We recently posted an article Why Aren't Women Investing? to share new research presented by Canaccord Genuity Wealth Management. Since then, I've had a number of conversations with people right across our profession to explore how we can address this important issue. We all know that:
This is an age-old adage in financial services. And a crying shame that when women have money, they squirrel it away rather than try to grow it. Men, on the other hand, are happy to invest.
The topic came up again last night in my discussions with leaders in the FinTech space at the Embark Group Digital Dinner. Read on to hear how I think, together, we can tackle it.
Let’s consider ISAs. In the last year for which data is available (the 2015/2016 tax year) 892,000 women invested in a stocks and shares ISA , compared to 1.1 million men. At the same time, 5.2 million women invested in cash ISAs compared to 4.4 million men.
Furthermore just 28% of investors using the Interactive Investor platform are women. At Wealthsimple the figure is 33%, even following their successful event series targeting women.
According to YouGov, just one in five women currently hold an investment, versus one in three men.
We hear a lot about the gender pay gap and the pension savings gap, so why isn’t the 'gender investment gap' under the spotlight? Teaching women to invest will not only give them greater control over their financial wellbeing, it will impact the choices they have available to them and their future security.
The investment gap is concerning because of the impact it will have on women’s financial stability in later life. And, sadly, it’s not something that’s improving with tech-savvy younger generations. A recent study by Wealthsimple into millennials’ attitudes toward money found that only 26% of women are investing - compared to 43% of men the same age.
I believe these six steps could help us make a huge leap forward in getting women to invest:
1. Risky business. Women are overly cautious, so giving them a solid understanding of all aspects of risk is a great place to start. I don't think being risk aware is necessarily a bad thing, but as a profession we need to be better at explaining risk and the implications.
2. Show what’s possible. Women tend to have career breaks when they have a family, which often leads them to hold on to their cash in order to have an emergency stash, should they need it. Many don’t realise that investing just a small amount per month, with the help of compounding and pound cost averaging, can make a major difference.
3. Remove the velvet rope. Historically, investment firms have been an Old Boys Club and many women feel isolated by the way the industry is marketed almost exclusively to men.
Catherine Morgan, financial coach, planner and founder of The Money Panel recently said:
“Many of the women I speak to say they are put off from seeing a financial adviser because the focus is male-dominated, while others feel there’s no alternative to seeing a financial adviser. So, instead they do nothing.”
4. Shine a light on female investors. Many women have never had a conversation around investing, or seen female investors in the public eye. Let’s get more women out there talking about investing - in the mainstream media.
5. Tackle the language barrier. We are guilty of speaking about ‘performance’ and ‘investment returns’, language that simply does not resonate with women. Instead, let's talk about goals and how investing can help women to achieve what matters most in their lives. Let's also lose the jargon, drop the acronyms, and report against goals rather than complex indices many can’t decipher.
6. Change behaviour. This last point is crucial. I recently caught-up with Neil Bage, of Be-IQ, who aptly said:
“You can educate people on investing and show them evidence to prove the value it can add; but to move the needle and get women to take action we have to address their behaviours.”
I often look across the pond for examples to see how businesses are tackling the issues we face here. Have you heard of Ellevest? It's a tech company based in New York designed by women, for women. It offers a refreshingly different client experience; one that is easy to use and has the most inclusive language (read: engaging and easy to understand) I’ve ever seen. If you're planning to join the movement and get more women investing, head on over to see what it’s like to Invest Like a Woman.
This article was originally created for the DISCUS website (Discretionary Investment Services Coming Under Scrutiny), an information resource for financial advisers interested in outsourced investing. The weekly DISCUS newsletter became Embark News on 31 October 2019.
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