ETF Strategy Summit

October 15-16, 2018 | Hyatt Regency | Dallas, TX


Lorraine Ell – Better Money Decisions

Building Portfolios Which Address Clients’ Needs & Concerns

Lorraine EliLorraine Ell is the CEO at Better Money Decisions. Author of the book, Bozos, Monsters and Whiz-bangs: Bad advice From Financial Advisors and How to Avoid it!, Lorraine is also frequently quoted in MarketWatch, Investment News, Investor’s Business Daily, Yahoo Finance, and The Wall Street Journal. We recently spoke with Lorraine, who will be speaking at our ETF Strategy Summit (Oct. 15 – 16 – Dallas), as she gave us some insight on building portfolios which address clients’ needs and concerns.

ETF Strategy Summit: As average career, lifecycle and longevity trends among women continue to diverge from those of men, should advisors think about ETF portfolio construction differently for their female clients? How?

Lorraine Ell: The current statistic is that 80% of those living into their 90s are women. Longevity considerations are therefore more important when constructing a portfolio that must be capable of providing income for women well into their 90s. ETFs because of their low internal expense ratios are an ideal vehicle to improve investment returns over a long period of time. Longevity also increases the importance of a portfolio keeping up with inflation. An allocation that is too conservative may not work in the long run.

ETF Strategy Summit: Clearly, the ranks of asset managers and analysts still skews towards males, even in the more progressive realm of ETF managers. Do female clients need or desire access to a broader range of female ETF managers and strategists?

Lorraine Ell: Women do not necessarily care about the person managing the fund. In fact, a client’s relationship is with the advisor, and clients generally have no interest in the individual managers at fund companies. Having said that, the industry has an image problem; numerous studies have demonstrated that female fund managers do just as well as male fund managers but still make up only 10% of the group. And that has persisted for years despite an increased representation of women in other professions: 37% of doctors, 33% of lawyers and 63% of accountants. Some of this may be a result of the lack of interest on the part of females to become portfolio managers but also there is a reluctance to hire women.

ETF Strategy Summit: Women investors and impact, sustainable, SRI and ESG investing are often mentioned in the same breath, so much so that it’s nearly become cliché – in your experience, is there a greater desire to do well by doing good among your female clients?

Lorraine Ell: Yes. More women than men come to my firm requesting sustainable/SRI/ESG investment vehicles. We do caution women that they need to “sustain” themselves first in making investment decisions but the increasing prevalence of sustainable options is making it easier to comply with their request.

ETF Strategy Summit: As a practitioner of sustainable investing, how do you typically approach the subject with female clients – do you take a values-based approach, a risk-awareness approach, or some other tactic?

Lorraine Ell: We start every client relationship with a comprehensive financial plan and then construct a portfolio to meet the needs and goals outlined in the plan. If requested, we use whatever sustainable funds and ETFs available to meet both the client’s concerns but most importantly the client’s needs. Sustaining the client is first and foremost.

ETF Strategy Summit: To what extent do you think the differences between male and female clients is an outgrowth of our culture, and what other attributes might explain the differences?

Lorraine Ell: The cultural perception that still exists in the U.S. today is that men are better at managing money than women even though the data does not support this idea. But there is a pervasive collective consciousness surrounding the belief that men are better at math than women. A “gender-equality paradox” has been noted in that there are more women in STEM in countries with lower gender equality. Women make up 40 percent of engineering majors in Jordan, for example, but only 19 percent in the U.S.
Sadly, there is still a stereotype that women make decisions emotionally and men technically, yet personal finance is emotional – for both men and women! The emotional aspect of a change in financial circumstance is far more impactful than the actual material loss. Our minds function to remember the negative more intensely than we remember the positive events in our lives which explains the reason the market crash of 2008-2009 is still so front-of-mind for most clients.

For the most part, clients, both male and female want to know that they will be okay throughout retirement and to the end of their lives. That is the biggest concern for all clients.

ETF Strategy Summit: Thanks Lorraine. We look forward to hearing more of your thoughts at the ETF Strategy Summit October 15 – 16 in Dallas.

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