The theme for this year’s International Women’s Day was #BalanceForBetter with an array of events held across the globe celebrating women, while also highlighting the challenges and inequalities women face.
One of these challenges is to get women to engage with the financial services sector. Consider these statistics:
» 21% of men have a stocks and shares ISA, compared to just 13% of women.
» Within these accounts, men have £33,616 on average, whereas women have £22,907.
» In their pension pots, on average men have £99,000 whereas women have just £39,000.
These are just some of the opening statistics presented at Boring Money’s Women Invest Too breakfast last week, in celebration of International Women’s Day.
Holly Mackay, the founder and CEO of Boring Money, kicked off the discussion by announcing that she struggled to get men to attend the event. She shared a story of how one man wasn’t interested because he viewed women’s investments as too niche for him.
Let’s be clear when we say that women are not a niche market.
If the same number of women invested the same amount as men, there would be £115bn more invested in the UK.
We don’t think that sounds very niche, do you?
There are several reasons why women aren’t investing or investing enough:
The number one reason is too much, and over complicated, jargon. When Boring Money asked women what would encourage them to start investing, the most popular response in their research was “if they speak in simple English”. This was higher on their agenda than the promise of 15% annual returns!
That’s why it’s incredibly important for everyone in financial services to cut the jargon. Holly would like everyone to call out the worst offenders with #nomorebull.
Just like millennials who are interested in seeing how their investments are working to improve the world, most women want to understand how their investments can work for them on a personal level.
For this reason, we need get to the why of investing. Often the motivation to invest comes down to a few key and very simple reasons.
Catherine Newman, Chief marketing officer at The Times and Sunday Times eloquently summed this up:
When I think about my finances I wants to ensure I have enough money to send my children to a good school, look after my parents (should they need it in their old age), and finally, I want to know I can be financially independent.
Women are more cautious and less prone to taking risk than males – and many still view cash as a better option than investing in the markets. However, as we know, history shows that over a ten year period investments usually perform better than cash.
It’s important that we offer education to improve the way women view risk. Currently women are not taking enough risk, which means they are more likely to generate lower returns over the long term.
Research from Boring Money found:
» If we look at 100,000s of completed risk profiles, women have substantially lower risk portfolios.
» If we look at the funds women hold on DIY platforms, their aggregate risk scores are lower.
» Over 70% of Junior ISAs – investment accounts where women report being more active decision makers – are held in cash.
Women need the confidence to invest.
The Middle Age ‘Til I Die event we attended last week told us that women are the ones making big financial decisions in the household – so why aren’t they making big financial decisions when it comes to investing?
The time has come to ditch the men in suits and ‘boys club’ mentality, to make women feel welcome with in the world of investments. We also need to start fostering a community where women can talk openly about money and investments and get support in their decisions, which should help close the gap. There are already a few Facebook Pages and support groups talking about money, although we need more specific ones to support people when it comes to investing.
Get the conversation rolling!
As an adviser what does this mean for you? The good thing is, we’re starting to see changes in our industry.
The number of female investors is starting to grow. According to the most recent figures from the Office for National Statistics, in the last tax year, women opened c892,000 stocks and shares ISA accounts. However that’s still far fewer than the 1.1m investment accounts opened by men in the same period, which means there’s still a way to go.
What can we do to bridge the gap?
» Ditch the men in suits and ‘boys club’ mentality and make women feel welcome
» Cut the jargon and ensure your messaging is simple and to the point
» Explain the benefits of riskier portfolios, over a long period of time
» Talk to your clients about their financial goals, what do they want to achieve – for themselves, for their family by becoming financially secure