Name: Most Powerful Women Summit 2024: Closing The Wealth Gap
Uploaded: 2024-10-16
Duration: 17 min 43 s
Description: Priscilla Almodovar, President and CEO, Fannie Mae Sallie Krawcheck, Co-founder and CEO, Ellevest Moderator: Allie Garfinkle, Fortune

Priscilla Almodovar, President and CEO, Fannie Mae Sallie Krawcheck, Co-founder and CEO, Ellevest Moderator: Allie Garfinkle, Fortune 

Most Powerful Women Summit 2024: Closing The Wealth Gap

Conferences

Sally, Priscilla. I am so excited to be here with both of you. I am in preparing for this conversation. I was thinking a lot about something that you brought up. Priscilla, which is Virginia Woolf's a room of one's own. You're laughing, you're laughing, you're already laughing. But it's um it actually was really serious. It drove some home something to me. That is an essential truth, which is when we're talking about women's wealth. We're not just talking about money, we're talking about agency and Sally, when I told you about this the other day, you said we're talking about power. So how high stakes is this? I would love to just hear, hear what you go ahead, please. Yeah, that great to be here. It is high stakes and it is about agency, which is what it comes down to. You know, uh we Fannie Mae, it's all about home ownership for us. And today there are a million, there are 11 million single women who are homeowners more than men and women. Despite it being the tough housing market desire to be a homeowner and when women have wealth and homes, I mean, it's not just themselves. It's the families, it's the Children, it's the parents they're caring for. Said, actually the wake of women when you invest in women is way more powerful than just that individual woman. So, I think it's women's time. Yeah, I agree. Let me, let me tell you why you care. So, first of all, the gender pay gap, as we all know is about 80 cents to a white man's dollar. The gender wealth gap is about 30 cents to a white man's dollar for black women. It's a penny and it's been going backwards. Whereas the pay gap has been steady to increasing a little bit. Now, the reason we, we care on a macro basis, we love to say at L of S nothing bad happens when women have more money and when women have more money, they spend it. So the economy grows, your businesses grow, their families are stronger. Societies are fairer communities are stronger. Women give more to nonprofits. Women are more likely to believe in the negative effects of climate change and give money to them politics, everybody is super happy with politics in this country. I know we are uh women give about 30 cents of political donations to a man's white to a white man's dollar. But when they do, they tend to be, you know, politicians who agree with our points of view and are more family friendly. So everything gets better when women have more money today with the gender, we wealth gap. You've got too many women who are stuck in marriages, they can't leave because they don't have the money stuck in jobs. They hate because they don't have the money getting chased around a desk at a job. They hate because they don't have the money, not starting a business because they don't have the money living smaller lives because they don't have the money. And finally you care because of your companies. Women's number one financial concern is not having enough money and not building wealth. And as a result, the stress on them leads to presenteeism, which means they're sitting there but they're worrying instead of working. Now, I wanna start with housing on this end. What is the state of how the housing journey for women? Yeah. No, it's so I agree with everything. Sally just said. I will add to that, that women are, they're less confident than men when it comes to homeownership, they wanna be homeowners, but only 30% of women feel they have the confidence to actually go through the mortgage process. So it tells there's a gap there, there's like a confidence gap as well with women. Well, because society tells them to be less confident, right? They receive negative money messages their whole lives about, you know, financial planning doesn't have to be really, really hard. And so they, they're told to have a confidence, it's com and also, um, we do surveys just to get a sense of the understanding of the, the mortgage process. And women, there's a bigger disconnect with women in terms of the down payment. One needs to buy a home. Uh, you know, they think you 20% today, there's a lot of products where it could be 10 or 5% even 3%. Also FICO scores, you know, there's a real lack of understanding and everyone in this room hopefully is, you know, has, has that information. But you would be amazed how so many women don't know. I think when you and I talked, right, especially, you know, the millennials, they are millennials and the gen Z, I'm not millennials. Right. Right. I confess to Priscilla, I, I feel, I don't feel millennial. I love that term yesterday. Millennials, that's our future homeowner. That's that cohort and they're the ones that don't understand, uh what it takes to own a home. The other thing I find interesting and I love that Sally and I are on this together women today. When you look at the older women, the in terms of their wealth, 66% comes from their home equity that seems high. But it's not because they have more equity in their home. It's because they don't have other rights, right? They, but the average person is 50% because they have other assets. So homeownership from our perspective, again, it's not the all and be all. I, I don't want to suggest that it's a fast thing, you know, homeownership should be about, it should be lasting, it should be long term. It's not like a regular, you know, investment security that said it is part of wealth building. It's part of a portfolio, your personal portfolio. But the lack of understanding for women really just amazes us. So there's a lot of work to be done there. What is your take on where housing fits in women's overall? financial health? Oh, first of all, I love my house. Um You know, and so absolutely, it's an important component of wealth building. In fact, I would