The investment “boys club” is becoming more inclusive but “hackneyed assumptions” around how women invest still need to change, according to some of the most prominent female fund experts.
As part of International Women’s Day, interactive investor (ii) data showed there were 120,000 female customers on its platform out of 403,000 in total (around 30%).
This disparity was repeated on other platforms, with InvestEngine, an ETF investment platform, reporting that only a quarter of its portfolios were held by women.
Becky O’Connor, head of pensions and savings at interactive investor, said that this disparity was because investing “does not feature on women’s radar”.
Historically, men have been the main wealth creators, a stereotype that is still playing out today, especially among older generations.
Ritu Vohora, an investment specialist at T. Rowe Price said that women “often feel they don’t have the required knowledge and skill set to manage their own finances.”
She has spoken to many women in their fifties who have property investments “but have never opened an ISA, as they didn’t understand the jargon and have now probably left it too late”.
Olivia Ellis, assistant director at Mirabaud Wealth Management, agreed that managing wealth had typically been seen as a “bit of a boys club” but this had been changing the past few years, with a lot more women starting businesses and competing for senior roles.
“It is gradually evening out and becoming more of a level playing field, but there is still a long way to go. I am sure that even in five or 10 years’ time the numbers will be a lot more evenly split.”
However, when they do invest, there is little to distinguish the portfolios of women from those run by men, according to the ii stats.
Breakdown of male vs female portfolios
Source: Interactive Investor (ii)
The variations around risk were also marginal, although slightly more women than men defined themselves as “adventurous investors” (12% versus 9%).
O’Connor said: “The results of this poll suggest we need to scrap hackneyed assumptions that women are fundamentally more risk averse and stop babying women, implying that they need more help in understanding investment.”
One of the main barriers to women investing is the perception that it is not for them. Among her own friendship groups, Ellis said that her male friends frequently discuss their portfolios and trading options but very few female friends join in the conversation.
According to Vohora, one of the problems is that “from an early age, women are taught that the route to financial empowerment is via budgeting while men are taught about investing. As such they are not putting their money where it can really grow.”
Ellis added that with more financial education – especially via social media and dedicated female investment outlets – this should improve.
However, the investment industry needs to improve how it markets to women. According to an interactive investor poll, 34% of women found the advertising aimed at them “patronising”, with deliberately pink colour schemes and a generalisation that women are risk-averse investors.
O’Connor said that this was not an effective approach. “Making everything about shoes and handbags or suggesting that women are bad at maths is not a good strategy. Is that the perception of what women are and what they are interested in?” she said. “Those who are interested in investing won’t appreciate it.”
Getting women involved with investing early is crucial, especially when it comes to tackling the ‘pensions gap’ or the ‘mothers pension gap’.
Studies from ii and InvestEngine found that women usually end up with around 50% less in their retirement savings than men. This is despite women allocating more to their workplace pensions in their early 20s than men, according to O’Connor, showing that early on in their careers women care more about their retirement.
Andrey Dobrynin, managing director of InvestEngine, said: “Whatever people have heard about the pay gap between women and men, the gender pension gap is more like a chasm”.
This inequality between male and female pension pots begins to widen between the ages of 25 and 34 when women become mothers for the first time.
O’Connor explained that when couples have their first child and decide who will take the leave “maternity pay is generally much more generous than paternity pay”, so it makes more financial sense for the mother to take the career hit.
“There are some more enlightened employers who are improving paternity pay,” she said, but until this imbalanced is addressed with equal pay for the first year of a child's life, the problem will persist.
“Effectively, you have years where women are definitely going to be compromised on pension contributions and career progression,” she said, which only becomes more apparent with more children.
O’Connor said it was important both women and men know about this issue so that they can plan for their families’ financial futures and noted that women could lessen the hit by frontloading their pension contributions early on in their careers, and before the gender pay gap plays a role.