We Can Know Things and Still Need to Hear Them

Grace: 00:00:00

Kate Nevin is the president of TSW2 Capital Advisors and the portfolio manager for both TSW2 and TSWS. She focuses on investments in hedge funds, venture capital, and other alternative strategies. Have I scared you yet with the financial jargon?

Grace: 00:00:19

Stick with me, I promise. We need to know what this means. Her career has spanned over two decades, beginning as an analyst in New York City with Lehman Brothers in the early 2000s. One of Kate's leading directives is to incorporate diverse talent, gender parity, and extensive data to inform her investments.

Grace: 00:00:40

She's involved in a slew of organizations, including 100 Women in Finance. She's an anchor partner in the Diverse Investing Collective and an active member in Rethink Food, to name a few. Her commanding drive is that when you invest in organizations that address your ideals and morals, the long term outcomes have an exponential impact.

Grace: 00:01:01

Kate Nevin, how you doing?

Kate: 00:01:04

Hi, Grace. Oh, that intro sounded amazing. Thank you for that. Wow.

Grace: 00:01:10

I wish I knew what all of it meant

Grace: 00:01:13

We're finding out today what that means. There are two kind of takeaways from your bio that stand out to me and the first is that as someone myself who is not deep into the finance world. I have no idea what you do. And I think that for a lot of people, the language of finance is so intimidating that they don't participate and they are afraid to talk about it. Particularly women. And I think that has a history behind it, right?

Kate: 00:01:49

Yes, indeed, grace, I think there is a history behind this, and I think a lot of it, has to do with the unnecessary amount of jargon we have in the financial markets and this real need that, long ago was felt to put up some screen between the lay person and the experts.

Kate: 00:02:05

But it doesn't need to be as complicated with a lot of the language that we use.

Grace: 00:02:12

I think too, there's, an even. Bigger, deeper history, which is that women and most people of color prior to, very recently were not included in the conversation of finance.

Grace: 00:02:30

You know the way that the foundations and systems of our country were founded did not include most people. And so it's. It's stayed with us for a long time and even until the 70s and 80s, women weren't able to get a credit card or mortgage without the signature of a man.

Grace: 00:02:49

And that has, I think, kept its hold on, a lot of the higher end financial world than we would have liked.

Kate: 00:03:00

You're exactly right. It's so recent. Like it's basically in our lifetimes, right? We think about the 19th amendment. We think about all these things that happened, over a hundred years ago, but really when it comes to financial equity, like we're not even Almost there yet.

Kate: 00:03:15

When you look at things like the gender pay gap, which is really a pesky thing that's hanging around, women make, I think, 82 to 83 cents on the dollar, that men do. And that's white women, black women, it's even lower. And to your point about credit cards and mortgages, that was the mid seventies.

Kate: 00:03:34

And, I think about all of the things that impact women one that's really, crazy to me is that in, in 1993, Congress passed legislation that allowed for women to actually be included in clinical trials. So even all the drugs before 93 were only tested on men and then titrated like as if women were just small men, right?

Kate: 00:03:56

So give them a smaller dose. But we know that women are completely different in so many ways and I think, never is that more acutely felt than in how we respond to money, and how we think about wealth and how we think about investing. And how so rarely were women raised, from a young age with this vocabulary, with this, push to understand money and the flow of capital and investing. I think boys are given this language and this, business quote unquote sensibility early on. And I'm only seeing it happen now. So. It's not only are we structurally behind in legislation and Equity, but just the way we live and breathe I think as women growing up we were Wholly left out of a lot of these conversations.

Kate: 00:04:49

So yeah, it looks like a big black box and you know Do we really want to open it up? And the answer that I'm screaming from the mountaintops is yes Yes, absolutely

Grace: 00:05:00

for almost all of our country's existence, most lower and middle class families, the women are oftentimes the only one working or the one bringing in more money. And even then, The men were handling the higher end of the finances. It almost doesn't make sense.

