Money matters - especially for women

It was 1983,and Katherine Lapidoth's life was perfect. She was in love, newly-wed to a well-off lawyer husband, her career was going well, and she had just moved to Israel to start an exciting new life.

"What we didn't know was that my husband was ill," she tells a group of women in the kick-off to her lecture series entitled, "Money Matters - Especially for Women." "He was diagnosed with diabetes, he couldn't work, and the day after I gave birth to twin boys, he had his leg amputated."

The audience gasps audibly, and Lapidoth, today a senior financial consultant at Pioneer Global Funds, has made her point: life is uncertain and anything can happen, so prepare today for the unexpected events of tomorrow.

Lapidoth is a licensed financial consultant in Israel and a financial planner in the US. She holds National Association of Securities Dealers (NASD) Series 7 and Series 63 licenses as a stockbroker (the licenses required to be a stockbroker in the US). She is also a member of the Society of Trust and Estate Practitioners (STEP), and the US Financial Planning Association (FPA). She has been with her company for 18 years, specializing in tax-efficient international offshore investments. This means that she helps middle-income to high net-worth individuals decide on the best places to put their money, where no tax is deducted at the source, and where it is readily available in case of emergency.

In her talks, Lapidoth uses her own story as an example of the bumpy ride life can give us. Her husband recovered, learned to use a prosthetic limb, and resumed his career. In 1984, Scitex hired her as manager of corporate communications. "It was exciting and fun, and the only drawback was my poor Hebrew, and Robert Maxwell's behind-the-scenes takeover," she says dryly. "I had no idea what was going on. Suddenly, Efi Arazi left the company, and my department was downsized. We had three little sons at this point, and I was ready to go back to America." The Lapidoths had already put a bid on a McDonald's franchise in Northern California when, Katherine recalls, "I was told that a man by the name of Kobi Faigenbaum was looking frantically for me." And so, her plans and life changed again.

Jacob (Kobi) Faigenbaum, together with partner Omer Galin, had founded a company called BIT - Business Intelligence Team. BIT was the Israeli branch of Finexco, a British investment house headed by Philip Goldsmith. The idea was to do something that had never been done before in Israel: provide offshore investment opportunities for eligible individuals, mainly new and veteran immigrants (olim) with dual citizenship and non-Israeli income, and foreign residents.

Those were the days of rampant hyper-inflation. "At the time, there was exchange control in Israel," Lapidoth recalls. "Foreigners were freaking out, wanting to put their money in a safe haven offshore." She was recruited by Faigenbaum and Galin, the McDonald's plan was put on hold for a year, and she joined the BIT team. "So, I am not a founder who came in with seed money, but I am the third person, and took a huge risk to come in. I started to run around like a madwoman, and I was doing well. The company was only a year old, and I had several successes under my belt."

And then disaster struck again. On Monday, October 19, 1987, a date now known as Black Monday, the US stock market experienced the largest one-day decline in its history. "33% was wiped off of the market in three days, I think it was, and we thought it was over," Lapidoth says.

In the spring of 1988, Philip Goldsmith came to BIT's rescue. Finexco had been acquired by South African insurance company Old Mutual, which wanted to buy BIT as part of the purchase package. Because of the Arab boycott, however, Old Mutual wanted the Israeli company to reform under another name. Pioneer International was selected, Lapidoth flew to South Africa to open the company's offices there, and "that was the beginning of the beginning." In 1990, the company had $100 million under advice. Today Pioneer Global Funds (the Israeli branch) has more than $400 million and Pioneer International has $1.5 billion under advice worldwide.

Pioneer International represents the funds and investment products of Insight Investment, Man Investments, GAIM Paragon Inc., Irish Life International, INVESCO GT, Fairbairn Trust Company, Barclays, and Close Trustees. In the local, shekel-based fund market, Pioneer Global Funds has additional contracts with Clal Finance Batucha, Migdal, and Excellence. "The local investment scene is a good market," Lapidoth says. "At least three of the offshore funds we deal with have investments in Israel. But, as an English speaker, most of the people I deal with are offshore money."

Which brings us back to the issue of women, money, and why Lapidoth feels so strongly about conveying her message. "This is a true story: I went to Netanya during the 1991 Gulf War to see a client. She was about 68 and her husband had just died suddenly. And I went to see her and she was reading her telephone bill and crying not because her husband was dead, but because she didn't think she had enough money to pay the bill. She didn't know that she had a million pounds in trust. I was shocked. I had always assumed that her husband had conferred with her about their money. And so, I explained to her how to pay the bill, and more importantly, I explained to her about her financial situation."

It was at that point that Lapidoth decided to create a seminar geared towards women. "Men and women can be equal, at least in terms of earning power. But women still think differently than men when it comes to investment. Now, why is that?" she asks rhetorically.

One reason, Lapidoth says, is that men and women think differently in terms of security in old age. "From an early age, men are taught to think that they will earn money, and spend money. Women are not."

"Let's say your dear old Aunt Sarah, whom you never knew, just died and left you $100,000. 75% of women would that put money in the bank without even checking what sort of interest they will gain on it. Statistically, most women will wait 1-2 years before seeking an investment opportunity for that money. On the other hand, most men will immediately look for a way to invest that money. Why? Because historically, women are more worried than men about making ends meet and less confident that they will have enough money in the future."

A woman in the audience asks: "How much money do you need to retire?" Lapidoth shoots back: "80% of your former income. On average, women live six years longer than men, and as of 2005, spend 21 years of their life in retirement, as opposed to 16 years in 1985." And all this in a Western world where women still earn NIS 0.74 for every NIS 1.00 a man earns. "We need to start saving more aggressively. Most of my older women clients are outliving their money."

Lapidoth's main message to women: invest for the future like a single person even if you're married. "Statistically, at some time in their lives, 90% of women will be managing money on their own because they have either remained single, gotten divorced, or been widowed. In the latter two cases, the transition can be traumatic, if unprepared for.

"It may sound unromantic, but women should think single when it comes to their money. At least one credit card should be kept in the woman's own name; I think a woman should have her own credit rating. They should also have at least one bank account in their name, and perhaps a mutual fund as well. Women should know where the insurance policies are kept, and how to reach the family financial advisor. Women today must know exactly how much their monthly expenditures are, and see the bigger picture as well. The good news is, once we understand this job, we handle it better than men."

Published by Globes [online], Israel business news - www.globes.co.il - on March 2, 2006

© Copyright of Globes Publisher Itonut (1983) Ltd. 2006