’t care what level that is at. Whether it’s still at the $100 level, whether it is serious investing or not, it’s just being involved, because the first best time to do anything was 10 years ago, and the next best time is to do something today. So on a five year view, improving that.

Alva Devoy: 45:50 On a 10 year view, to see women feeling equally confident about financial services and about investing I thing would be a fantastic achievement.

Alva Devoy: 46:00 So they’re kind’ve my three timelines. That’s a very personal ...

Fraser Jack: 46:04 That’s brilliant. I think there’s a lot ... there’s definitely a lot ... I certainly shared, a lot of other people share that idea too, it’ll be amazing.

Fraser Jack: 46:11 Thank you so much for coming on the show today and sharing the insights, and as we mentioned that people can jump on the Fidelity website and have a look for that white paper and certainly join in the conversation and be part of it going forward. I think it’s a great idea for anybody that’s anyone, Licensees, and Super funds and anybody that wants to get involved to come and have a chat to you about it.

Alva Devoy: 46:33 Agreed, yeah, the door’s always open.

Fraser Jack: 46:34 Fantastic. Thank you Alva.

Alva Devoy: 46:36 All right, thanks Fraser for the opportunity. Cheers.

Fraser Jack: 46:42 If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice, and to continue the conversation, head over to our social media channels.

Fraser Jack: 46:52 We’ll catch you next time

 

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