Kate: 00:05:20

It doesn't. I love to lean on like statistics. If you're in the financial world, like data and metrics. That's ultimately what we're all using.

Kate: 00:05:29

And when I think about the statistics on women, we're over half to half of the population. What I've learned from your podcast is we're over half of this state, right? We're over half of every County in this state. I thought that was a fascinating statistic. We contribute 40 percent of global GDP.

Kate: 00:05:46

So gross domestic product means about half of the capital goods, currency, services, everything floating around this world. Wouldn't exist if it wasn't for us and on top of all of that, we account for 70 to 80 percent of all consumer decisions. So going back to the leave it to beaver, Even then, women were buying the groceries, choosing the grocery store, they were choosing where their kids went to school, they were choosing the health care options, they were choosing the detergent they wanted to buy, so even before we really had this movement Towards equity in the sixties and seventies, women have always controlled the purse strings to some extent, whether it was, that they were the breadwinner or they were supporting the breadwinner.

Kate: 00:06:33

So you really can't look at a healthy economy, global or domestic without incorporating women's labor, invisible labor and actual, working capital. So it's just, it's crazy to think that, our impact in this, global economy is so profound that we aren't taking more ownership and sort of the back end of that

Grace: 00:06:59

so there's a language side of intimidation but then there's also the confidence piece. Many people either don't believe they have enough money to be investors and others are investors, But don't even realize that it's all the same stuff, like 401ks, like what you just mentioned, many working people have 401ks, but you don't always necessarily associate that with you are now an investor. And when I speak to confidence, there's a statistic that I found from an organization called FINRA that says 71 percent of men think they have a high level of investment knowledge compared to 54 percent of women.

Grace: 00:07:41

And my guess is that the understanding isn't that far apart, but the confidence level is.

Kate: 00:07:48

You're exactly right. I think we see that, in so many different ways, how that shows up where women want to know everything before they invest before they apply for that job, right?

Kate: 00:07:59

Like men will throw their resume in for any job that they think they could do. Women want to make sure they have all the skills and they can check all the boxes. And I think where that really hamstrings us is around investing. Particularly because I think women can. Have a real innate sense of their values and how the world should be.

Kate: 00:08:22

And I talk about this a lot in terms of women being closer to a lot of the intractable problems that we face. Women across the board globally. Domestically are closer to the issues of health care of climate change of, lack of financial access of lack of healthy food options. Like women are usually the ones that are trying to solve these problems day in and day out, and that makes them more aware, I think, of what the solutions look like.

Kate: 00:08:52

So I think a lot about to how women tend to feel more motivated around philanthropy when they think of solutions, right? When they think of investing in change, and that's so important. And I always, Try to make the correlation that the time you're spending in your advocacy, in your philanthropy, even in just in your community, how you show up, a lot of those skills are totally translatable to investing.

Kate: 00:09:19

And women, I think, Elvis came out with a study recently and it said 38 percent of women have financial advisors. About 54 percent feel confident enough to do their own investing. These numbers are fairly low, but I always, say you already know a lot about how you spend your money and where you think the problems are and how you'd like to solve them.

Kate: 00:09:42

So if we could even increase that 38 percent of women who have financial advisors to 74%, that'd be significant, right? You don't need to figure everything out at home watching YouTube videos trying to properly manage your 401k account.

Kate: 00:09:57

Leave it to the experts, but know that as a woman, you already are fully capable of deciding where your money should go. And you can titrate that around how you do your philanthropy. You can base that on how you get involved in your community. I like to always talk about how this is not a zero sum game.

Kate: 00:10:19

People think it's like musical chairs. And if we bring more women in, then that means like some poor white guy is going to get left without a chair when the music stops. And that's just not true. True. Bringing more women and people of color in creates more money so it's good for everybody.

Kate: 00:10:33

There was a study that showed that if women invested at the same rate as men, there would be three trillion dollars, in excess, in terms of managed assets . So that's three trillion more dollars. No one's having their money taken away from them. That's already out there. This is more money.

