Time for ladies with dollars to see sense and get clued up about wealth management before they get ripped off, says Daisy Prince
Time for ladies with dollars to see sense and get clued up about wealth management — before they get ripped off, says Daisy Prince
It never fails to amaze me how little things change. Recently I re-read The House of Mirth by Edith Wharton. It is a cautionary tale about the lovely Lily Bart, who despite being from an old New York family falls, rung by rung, down the social ladder through her own inability to accept the limited life choices set out by her upper-class upbringing.
Part of the reason for Lily’s demise is her lack of knowledge about her financial affairs, which leads her to make some foolish decisions. She says pitifully to a married man whose intentions towards her are not at all honourable: ‘I have a tiny income but I am afraid it is badly invested… and I am so ignorant of money matters that I don’t know if my aunt’s agent, who looks after it, is a good adviser.’
Although The House of Mirth was published more than 100 years ago, that sentence could’ve been written last week. If there is any lesson to be learned from the Madoff scandal it is that people who invest their money, and women in particular, need to be vigilant about researching who they are investing the money with and how to do it.
What is surprising is that in an age when information is so readily available people still make the same mistakes as they did a century ago. In a Vanity Fair article by Jamie Johnson on the decline of the Wasp establishment, he cites the example of David Netto, a Wasp who should have inherited $750 million but lost out on most of it through an errant, mentally unstable uncle who left the entire bequest to the Metropolitan Museum of Art.
In Netto’s own understandably bitter words, ‘had my grandmother not been such a Wasp that she actually could have dealt with money and signed a few damn papers and done some minimal estate-planning,’ his life would have turned out very differently.
More recently, Alexandra Penney, a former managing editor at Condé Nast, lost her $1 million nest-egg because she had invested with Bernie Madoff. Unlike Netto, she was not a trust-fund kid — she’d worked hard all her life but had put her entire investment in one place, so when the Madoff bubble burst she lost everything.
Part of the reason for these mistakes is that talking about money in polite society is still taboo and there seems to be a residual belief that men are better at finances. The truth is that women can be great investors, as they tend have less ego when it comes to business and a healthier instinct for self-preservation.
What is surprising is that even women of my generation aren’t taking hold of the financial reins. I find it baffling that many of the educated professional women I know have ceded control of their finances to their boyfriends/husbands. When I broach the subject with them, my enquiries are usually met with puzzlement: but why shouldn’t their boyfriends/husbands/parents look after them?
One 31-year-old was transformed into a Victorian maiden before my eyes when I suggested that she should make sure her money wasn’t being spent on hare-brained financial schemes. ‘But why,’ said one friend, ‘surely my husband will be able to do that for me?’
My response to her is a personal one. In my parents’ relationship, my father looked after finances and travel and my mother did everything else. This was a perfectly reasonable solution until he got Parkinson’s disease.
Now my mother is aware that at some point in the future she is going to be responsible for dealing with a lot of situations that she has had no training for. She’s very bright, but she knows that the transition will not be an easy one.
I can’t help thinking that if she’d been more involved with their finances from the start, she wouldn’t feel so nervous about the thought of taking them over. It’s an obvious point to make, but life is unpredictable and it is so easy to be caught unawares.
Finance, like law or medicine, has a language that can be learned, yet it seems as though the industry has purposefully drawn a veil over it. When I was at school a few of my Persian friends used have to have extra lessons on Saturdays to learn Farsi, their mother tongue.
The language of money is no different, so perhaps it should be added to the school curriculum. It would almost certainly end up being more useful to the average person than physics. For those of us who haven’t had the training, we need a course that can be downloaded from the internet which teaches sound financial principles and demystifies the murkiness of the financial lexicon.
If Lily Bart were around today, I’m sure she’d be the first to sign up.