To mark International Women’s Day (8 March 2020), Morningstar has published a special report asking ‘Why don’t women invest?’ The report, authored by Annalisa Esposito, features viewpoints from various female fund managers in response to this question. “In the UK there are more funds run by men called Dave than there are funds run by all women,” Esposito writes. “Meanwhile, just 975,000 women opened stocks and shares individual savings accounts in the most recent tax year, compared with 1.25 million men.”
Abby Glennie, manager of ASI UK Mid-Cap Equity Fund, is quoted, suggesting that this is due to generational and historic divisions of roles in the household. “But as many stereotypes are being broken down, women investing should as well,” she says. She adds that women can often be more risk-averse.
Alexandra Jackson, manager of Rathbone UK Opportunities, suggests in the article that the over-use of jargon can be off-putting. “There are ten different words to say the same thing, which makes it sound more complicated than it is,” she says. She also highlights her own experience with a relative lack of conversation about investing with her female friends, although she says that she has started to talk about it.
There is good reason for women to invest, according to Esposito. “A man aged 50 today can expect to live until 84, but a 50-year-old woman has a life expectancy of 87,” she writes. However, “women typically retire with a pension pot a third of the size of the average man’s savings pot”.
A match made in heaven?
Despite compelling reasons for women to invest, financial advisers are not paying enough attention to women as clients, according to an opinion piece by Saijal Patel, founder and CEO of financial consultancy Saij Elle, for the Canadian-based newspaper The Globe and Mail.
Patel recounts a story of a male banker who met with a couple wanting to bring a substantial amount of money to the bank. He ignored the wife’s presence and cut her off when she tried to speak. He didn’t realise that the majority of assets belonged to her – she was the decision-maker. She was so annoyed by this that she walked out of the meeting.
“Too many advisers are making preconceived and incorrect assumptions about women’s interests in their own financial welfare and grossly underestimating the value of female clients’ business. [Yet] female clients are three times more likely than men to refer their friends and family members to their advisers,” she writes. “It’s smart business to align with women who are naturally more inclined to speak about great experiences and be huge brand ambassadors.”
Referring to a 2019 study by the Canadian Imperial Bank of Commerce, she says that Canadian women control CAD$2.2tn of financial assets and that figure could almost double over the next eight years. “The financial services sector can no longer afford to see women as an afterthought,” she says.
The Globe and Mail article
Closing the gap
In the UK, the gender gap in investments is slowly closing in the property sector, where women make up 47% of investors, reports Andrew Truglia for Landlord News.
Between the 2015/2016 and the 2016/2017 tax year, there was an increase of 100,000 women investing in property, bringing the total to 1.2 million women, according to estate agent ludlowthompson. The agent believes this increase is due to the perception of property investment as a lower risk option, in line with women’s supposedly “less[er] tolerance for risk than men”. Truglia points out that ludlowthompson backs up this opinion with “data from eToro and HMRC that shows that other investment classes have a much less equal gender split, that weighs more heavily towards men as the risk increases. They say that women account for only 43% of stocks and shares ISAs, and at the furthest extreme, women represent just 8.5% of cryptocurrency investments”.
“The relatively transparent business model [of property investments], regular pay-outs and low-price volatility associated with buy-to-let property has helped make the asset class increasingly popular among women,” Truglia writes.
Stephen Ludlow, chair of ludlowthompson, is quoted: “While some investors have become distracted by more speculative investments, buy-to-let continues to build increasing interest amongst investors who value income and long-term growth.”
Ludlow says, “It may not be long before we see a 50/50 gender split amongst buy-to-let investors, which is significant given the much wider gaps in other asset classes, such as equities.”
Landlord News article
How can more women be encouraged to invest? Leave your comments below.
Seen a blog, news story or discussion online that you think might interest CISI members? Email firstname.lastname@example.org.