Certified financial planner Amanda Neely writes that female real estate professionals are overcharged and underserved by the traditional financial system. Here’s how to stop paying.
Do you know about the pink tax? It is the same as the men’s version except for the pink razor markup. Dry cleaning charges for the same fabric. Since it is marketed to women, it comes in smaller quantities for the same price.
Don’t stop at the cash register.
A recent study published in the American Economic Review that looked at 27,000 customer meetings at German banks found that financial advisors, regardless of gender, systematically gave worse investment advice to female clients. Women were steered toward expensive in-house funds with higher fees and offered lower rebates than similarly situated male clients.
Researchers called this statistical discrimination, using gender as a shortcut to economic sophistication and applying that assumption to every woman who walked through the door.
As a result, your investments will be subject to a pink tax. You pay more and get less not because you asked for something, but because of what was assumed about you.
The reaction of the financial press was wise. Increase your financial literacy and start investing faster. Both are true. Both are unfinished.
Here’s what I would like to add.
Know what you want before you walk into the room
The traditional financial system was built around specific types of customers: stable incomes, employer-sponsored retirement plans, long investment horizons, and standard risk tolerance. That profile doesn’t describe most women (and men) in the real estate industry. Your income will fluctuate, your employer won’t match you, and your financial goals may bear no resemblance to the glide path of a 30-year index fund.
Before you sit down across from a financial professional, be clear about what you actually want. What does financial security mean to you?
Do you want to save for 6 months or 2 years? Do you want to build wealth outside of the stock market? Do you run a business that requires a different type of architecture than your W-2 employees?
There is no definition of “enough” on any calculator. You decide that.
An expert who starts the conversation by asking what you want is a different kind of expert than an expert who starts the conversation by explaining what you should want.
Interview at least two or three financial professionals
Do this even if you like what you have.
This is not a question of distrust. It’s about information. A second opinion costs a conversation and gives you a baseline. You’ll quickly find out whether the proposed strategy is standard or actually suitable for your situation.
Ask each person:
How will I be paid? What products do you recommend most often and why? Have you ever worked with self-employed commission-based women? How do you approach tax strategy with irregular income?
You’re interviewing them, not the other way around.
Please ask all questions until you are satisfied
The study found that women are treated as less price sensitive. That is, we assume that your advisor won’t push your rates down or ask you for alternatives. Prove that assumption wrong.
Let’s ask how much it costs. Ask what the alternatives are. Ask what would happen if the situation changed. Ask what the downsides are.
Experts who get irritated with your questions or give answers you don’t understand are telling you something important. move on.
You don’t have to accept recommendations that you don’t understand. Understanding what you are agreeing to is not optional. That’s the bare minimum.
Traditional methods don’t work for everyone, and that’s okay
The standard financial roadmap — max out your 401(k), diversify into index funds, retire at age 65 — is built on assumptions that don’t apply to many people, including many women.
Fluctuating incomes, entrepreneurial goals, non-traditional family structures, risk tolerances that are completely different than what the algorithm assigns – all of these point to a different financial architecture than the default.
It’s not a problem to fix. That’s information.
The real estate industry has already taught us that off-market transactions exist, that list price is not the only price, and that traditional methods are not always correct. Your financial life deserves similar scrutiny.
Traditional is not neutral. That’s what everyone else is doing. There’s no need for that.