Kate: 00:10:52

And then, 2 trillion of that they anticipate would be invested. In line with values in terms of how women want to support people and planet. The first step is really bringing women in from a confidence level finding that ally to bring these women into the financial system and then letting them work their magic because they know What they want to invest in. They know they want to see more equity in the world. They know we can solve. Climate change with better, technology.

Kate: 00:11:23

They know all of these things. I'm seeing so many exciting things happen in health care with these women, lead teams. It's fascinating to see how they're solving these problems. And so for me, it's if we can dust off some of that confidence and get the right allies and really boost up this connectivity, women invest differently than men do. And that is a force we have yet to see in this world and I think it would be amazing.

Grace: 00:11:50

I want to back up a little bit and just reiterate something that you said. And that was, philanthropy and advocacy . Because I think those two words are often associated with wealthy people. And I think that everyone does both philanthropy and advocacy every day without realizing what they're doing.

Grace: 00:12:14

When you buy Girl Scout cookies, when you give to, the preschool that's doing a fundraiser, there are all these simple ways People do every day. You get an email, send 25 dollars, send 50 dollars here. And then you also have, some advocacy groups, meaning like a Wren or, conservation society.

Grace: 00:12:32

There are these different organizations that you may give to. That's philanthropy. And I think that a lot of times we associate words. Like that being. Only available for people that are having their name put on the side of a building that I'm a philanthropist.

Grace: 00:12:47

They're just fancy words for things that we do every day and that we can then apply to our 401k even, right? There are ways to apply your vision. And that actually brings me to one of your main focuses which is why having diversity at the highest level of organizations affects outcomes in productivity and long term outcomes.

Kate: 00:13:10

It's so accurate to point out the, just the nuances in language. So I'm glad you, you made that connection. I think in a lot of ways, what people do with their feet and their hands in terms of advocacy and marching and volunteering is really moving the needle beyond the big, maybe more distant words like philanthropy, or donating.

Kate: 00:13:29

It takes all of us. This is a very non scientific statistic, but, diversity outperforms a hundred percent of the time. 100 percent of the time.

Grace: 00:13:40

Tell us what that means.

Kate: 00:13:41

The more perspectives, the more socioeconomic, gender, ethnic, religious, however you want to slice it. The more perspectives we have around a table, whether it's a, a PTO or a board or a committee or a team of analysts and investors, when we have. This, recognition that everyone is coming with different insights, and different journeys and different ways of thinking and being in the world.

Kate: 00:14:16

That's The real alpha, right? Alpha is a word we use in the industry for like differentiated performance. That's where this happens in this collaborative, More inclusive way of making decisions. This is getting out of finance a little bit, but just the fact that, in our state, Supreme Court is only about White and male, I just-

Grace: 00:14:40

don't even get me started on that.

Kate: 00:14:42

Opening. I'm kicking a hornet's nest right now, but it's think about your investment portfolio as a woman, white, black, young, old modest income with a 401k, or, somebody that's doing more of the venture side investing. Would you ever want to give a hundred to a hundred million dollars with just a bunch of white men, like there's no value add there.

Grace: 00:15:09

It's been trained in our brains that those are the people that are the best at doing it. There's that line in the Barbie movie that I am obsessed with, which is we can know things, but we still need to hear them.

Grace: 00:15:24

We've been so ingrained with this belief that the best of the best is a white man sitting in a New York business office with a blue pinstripe suit and, a wall street journal under his arm, but it's not there's data that says it is not.

Kate: 00:15:40

We all have biases. I have biases. You have them. I'm not saying it's just one sided. But the bias in the financial sector to, default to that white male businessman, it's so ingrained. It's fascinating to me from my seat as an investor who does, really deep research on investments that if these teams were actually doing the research they purport to be doing, all the data shows that more diverse teams outperform.

Kate: 00:16:12

They're actually leaving performance, leaving money. Leaving more success on the table by the result of these ingrained biases. My seat as an allocator, as someone who's investing money using data.