argue there have only been two scalable, predictable over a medium to longer period of time means to build wealth in this country. It's not entrepreneurialism that's too hit and miss. It's been owning a home. Uh and it's been investing and for, for investing well, for homeownership, you know, the stats I've seen show that, you know, home prices increase about 3% a year, different amounts in different places, but it compounds on itself. Investing in the stock market since the early 19 hundreds has returned about 10% a year, which compounds on itself. And if you had stayed invested for 15 years, you could have invested in any given day, any given day and you stayed in the market for 15 years. Historically, you had a 98% chance of a positive return and for 20 years, it was 99%. So I'm in favor of home ownership. I'm also really in favor of investing, which is what we do at all of us because it's actually been less risky historically than women have thought. Yeah. One thing I will say if I may again, I'm not an advertisement for homeownership because it's also understanding what it means to be a homeowner as well. I think the other thing we're finding about all consumers is when you buy a home, why one, first of all that you could afford and by that it's, once you're home there's a lot of other costs. That's the other thing that people don't understand. They think it's just their mortgage payments. Right these days you have insurance and that's going up with climate, uh, taxes. By the way, if you own a home, the roof leaks, you gotta fix it. So, it's, it's about understanding what it means to be a homeowner. So you're lasting, lasting homeownership. So, I just wanted to put that out there. Not like a walking commercial, but it is a responsibility to understand what it means. Um, but investing doesn't have any of that. So, yeah, that's, so you have to take them into account. Right. You know, the, um, housing is a big issue this year's election cycle. There's an election coming up. I don't know if anyone's heard. Um, but regardless of the outcome, how do you foresee this election cycle affecting women's wealth? Yeah. Look, I, I can't talk about politics, but I will say this, I've been doing housing for a long time. It is the first time that I could remember where both sides are talking about housing, which really demonstrates that housing. Obviously, it it impacts the affordability crisis we have right now in this country obviously impacts the unreserved and the low income more. But it's happening across all income levels, all ages. I mean, you have Gen Z now living with their parents, right? That didn't happen before, right? You have homeownership now, the average age now 3537 years old before you used to be in your late twenties. So, um, it's a real issue. Um, for people, housers, we call ourselves housers. It's an exciting time. Yes, that if you're, um, it's an exciting time because people are, you know, are finally saying we know what's up with, with housing and it's, you know, people still remember mortgage rates from just right before the pandemic. It was like 3% 4%. By the way, historically, 6% is a low mortgage rate, but the consumer still hasn't adjusted. We've been trained, we've been trained. That's what you remember. Home prices to your point. You know, that's the one thing that we have the best economists. It's even surprised us how home prices continue to go up. Right. So, um, I think it's an affordability crisis. I think it's exciting that both sides are talking about it. Housing is not gonna go away. I'll shrug here. I'll talk about politics. Um, you know, and we all know the answer to this one. and a good part of the answer is the repeal of Roe V Wade was many things and it was a negative economic issue for women. It was a negative economic issue for their families and it was a negative economic issue for the states in which they live and that's just the beginning you can. Right. Yes. Well, boo hiss, boo, hiss. Um, you know, and then these, these states where abortion rights are being restricted, don't have things like paid family leave, don't have adequate child care and support. So it's a double and triple impact to women's wealth. I wasn't going to let them boo you. Was that no, but not boo me. But boo. Yeah. And that's before you get to get to tariffs and what the impact of those are gonna be, etcetera, etcetera. So, so we all know the answer here on the subject of other completely ubiquitous news. A I, how do you sort of see a i affecting women's wealth moving forward? I know you have distinct thoughts about that. Yeah. No, I, we're very excited about you and I, by the way, I'm a fir of doctor Thursday. William was great to, I finally see you on the panel the best. Yes. That's definitely, by the way, I, when before the speaker said about the New York times article, I remember when I read the article, she, I noticed she was not on that list, so I was so delighted that it was right here. But in any event A I has been really for women in particular the other, it's allowing us to see consumers, including women, self employed, women, women who don't have a W-2 income. I mean, historically, the way credit has been available in this country has been through credit scores very often. You have to be in the credit system for that, right? So women, Gen Z millennials, they're credit invisible, right? Because they're not in the credit system yet. I'm new to country as well. Um but also the gig economy, 30 million Americans are in the good economy. So with technology, we now could underwrite a consumer, including women that are not traditional W-2 income employees. And we we have confidence, underwriting that risk by looking. If they give us permission through their bank statements, we can look at that data and we can we can we're teaching models how to understand that information and take the risk that that person has the capacity uh to be a, you know, mortgage holder. So for us, it's exciting. The other thing that's exciting is consumers. One thing I will say this is including women, more and more women and men understand their credit score now. So that's what I love about