Female Founders: This Is How To Make Your Money Work As Hard As You Do To Earn It

It’s no secret that women are seriously lagging behind when it comes to investing. Financial advisor Francesca Smith shares how female founders can make their money work harder for them this year.

By Bianca Barratt

It’s no secret that women are seriously lagging behind when it comes to investing. According to a study from Boring Money, there are only 6.4 million female investors compared to 9.7 million male, meaning that men in the UK currently have close to £600bn more in stocks and shares ISAs, private pensions and investment accounts than women. This is despite the fact that women are statistically better investors. What this means is that women end up with less money for their futures – particularly if they’re business owners – and are far more likely to face poverty in later life.

But why? Why are women being left behind?

“When I think about the dinner party conversations I encounter, it’s my male friends chatting about markets, work, and business ventures. These topics aren’t normalised in [women’s] social settings. This small difference repeated over time creates a seismic gap in the way that men and women approach finance.”

Meet Francesca Smith – a financial advisor at Jarrovian Wealth who, as a serious advocate for women’s financial education, is on a mission to change these sobering statistics. Working primarily with women (and, more specifically, those who own businesses), Francesca realised how great the gulf really was between men and women’s financial literacy, so decided to start hosting monthly investment events across London to teach women the skills they need to start investing.

“I’ve met many inspiring, successful professional and entrepreneurial women but have always been left surprised by how many of them lack confidence in their finances,” she observes. “These events focus on creating an informal environment to discuss a range of financial topics and dissect the jargon of the financial services industry.”

This then led to the launch of Frankie’s, an exclusive membership network where business women can build their knowledge of and confidence in finance so that they can flourish and grow in their professional careers or entrepreneurial ventures. This comes in the form of monthly high profile keynote speaker events and fine dining experiences, masterclasses and workshops, financial planning seminars, exposure to strategic partners and access to mentors, amongst other things, and all leads back to the ultimate mission of the club: “to encourage women to engage in conversations around finance and give them the tools to have the confidence to be bold.”

And by “bold,” Francesca doesn’t mean taking undue risks. “It’s about having the confidence to be inquisitive and seek understanding of how you can make your money work more efficiently for you.

“My favourite saying is, ‘make your money work as hard as you do to earn it.’ It’s the saying that transformed my own relationship with money and it’s with this mindset that I endeavour to empower my clients and members.”

Of course, being a young woman in an industry primary populated by men has had its own challenges for Francesca. “I’m regularly in situations where I walk into a room full of advisers and am lucky to see even one or two other women. But it’s not just us that the financial planning world under represents. There’s a lack of diversity in our sector that urgently needs addressing, whether that be ethnicity, age, gender and/or socio-economic backgrounds. The industry as a whole, I believe, is not representative of many of the population that it is required to serve.”

For many female founders, Francesca’s experience is probably familiar. But just as she has done, there’s an opportunity to view that outlier status as an advantage.

“When I initially set out as an adviser, I was very conscious of the fact that not only am I a woman, but a young one, hungry to do well in what sadly remains a man’s world. But as my community has developed, [I’ve realised] these elements are my superpower – they’re my USP,” she explains. “In my experience, many women feel more comfortable, less embarrassed and less afraid to ask questions when speaking to a female adviser.”

And it’s this sense of safety, this connection, that women have been lacking and really need when it comes to financial advice. It’s this that has already made Francesca such a success. “I think my focus on women and female founded businesses has grown so rapidly because I can relate to their situations, I understand the feelings that they have and am on my own journey of building courage and confidence through the skills and knowledge I have learnt and continue to learn.”

As we move into a new financial year, Francesca shares her insights into how you as a female founder can make your money work harder for you.

If you’re seeking investment make sure that you have the right partners

The venture capital sector is notoriously underrepresented by women (just 13% of women in VC are decision makers) which means the funding available to female founders is minuscule – just 2% compared to that for men – mostly because men are more likely to invest in businesses that they can relate to. That can lead to female founders taking any capital that’s coming their way, but Francesca advises against this.

“Valuation is a challenging element with early stage companies, but it’s really important that founders remember that whilst any investment you’re asking for may seem a lot now, it may be a very small percentage as your company grows. Be mindful not give away too much of your equity early on and when you do, make sure you are getting more than just the money. What can that angel or venture capital firm offer you beyond cash? What expertise are you missing in your current team? What might you need moving forward? I would make a list of these things and then when thinking about who you might partner with, make sure they fit your needs.”

Pensions can be your friend

It’s easy to forget about pensions when you’re a founder, as it’s up to you to actively seek out and invest in one.

“I think most people are seeking financial freedom and the freedom to choose what they do with their lives,” says Francesca.

“I’d always strongly recommend seeking professional advice to explore what these structures might be as every situation is different, but for entrepreneurs, not only can pensions be great for building personal wealth in the future, they can be really tax-efficient and useful in the present as your business grows.”

Make sure you consider your personal wealth alongside that of your business

As a founder it’s tempting to pour all of your focus into making the business profitable at the expense of your long-term personal wealth. But kicking the can down the road isn’t wise, advises Francesca.

“It is very easy to only think about how to make money in your business, but as an entrepreneur, I’d always encourage you to use this skill to your own advantage as well by diversifying and building your personal wealth in your own name, alongside your business. This might be through your pension, and ensure you are maximising savings, for example. This just gives you greater flexibility and reduces your overall exposure to the fluctuations of your business.”

Make sure that you and your business are protected

It’s easy to overlook business protection when you’re doing well, but it’s the kind of oversight you’ll regret in the face of unexpected challenges.

“Nobody likes thinking about the worst case scenario, but what would you do if you were unable to work for a period?” Francesca asks. “I encourage entrepreneurs to consider putting income protection policies in place to give them the peace of mind that some of their income would be supported if they were unable to work.

“Furthermore, no one will work as hard for your business as you will, therefore it’s important to consider what would if you were able to work for a period and had to pay for someone to come in and replace you. I would encourage entrepreneurs to consider Key Person Assurance or Relevant Life Policies to give the business the protection it needs. These are also very good hygiene factors if you’re getting your business ready for external investment, as it’s something investors will look for.”

Manage your cash

Women in particular take comfort from seeing cash in the bank without realising that they could actually make it grow.

“One of the advantages that we have seen for savers through interest rates rising is that you can now achieve greater return on cash,” says Frankie. “Whilst it’s important to be mindful that inflation is currently 10.4% in the UK and therefore returns on cash longer term aren’t great, we can still currently make our cash work harder than we could twelve months ago. I would encourage business owners to review their corporate cash management strategies to ensure any capital sat in your business is working as hard as possible whilst it is there.”

Ultimately, Francesca wants to see female founders arming themselves with the knowledge they need to make their finances work with, rather than against them.

“Money, whether it interests you or not is an enabler. It can give you freedom, flexibility and choice. I want to empower women to look beyond saving, investing, or being good or bad with money and focus on how can they can manage their money to work effectively for them, so they can achieve what they want to in life. When you think about it like this, it changes the conversation.”