What can markets learn from the Oscars and the film industry?

Untangling the financial literacy messages from this year’s Oscars: what can markets learn from the Oscars and the film industry?

Amidst the lingering glitz and glam of the Oscars red carpet and social media buzz around celebrities; it’s important to turn to the core messages of these award-winning films. The Oscars don’t just celebrate artistic excellence - they also mirror society’s biggest economic struggles.

This year’s underdog, the Best Picture winner Anora, emphasises the dangers of wealth without autonomy. Sean Baker’s indie, follows a Brooklyn stripper, Ani, who marries a billionaire’s son, Zakharov, seemingly securing a life of wealth; only to find that power or freedom is not a given.

Marriage as a Financial Strategy or Vehicle of Control?

Throughout history, marriage has been used to gain economic security, but dependence on another person’s wealth can be precarious.

Yesterday marks the 115th International Women’s Day. We have made strides in improving women’s economic autonomy and opportunity. A recent YouGov survey across 17 international markets, suggests that 67% of women manage their finances independently. Britain ranked stronger than the mean, with three-quarters of women independently managing their finances.

However, while celebrating progress, we can not neglect the obstacles that are still being faced today.

Financial control as a form of coercion in relationships is significantly overlooked, despite being widespread. Research conducted by MoneyShe found that nearly a third (29%) of women feel trapped in a relationship due to an absence of financial independence. Wider discriminatory frameworks are likely to be at fault here.

Irrespective of existing maternity laws, there has been a surge in the number of women being pushed out of jobs due to pregnancy and maternity. Despite equal pay laws, the gender pay gap still permeates the job market; currently standing at a 13.1% discrepancy. Concerns surrounding retirement act as an additional trigger for gender-specific financial dependence. With an average pension pot of £69,000, women would need to work for an extra 19 years to level up with men. 

These mere three examples from many, echo the unprecedented struggles that women face for economic freedom in a relationship as mirrored in Anora’s brutal depiction of the socio-economic divide.

It comes as no surprise that the YouGov survey reflected the greatest financial independence among women as being situated in Scandinavia. 

Pioneering financial inclusion strategies remains a clear determiner. For example, Sweden was the first country to replace gender-specific maternity leave with parental leave. This encourages both parties in a relationship to make sacrifices, enabling men to feel empowered to seek time off work amidst an expectation that they shouldn’t. Perhaps it's time for England to follow suit.

Short-Term Riches vs. Long-Term Security: The importance of financial planning

As in Anora, without autonomy or financial planning, wealth can disappear just as quickly as it arrives. 

Turning again to the markets, we can see how investors engaging with modern financial instruments such as crypto can just experience similar instability and volatility when lacking a long-term plan and structure.

Due to the crypto market still being largely unregulated, there is an increased risk of cyber-attacks, financial crime, and firm failure; all of which put your investment in jeopardy. 

Additionally, many crypto assets can be staked, meaning they are locked up to support a blockchain network. However, if a crypto staker breaks the rules, a penalty called slashing can take away some or all of the staked assets, potentially making your investment worthless.

As Matthew Long, director of payments and digital assets at the FCA puts it, “you should be prepared to lose all your money” when pursuing a crypto investment.

A recent example can be found in the 500,000 investors in Donald Trump’s meme coin, $TRUMP. Its market cap had dramatically risen to around £12 billion three days after Trump’s inauguration. At the time of writing the market cap now stands at only £1.87 billion, reflecting a $10bn loss. 

This is not an isolated case, however, with the decline being a recent trend in the wider crypto market. Bitcoin has taken a dive of 20% since Trump’s inauguration, and Ethereum, the second-largest cryptocurrency, fell to a 16-month low earlier this week.

It must also be noted that the sudden realisation of wealth is not always received positively. Anora luringly depicts money as a double-edged sword if not managed in a strategic way, acting more as a liability than an asset to some. 

A phenomenon known as the ‘sudden wealth syndrome,’ results in wealth acting as an emotional and practical burden on its inheritor. This particularly affects the younger population who are more prone to experience anxiety.

With nearly £65 trillion expected to be transferred from baby boomers in the Great Wealth Transfer over the next two decades, shifting the mindsets of wealth management advisers from merely managing assets to nurturing relationships, particularly those with the younger generation, should be a commercial priority for banks. 

Banks will be required to adapt their financial models to meet the demands of younger investors, who are open to new, and often riskier, financial vehicles such as crypto. 

Head of CIO Sustainable Investing Thought Leadership, adds that the younger generation are “more confident in their ability to direct their own investments.” 

It will come as no surprise then, that private equity and hedge funds will likely experience a healthy increase in demand over the next few years. However, this transfer of funds could take place sooner than expected, with baby boomers gifting their wealth instead of leaving it in their wills.

However, the biggest hurdle to overcome is the compensation structure at private banks. Shifting the focus away from sourcing new clients and instead rewarding bankers interested in client retention will in turn benefit the banks themselves through repeat business.