millennials and Gen Z, they're using all the credit monitoring tools that are now out there and they're monitoring their credit, which is a good thing. So I, I'm very, we're very big a fan in May keen on technology and how it's enabling us to see and serve more consumers and women benefit from it. Yeah. Well, maybe. Um so you know what they say, garbage in, garbage out. Um you know, Mistruth in Miss Truth out. And so let me give you a couple of things, you know, if we put in the world as it is today, then what comes out of the world as it is today? So a couple of things that we all know, for example, one of which is we all know women are risk averse, right? That's why they don't invest as much. That's why they don't buy houses as much. We all know that women aren't as good at math as men. That's another reason they don't invest. We all know that women need more financial education. Um In order to invest, we all know they don't enjoy investing. Those are things we know and are said all the time and none of them are fucking true. OK? But these are repeated so often. Then I had the nodding heads. So look, let, let me, we do a ton of research on women and money at all of S A ton. Let me tell you one thing we found again, another thing we all know, which is that women are not confident around money, what we and so therefore, they don't have as much money because they're not as confident. They're not investing no, when women get money and I'm looking at you great wealth transfer, right? When women get money, they become more confident. It's, it's the relationship is inverse, which is why I personally am looking forward to the great wealth transfer. Not when you know, the boomer husbands die that part of it. But, but there's not all of them anyway. Should I say it? Should I say it? I have nothing, I have nothing against middle aged white men. I've been married to a couple of them. So I'm not looking forward to that part, but I am looking forward to when women get the money. We think about the millennials and the Gen Gen Zs getting the money, but it goes to mom first and I'm looking forward to when women have the majority of wealth in this country, which is coming up the amount of confidence we will have. So one thing to watch out for, for particularly for your daughters is the media still gives women these negative messages around money. You know, and it's the financial planning doesn't have to be really, really hard and they're like, oh, so it must just be really hard and don't buy the latte and don't have the facial and don't have the avocado toast and the pumpkin spice latte. The press goes berserk about that because it's all those women spending their money that otherwise would make the millionaires on that frothy pumpkin, delightfully spicy pumpkin spice latte. So swift concert tickets. Well, that, you know what I loved about that is the media tried to mock women for that with the bracelets and women. Just forget it. Right. We're going, we're going to dance, we're going to multigenerational dance and I loved it that women were stepping into their economic power and didn't mind the blowback. They were getting, I need a question. How are you? How are you doing? So, until I've been, I've heard that before. You're just, we love you. I mean, I love you. It's uh uh you know, what are the guys that say on the, the wealth transfer? You know, a lot, there's a lot of hype about it and you're probably right. I will say that it's about 84 trillion or something to be transferred when you really drill down a little bit more. It's very high net worth individuals. Of course, a lot of that. And um you know, the average like 60 year old has maybe million dollars of net worth and they're gonna spend it on health care. So I hear you. So what happen? But it's really a high net worth. So we uh I, I've looked at that, I will say this, I'm not as, you know, I have a 22 year old daughter. I have to say I am really like, I think these young women are, they're pretty smart and savvy and technology is helping that. Um I, I really do. I have a lot of confidence in women. The questions you all ask, um how you all communicate with each other. So we just gotta make sure that education is a big part. Um I think Fortune does an amazing job but tapping those young women, I, I getting them early and, you know, in high school and college, um I think women, young people are just stavi these days. So I I'm very hopeful. So I'm I'm hopeful for one quick question for Priscilla and Sally, who wants it? And it's got to be a fast one. Anyone, anyone over here, there's a mic right behind you. Is there anywhere around the world that you think that could role model this and we could look at them and learn Scandinavia? Hm. That was quick. That was great. That was, that was incredibly quick. I want to spin that out but we are running out of time and I want to leave the audience with one takeaway from each of you. One piece of advice, financial or otherwise that you think they need to remember when they walk out of this room, make a plan, have a plan, financial plan. Yeah. Um I would ask you to remember nothing bad happens when women have more money. Nothing. And the best day to invest was yesterday. Uh but if you didn't invest yesterday, the next best day is today and then there's also tomorrow and it doesn't mean there won't be volatility along the way. But it does mean that if you can invest for the medium to longer term, particularly if you can get your daughters and sons started on this. The power of compounding is simply enormous. Warren Buffett, who used to attend this conference always said that was the secret to success. The secret, not stock picking and trading and watching. You know, I won't say the name but um but that, that tapping into that compounding is really it. So for all of our daughters opening brokerage accounts, for them opening investment accounts is key. If you want to leave our audience with one word, what would it be? Courage to invest? Money? Money, money, money. Yes. And as we establish when we're talking about money, we're not just talking about money. Thank you all so much Priscilla Sally. Thank you.