What do a mathematician, an Ecuadorian master’s graduate and a Japanese-speaking fund manager have in common? They are three senior members of Australia’s investment sector. They also happen to be women.
It’s vital women pay particular attention to their wealth, given the Australian Human Rights Commission’s latest figures show the average super payout for a woman is just $37,000 versus $110,000 for men. Working women also still earn 16 per cent less than men.
Mathematician Kirsten Wymer, head of risk strategies and research at BT Investment Solutions, Daniela Jaramillo, director, sustainable investing, Fidelity International and Catherine Allfrey, principal of WaveStone Capital, whose undergraduate economics degree included a Japanese major, have great advice for building wealth, no matter what gender you are.
Every day, Wymer and her team draw on techniques from maths, physics and statistics to solve problems like asset allocation, asset liability management and also analysis. “It sounds complex, but it’s like being a chef, except our ingredients are mathematical techniques and our finished product is an economic scenario generator.”
Wymer is proud of the pivotal role her team plays in her customers’ financial wellbeing and quality of life. “Our mission statement is to develop asset modelling and money management frameworks that are independently peer-validated as market-best practices. Everyone in the industry should be part of the conversation. So we publish research and work with other practitioners and academics to contribute to thought leadership in the investment industry.”
She says sound financial modelling needs to strike a balance between sophistication and practicality. “That means you need to know when to unleash the full technical beast and when a simple solution is optimal. For example, we do use quite a lot of artificial intelligence and machine learning and they are powerful and highly relevant techniques. But they are not the right tool to use if you just want to compound returns.” Compounding involves adding the interest earned by an investment to its principal to drive returns over time.
Wymer’s interest in numbers was first piqued by her actuary brother. “I’ve always loved maths. I started out as an intern at Macquarie Bank on the trading floor before I moved across to Westpac to take up a role in electricity derivative modelling, before moving into trading. I just fell in love with it. I lost money in the first week, which was a really powerful learning tool. I knew from that point on I wanted to apply maths to investing decisions.”
At Fidelity, Jaramillo says her role is all about change and innovation. “My job is to help our analysts, portfolio managers, product specialists and marketing professionals change how they think about investments and our business. The sustainable investing industry is moving very quickly, with climate change, gender, social inequality, biodiversity and digital ethics just some of the issues driving our thinking. My role is to ensure we are always one step ahead.”
Jaramillo has always been obsessed with how complex change happens and this drives her work today. “The structures, incentives and people involved in big systemic changes have always fascinated me. I wrote my dissertation for my masters at the London School of Economics about how change happened when an oil-dependant economy passed a law to leave oil underground for environmental reasons, a very complex and unlikely change.”
Growing up in Ecuador, a country reliant on natural resources and tourism, where social inequality and poverty are endemic, has also fundamentally influenced her work. “That shaped my career. Environmental and social issues are deeply personal to me. This has been one of my biggest motivations to join and stay in the investment industry, well before ESG became popular.”
Jaramillo says more needs to be done to encourage women to seek out careers in financial services. “We need industry-wide initiatives like asset owners requiring more disclosure about the composition of investment teams.”
She cites the UK Asset Owner Pledge, through which a group of 17 public pension funds representing £1.8 trillion in assets under management has promised to disclose information about the gender breakdown of its staff, as a positive initiative to encourage more diversity among investing teams. Local initiatives like FutureIM/pact, which aims to encourage more women to take up roles in client-facing investment teams, as another important step in helping the sector to become a little less male dominated.
Jaramillo says there is plenty of scope for women to take more control of their wealth. “Everyone owns a piece of the companies our superannuation is invested in, even if it is just a very small share. Our stakes in companies like Amazon, Apple and Facebook give us a voice. As shareholders, we can expect these companies to deliver on our money financially and also on other things we care about, like the environment and society.”
WaveStone Capital principal Catherine Allfrey has more than 20 years’ experience in investment markets. Her role involves investing client funds in the local share market, co-managing the WaveStone team and analysing sectors such as banks, real estate investment trusts and diversified financials.
“I have a competitive nature and want to deliver above-market returns for our clients. I am always curious to learn about the companies we invest in and enjoy engaging with different management teams,” she notes about her work ethic.
Allfrey says it’s good to see women paying more attention to the stock market and their superannuation. “As you get older, your super balance grows. So you naturally become more interested as you have a nest egg you want to protect.”
No matter if you are a man or a woman, there is no great secret to building wealth. What’s important is consistency. As the old saying goes, it’s not timing the markets, but time in the market that counts. Taking advantage of the power of compounding is also important.
“Combine compounding with a savings plan to build an investment portfolio separate to your PAYG income. This is how the rich get richer,” she adds.