Why don’t women invest more and what can be done about it?

12th March 2013


In the wake of International Women’s Day, Samantha Soames asks what is being done or can be done to bridge the gender divide when it comes to investing.

 Less than one in five women hold an investment portfolio compared to over a quarter of men. Not the most shocking statistic ever, but given that women have had equal rights to pay and working conditions for the last 40 years, it is an issue some finance companies believe is an issue worth tackling.

Duncan Lawrie Private Bankcarried out a survey into the amount of money held by individuals in bank accounts, savings and investments, includingISAs and pensions, and found that on average men have around £48,000saved up compared to £41,200 by women. That’s a difference of 17 per cent.

The bank, which released its research findings on International Women’s Day, said that when it comes to investingwomen hold less money than men at nearly every age, until they reach 55 or over.

At one point, between the ages of 25 and 34, this ‘gender wealth gap’is wide as 185 per cent with men claiming an average wealth ot of £21,827 compared to just £7,648.

The fact is women are in less debt and the businesses they set up are often considered more profitable – a fact highlighted by the crowdsourcing funding website Crowdcube .

So why are they less likely to be investing their money? Jane Parry of DLPB said women still displayed less confidence than men in their knowledge and understanding of investments and that in its survey 17 per cent of women said that the thought of investing was worrying and too much of a gamble.

She pointed out that this was probably a historical legacy. “The investment world has been seen as the domain of men, but this should not be the case anymore. The idea that wealth is only the concern of one gender is the predication of the naïve.”

Achieving financial equality

The gender investment gap is unlikely to go away anytime soon, the impact of financial education on investment will take a generation at least. So what are the immediate solutions?

DLPB believes the financial services industry needs to do way more to reach out to women directly. Parry said: “The difficulty is that banks and advisers are simply not doing enough to reach out to women and offer them financial solutions that meet their needs and that of a growing population of financially astute women.”

Parry said advisers often do not realise what important a part they can play.

Stockbrokers TD Direct Investing back this up. A survey it carried out showed women were more likely than men to seek investment advice from a professional adviser (42 per cent versus 35 per cent) than a man.

Vive la difference!

Stuart Welch of TD Direct Investing, said women and men do have different financial goals and it was not appreciated enough.

He said: “In all our surveys women’s main financial goal was financial independence, whereas men are more interested in retiring early. It seems that women want to protect their future – whatever it may be.”

Men tend to rely on self-education when it comes to investing, in that they are more likely than women to increase their financial knowledge by reading the financial pages of a newspaper, following finance and/or investing blogs/forums, watching investment-focused TV programs as well as following the stock market.

Welch believes women need to empower themselves rather than just rely on an adviser. He said: “It is largely through self-education men feel more confident to invest. Maybe the media and communications industry can play a part in this.”

Clare Abrahams, senior actuarial consultant at Lorica Employee Benefits, said that fear could be used to help empower female investors. She said: “Women need to understand the risk of relying on their husbands especially if they end up single at retirement age or feeling responsible to use a bigger proportion of their pay towards household or childcare costs.

“Everyone needs more awareness about saving and investing, but women in particular need to be aware that as a group they often fall into the same life traps.  These traps may not be painful at the time, but can be very uncomfortable in the future.”

Real women, real solutions.

Mindful Money asked professional women, all over 35, who worked full time and have had young children what would make them invest more.

Susan, an accountant: “A specific product that would allow me, as a self-employed person to take into account financial gaps such as maternity leave. A flexible pension or investment I could use to help pay for financial gaps and then totted up how much you need to put in when you are back working and gave me the same tax break as a pension.”

Eileen, a biochemist: “Something that allows you to save up for childcare – in advance – via work, I don’t care whether it’s an investment or savings plan. And then still allows you to take the tax break.”

Mary, an IT consultant: “A simple investment that didn’t try to blind me with science. I think most financial products are designed to make companies richer, not the investor. I don’t have time to research the stockmarket but I feel charges in some of the other products are too high.

Anne, a teacher: “Some automatic reminder at the beginning and end of each tax year to tell me what I should be investing in. I had an accountant who did my tax return for part of my pension but he wasn’t interested in giving me any extra advice. Surely that should be compulsory?”

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