Kate: 00:16:27

I am finding incredible teams that are made of women and people of color, and I'm using Data. I'm using, deep research, peer networks, connectivity. And so I think, part of my work here, is to share as publicly as possible what I'm finding, maybe the old way of doing things was that everything happened behind closed doors and you had this portfolio. And I think to your point, Grace, if we're not seeing these women and these women of color who are managing these funds, who are starting these companies, who are these entrepreneurs, if we can't see them publicly, They're not getting the same exposure as their, peers.

Kate: 00:17:11

Then it's incumbent on me. And I think my fellow investors and allocators and, the women in the financial sector to really elevate what it looks like, because there's also that, if you can't see it, you can't be it right. So the similar to the Barbie quote, like you really have to contextualize the visuals behind this. And so that's a lot of. My work as well. And something I'll be leaning into more even in the future in terms of sharing publicly who these women are, how I'm finding them, what they look like, more of the backstory, because it's not coming through the traditional channels, we have to find new ways of building this community.

Grace: 00:17:51

Essentially what we are talking about in diverse leadership is it often gets tied into the D E I or the diversity, equity, inclusion, topical, terminology. And I think that because of how, So many words have become co opted and politicized.

Grace: 00:18:16

What that term has become in meaning through the lens of politics is very different than what it actually looks like. Because it's been made a political term, there is a sense of a pushback, against this D. E. I. It's like a scary thing. , so let's define what DEI means

Kate: 00:18:38

diversity, equity, inclusion, and then I think there are even, some other ways of looking at that. It's Maybe D. E. I. A. Is that access? And there's also E. S. G. Which is the environmental social governance.

Kate: 00:18:50

And to your point about those being political hot potatoes. I think they totally missed the point. We have to raise awareness on a lot of the language around equity, because, it hasn't been discussed for so long.

Kate: 00:19:06

I do think there, there are better ways to do that. Because I think what we're seeing now is a backlash to something that was really meant to make. Boards, organizations, corporations, companies better, again, it's this scarcity mindset that we're always up against, right?

Kate: 00:19:27

And I see this running rampant, in our political sort of the wokeness or the hot potato of DEI or ESG doesn't really serve a purpose to have it be these optical, More window dressing movements because I think what's happening below the surface is just let people choose the best people for the job from a broader pool of candidates.

Kate: 00:19:54

Let people choose investments based on their values, right? Maybe that is more a governance or an environmental approach. I understand why we needed to push that movement forward. And I know a lot of amazing people working in the D. E. I. Space, and I'm so grateful for that work and that education and that awareness.

Kate: 00:20:15

But at the end of the day, it's empowering people to build better teams, and to build better portfolios. And I think that really comes out of doing the research for the strongest candidates. There's a group that I really love in terms of how they approach a lot of their investments and their managers and, they have a, how far they've traveled metric. Which means how long did it take that person to get from where they started to here? Distance traveled might be what they call it. And they found that people that had to travel longer distances. Distances. Whether it's the immigrant story or the woman who was raised in the single family household or the, the entrepreneur who's the first in his family to go to college.

Grace: 00:20:59

And you don't mean, like, you're, you're not saying like literally traveled the long distance, not miles. You're saying like career

Kate: 00:21:05

wise yes. Yeah. The American dream story. And I think that is what we're trying to get at when we talk about DEI, but we're missing the stories of why it matters because we're focusing on this very surface level.

Kate: 00:21:21

And I know we have to do that, right? It's hard to go deep every time. I feel like as a society, we can't really go deep. Any more . But I think what I would like for people to think about when they think about D.E.I., think about distance traveled because what we found in those studies is that makes for a scrappier, harder, more determined, more creative, more clever, more resilient worker.

Kate: 00:21:45

If it's just been handout after handout, Ivy League to Silicon Valley, whenever anything goes wrong, we just put it on the credit card. That's not resilience. That's not a company that can scale. That's not a company that's going to move the needle on all the things we need to innovate for in the world.

