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March 12, 2021

Women and investing: busting myths

What are the reasons behind women not investing as much as men?

Women and Investing — Let’s bust some of those myths.

by Charmaine Crisp.

Far fewer women invest than men. That is a fact.1 But the reasons why women invest less than men, is the part which requires some dissection.

People often assume it’s because women are more “cautious” when it comes to investing. However, when they do engage, research shows they are confident investors with performance outcomes that are just as good, if not better than their male counterparts.2

As women continue to rise and thrive in the workplace, teamed with the explosion of female entrepreneurship, this “cautious” and “risk-adverse” rhetoric just doesn’t seem to resonate with the behaviour demonstrated in the other areas of women’s lives, or more importantly; how women see themselves.

How do we help women have access to the same level of financial freedom as men?

So why do less women invest?

The Wisdom Council, along with Aberdeen Standard Investments, EY, HSBC Global Asset Management UK, Royal London Group, Scottish Widows, St. James’s Place and Vitality worked collaboratively with over 3,300 women around the country, tackling the challenge of making the proposition of long-term savings, investments and pensions more engaging and relevant for women and ultimately everyone. They found that advertising and communications targeted at women often reinforce the outdated mantras that women are risk averse and lack confidence as investors.

Anna Lane, CEO of The Wisdom Council when highlighting this research as part of a panel discussion found overwhelmingly that when it comes to investing, it that it isn’t that women are risk-adverse or lacking in confidence, but for most “it just isn’t on their radar”.2

The vast majority of the women involved in this research had simply not considered investing, as opposed to consciously deciding not to invest. It was identified that 87% of ‘non-investing’ women had never been encouraged to consider investing, with 59% of this group not even considering it as an option.

Why is it not on women's radar?

One of the reasons that emerged was down to sheer lack of time. Often describing themselves as “CEOs of their households” women are responsible for up to 70–80% of consumer purchasing decisions.6 Add this to many being caregivers and breadwinners too and most wouldn’t argue with the label “time poor”.

The Wisdom Council study, also found that women generally like to make decisions in a controlled, informed manner and investment information can often be presented in a way that can be overloaded with jargon, requiring time and effort to process and digest. Regardless of gender, many people view investing as something that requires specialist knowledge and expertise which can make it seem inaccessible and exclusive.

Outside of financial services, it has been found that many women really engage with and love consumer brands that speak to them in a way that is relevant to their everyday lives and provide products and services that save time, create efficiencies and help them feel in control. Women often value trusted, credible advice from friends, family and their wider community and can be eager to share information with others too. Family and social circles can often play a critical role in motivating and encouraging individuals to invest, especially for women.

By creating a narrative that promotes the benefits of investing, for them, their families as well as wider society and the environment too, could be a game-changer. Because by redefining the language of investing with relevant engaging information that aids the decision-making process, rather than hindering it, will not only benefit women; it will benefit everyone.

Campbell Fleming, Chair of The Big Exchange, said in this report at the time:

“It’s an important fundamental of asset management to engage with investors, and yet it’s clear from the research that women are financially disadvantaged in this area. What’s so encouraging about this research, is that women are interested and ready to take action to manage and improve their long term savings and investments.

“It’s up to us as an industry to empower all customers to make informed investment decisions. That means thinking about the way we present, communicate and educate people about the options available to them at each stage of their investment journey. The research highlights important themes for our industry, including the fact that all consumers, women in particular, care deeply about environmental issues and the impact of climate change, which is something that Aberdeen Standard Investments recognises with ESG practices embedded in the heart of our investing processes.

“We welcome the opportunity to be part of this collaboration — we’re coming together to give everyone the opportunity to take control of their financial future.”

Jill Jackson, former CEO and current non-executive director of The Big Exchange, spoke to Martin Quinn at Headline Money for International Women’s Day. She said,

“Women still earn less on average than men, take more time out of work to care for children and elderly relatives, and if they rely on a partner’s income (and pension pot) can be more vulnerable financially after a divorce. In terms of investing, it’s a responsibility of finance to give them better access. By showing every woman how to participate. To show them how they can find a fund that they like that resonates with their values, speak to them in a language they want to engage with and show them how they can start putting whatever they can out of each pay check into a fund … while of course being aware of the risks.”

Keep an eye out for more content from us on why women and minorities lack trust in the investment industry and what it means for people and for the companies trying to grow too!

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Please remember that when investing, making money is not guaranteed and your capital is at risk. The value of your fund can go down as well as up. Tax treatment depends on an individual’s circumstances and may be subject to change.

References:

  1. The Gender Investment Gap 2018
  2. Yes She Can — The Wisdom Council (2019)
  3. Financial Times Do women really make better investors than men? (2019)
  4. Investment Week
  5. Harvard Business Review 2009 Forbes — Facts and Figures when marketing to women (2019) https://www.forbes.com/sites/forbescontentmarketing/2019/05/13/20-facts-and-figures-to-know-when-marketing-to-women/?sh=3426bd511297
  6. Five guiding principles to help brands engage with women. (2014) https://www.theguardian.com/media-network/media-network-blog/2014/jul/11/brands-engage-female-consumers

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