The Risks of Being Risk-Averse

Moderator: Barbara Stewart
Global Researcher & Author

Barbara Stewart, a Chartered Financial Analyst, is recognized worldwide as one of the leading researchers in women and finance. She conducts interview-driven research for multiple global financial institutions and serves as a keynote speaker for CFA Societies, banks, stock exchanges and industry conferences globally. She is a columnist for CFA Institute, Canadian Family Offices and Canadian Money Saver Magazine. She is on the advisory board of Kensington Capital Partners.

Speakers: Amber Ortiz
Senior Vice President, Private Banking | City National Bank

Amber Ortiz is a senior vice president and team lead of the Montecito office for City National Bank’s Private Banking team. She has more than 20 years of experience advising highnet-worth individuals, business owners and their families, and foundations on integrated wealth management strategies, including comprehensive investment management, customized credit facilities and private banking solutions. She currently serves on the boards of Laguna Blanca School and The Towbes Foundation. Ortiz holds designations as a Certified Financial Planner and Certified Exit Planning Advisor, is a registered and licensed securities representative and holds California life and health insurance licenses.

Lara Shortz
Los Angeles Office Managing Partner and Employment Advice, Counsel & Executive Disputes Chair | Michelman & Robinson, LLP

Lara Shortz is the managing partner of Michelman & Robinson, LLP’s Los Angeles office. She is formerly the head of the firm’s Labor & Employment Practice Group and is sought after by management to handle a full spectrum of employment-related issues. She is particularly known for her work advising domestic and international companies on major growth and hiring initiatives as well as workforce reductions. Shortz is also relied upon to negotiate complex employment agreements, navigate restrictive covenant issues and litigate executive disputes.

Angela Sutherland
CEO & Co-Founder | Yumi

Angela Sutherland is the chief executive of Yumi, a next-generation nutrition and food sciences company. She launched the company in 2017 when she discovered that scientists consider nutrition in the first 1,000 days of life to be the most important environmental factor in human development. While pregnant with her first child and unhappy with the baby food options readily available to her, Sutherland – alongside her co-founder, Evelyn Rusli – set on a mission to build a healthier generation. Today, Yumi has become one of the fastest-growing kids nutrition companies, recently crossing the milestone of 30 million bars sold in retail.

ON WHY WOMEN HAVE BEEN HISTORICALLY RISK-AVERSE

Amber Ortiz: Risk is multifaceted and there are many different factors that influence people’s risk tolerance. There’s cultural norms, stereotypes and circumstances that all affect how we approach risk. I believe that women are risk-aware. We evaluate outcomes and factor in our family, company, investors and clients. It’s a prudent way to look at risk and risky decisions.

Lara Shortz: I deal with women executives who are in negotiations, but I’m also a management side attorney. Pay equity is a big issue and there are laws on the federal and state level that are meant to protect equality in pay between men and women. While you are seeing strides in investment between men and women, there is still a lot of room for improvement with respect to pay. There are societal and cultural barriers that are hard to overcome, but it’s getting better.

Angela Sutherland: The numbers are showing that there are more women-run businesses than in the past. To be an entrepreneur is risky. People can be afraid of reputational risk. Being an entrepreneur, the idea of failure weighs in on that decision. Women weigh reputational risk differently. But once you feel comfortable with the idea of risk, I think women and men entrepreneurs are equally risk-averse.

ON ALTERNATIVE INVESTMENTS FOR WOMEN AND BUSINESSES

Ortiz: Underperformance and regret is a big risk. Risk is relative and continues to shift and adapt as we pass through life and we gain different exposure and circumstances. Women can be better investors. Once we commit, we’re all in. Men can overreact or overtrade. I’ve had success discussing topics in a smaller group of women that help people share stories and ask questions. Risk also drives success, growth, creativity, resilience and grit. We need to talk about both sides of risk. We are seeing changes in the younger generation who are investing earlier.

Shortz: As lawyers, it’s our job to present the risks. It’s our job to help folks make smart choices. If you are looking at longevity at a business and you look at the newer generation of people coming in, they’ve seen their peers at really young ages have major success. People at junior levels can impact a business or start a company. If you aren’t making space for people to have a voice and embrace new ideas, it’s a big problem for succession planning and employee retention.

Sutherland: The risk on the other side is also a risk. Startups founded by women do better than men. The returns are better, and the revenue is higher. The idea that you can’t do it has to be tempered by the idea of missing out on wealth creation. You’re missing out by not investing. There’s a greater risk for inaction.

ON ADVICE TO EMBRACE RISK

Sutherland: Figure out what you need to help you make a decision. Figure out the baseline for your comfort level. If you don’t have the skill, use the network of people until you learn. My advice is always take the first step.

Ortiz: Women need to build a network of like-minded thought partners. We need to be better at teaching and supporting women to fail. You have to be OK with failing. It’s part of that journey to success.

Shortz: Outsource the things that you’re not good at, but you need to do. In executive negotiations, it can be uncomfortable. I get to do that for them and it becomes easier. It helps you overcome the risk of anxiety.

ON THE BIGGEST RISK THAT YOU’VE TAKEN

Barbara Stewart: There are three key findings from my research. Our level with risk changes over time, risk is a relative concept, some people prepare to take a risk and other people are “leapers” and take a risk without much planning.

Shortz: My decision to become a lawyer was the biggest risk that I took. I had a career in marketing and had gone to graduate school and wasn’t expecting to dive back into education. I thrive on challenges and I felt like I wanted to be challenged daily. Through graduate school and the work that I was doing, I felt that something was missing and I had an interest in legal issues.

Ortiz: In 2014, I left my previous firm. The risk of starting over was daunting, yet exciting. One of the things that I learned most is that I could take that leap. I was also a brand-new mom. I’m one of those people who need a plan. Once I made the decision, I committed and never looked back. We’ve been the fastest-growing private banking office in City National’s history.

Sutherland: My biggest risk was quitting my job and starting this company. I was on a particular path and got off that path. It was a big decision and a big risk. The idea of that big leap was worth it for me.