Kate: 00:22:01

But when we think about building inclusive teams, that perspective is what leads to better performance, better results, better school boards, better corporate boards, you name it. It shouldn't just be, we need three more brown people around the table.

Kate: 00:22:18

It should be, we want these diverse brains around the table because they're going to teach us something new. So where I get frustrated in the backlash on DEI is I think we did it wrong from the start. It's about the purpose building of a team, the purpose building of that value and not the optics of how many, different faces and skin colors do we have?

Kate: 00:22:43

It's really, why are they there? It's because they're adding transformational value to that organization.

Grace: 00:22:50

Most businesses don't just follow the backlash of pop culture, there is data that says, Even though, there's this, social backlash in some circles on diversity, equity, inclusion, the results are better than non inclusive.

Grace: 00:23:10

And the, there's a statistic out of Axios that says 57 percent of 322 U. S. executives surveyed, in NovemBer. said their organizations have expanded DEI programs over the past year. However, they're not calling it like the D. E. I. Director there. They're putting like a chief diversity officer in they're still doing it. But because of the Supreme Court ruling, that race could not be used as an explicit factor in university admissions, companies are now freaked out that any programs that took race into account under their umbrella would be vulnerable to litigation.

Grace: 00:23:49

So it's really just about changing the title of those programs, but they're still actually doing them. Because companies now are seeing why it's so important. And I have a silly personal story in architecture, it's a mostly male field. This is my equivalent to finance. When we, bought our house, it has like a closet basically that has a washer and dryer in it. When I. First walked in to do the laundry.

Grace: 00:24:15

I realized that you can't open the door out. You have to close yourself into the room to actually do the laundry. And the architect that designed the house, I don't think had ever done a load of laundry and obviously didn't ever consider how to go through this whole process. And I thought that is a perfect example of someone who doesn't have experience doing something that he's providing for someone else. And that's where you need other voices.

Kate: 00:24:46

And I think this all really ties, the threads we've pulled in this conversation from language to who's actually going to win in this next economy. So you realized you had to lock yourself into the laundry room.

Kate: 00:25:01

So if you had been involved in the design of that, it would have looked completely different. And then that architect would have remembered that for every future build probably. So we think long term outcomes, that's why I just think this is so important. So if we can get women get their confidence up. Take away this idea that they have to know all of the jargon that they need a glossary, you just said it, we recognize the solutions to the problems and that is actually investing. That is actually really smart investing. That's what I see all over the place right now is women that are getting more engaged around ed tech around, women's access to health care around climate and ag tech. And it's just really, I think, highlighting that the more diverse voices we have Around the table when it comes to solutions, then we're not going to get stuck in a tiny closet that only opens one way, right. That doesn't make any sense. And I think that, this new economy, the 21st century is actually going to be defined by those people that can solve those problems and really build those inclusive networks. And those inclusive boardrooms and companies. And as a portfolio manager, I'm going to put my money on them.

Kate: 00:26:20

That's where the puck is going, and that's why I spend so much time talking about why this is important, and trying to connect the dots that everyone actually is capable in whatever role they find themselves in., right? Whether it's trying to, maybe understand a bit more of the 401k options that your employer provides, getting more engaged around your, investment committee or your personal portfolio.

Kate: 00:26:49

There's on ramps everywhere, but we've got to do a better job of innovating that access. And so I do see that happening. I do feel really hopeful. That we're about to unlock like crazy potential for people to solve those issues like backward doors on a laundry room.

Grace: 00:27:07

I love it. I love it. I, Kate, thank you so much for being here today. You're just so full of knowledge and very inspiring to us all. I really enjoy having you on. But now I have to go do the laundry in my closet.

Kate: 00:27:25

I'm going to come over there with my screwdriver and we're going to take those doors off and turn them around.

Kate: 00:27:29

Fantastic.

Grace: 00:27:31

All right. All right. Until next time, my friend.