Women tend to invest less than men and are less likely to occupy senior wealth management roles. But this can change, argues Nneka Orji from Alvarez & Marsal
With around $68tn in wealth projected to change hands over the next 25 years, women will soon control more than half of the world’s wealth. But despite the fact many women currently occupy senior and influential roles in companies, they remain largely overlooked by the wealth industry on the whole.
On top of being underrepresented in wealth management roles, women also tend to invest less than male peers. As a widely acknowledged issue the sector continues to grapple with, what will it take to really empower women as investors and to enable career progression as wealth professionals?
The space between
Although women have solidified positions as CEOs and senior leaders of FTSE-listed companies – and have founded some of the world’s most important companies – the wealth gap endures.
On the whole, women have less access to private capital and are more likely to pause their careers during prime earning years, thereby earning less than men over the course of their lives. The challenge is also that as women tend to outlive men, their wealth must last longer.
Some wealth firms are now seeing more women in senior roles. Image via Getty Images
The gender investment gap can be seen across all age groups: 28 per cent of men aged between 18 and 35 invest, compared to only 14 per cent of women in the same age group, according to a Boring Money study. While 47 per cent of men aged 65 and over invest, just 28 per cent of women do.
There is also a growing gap between men and women in terms of pension savings and payments. The Pensions Policy Institute recently found that women who retired before 2016 get £146.78 ($182.56) a week on average for their pension, while men receive £172.71.
Investing gap
Despite the disparity, women are not a niche investment demographic and are well aware of how investing can benefit them. Following the Covid-19 pandemic, some 80 per cent of women surveyed in the UBS ‘Own Your Worth’ report said events of the past two years made them reassess what’s important to them, while 90 per cent viewed money as a tool that can be used to help achieve their purpose in life.
So, what brought about this investing gap?
The discourse and lack of direct engagement plays a large part, with the industry often over-jargoning to the point where women can feel excluded. Income expectations and risk aversion also play a role. Studies often note the differing saving styles of men and women, with women preferring to hold onto cash so it is instantly available to cover expenses if needed. Cash is also an important key to unlocking and maintaining financial independence.
Closing the gap
Businesses must look at how they develop inclusive products – particularly products that resonate with key milestones in their clients’ lives (for example marriage, divorce and starting families) – in order to close this investing gap. And there is a clear incentive to do. According to a study by BNY Investment Management, if women invested at the same rate as their male counterparts, there would be an estimated $3.2tn of assets under management today.
One example of an organisation proactively designing such products is Singapore-based investment platform StashAway, which launched its own series of classes geared towards women in early 2022. ‘She Invests’ offers free classes on topics such as personal finance, thematic investing and digital assets. The results speak for themselves, with StashAway announcing that women make up 40 per cent of its new client base in the Middle East, up from 16 per cent from its launch in November 2021.
This lends credence to the idea that new-age challenger banks and investing platforms with younger, more diverse staff are well-positioned to tap into women’s increasing interest in investing. But with only 16 per cent of regulated financial planners in the UK being women, there is a long way to go.
Among the many companies attempting to address this imbalance, Edinburgh-based global investor Abrdn has made notable ground. Under the leadership of former CEO Richard Charnock, the company introduced diverse interview panels for recruitment and ‘blind’ CV judgement, with no disclosure of backgrounds, gender or ethnicity.
Abrdn has also introduced inclusivity into objectives and appraisals. The investor has since met one of its three 2025 gender targets and is on track for the remaining two. Women in senior leadership roles improved from 36 per cent in 2021 to 41 per cent in 2022, and women on Abrdn’s board increased from 45 per cent to 50 per cent.
In a congested and competitive marketplace, the ability to win the trust and custom of female investors will be a differentiating factor for successful wealth managers. And if we are to see the true potential of the industry in shaping a more positive and inclusive society, the decision-makers within it must reflect society at large.
Nneka Orji is senior director at Alvarez & Marsal
