Women have been disproportionately affected by the pandemic, but as the world begins to reopen, could financial institutions take the opportunity to persuade more women to invest their money?
The pandemic has amplified the issues affecting women, including the difference in average income, the use of women to take on the majority of childcare and home schooling tasks, and the savings and retirement gap between the sexes.
Women already earn less on average than men, with average salaries of Â£ 22,200 and Â£ 27,400 respectively.
Men are more likely to invest than women, so even when women have money to set aside, they are more likely to keep it in a cash ISA, reducing their potential returns.
But why? Is it because of issues with income, family responsibilities and having less to invest or are there other issues involved?
One argument is that businesses, which have traditionally been used extensively to target men, do not yet communicate effectively with women.
This is what SCM, the wealth management company headed by Gina and Alan Miller, says. He believes that women do not need separate investment products, but that they should receive different information and talk to them differently.
It has now launched ‘MoneyShe’, described as a ‘women-focused information and resource center aimed at increasing women’s confidence in investing’.
Gina said in a statement: âThere is a lot of talk about the gender pay gap, but not enough about the enormity of the gender gap in investment and retirement. The industry has been aware of the gap for years, but little has changed.
âWe think it’s because there has been too much emphasis on designing products for women, but our experience is that men and women don’t necessarily want different products. What women want is to be communicated and treated in a straightforward and straightforward manner.
The fact that women earn and save less is also an important factor.
Men hold an average of Â£ 30,089 in ISA savings, compared to Â£ 27,098 for women, and this gap exists at all ages.
Saving behavior between the sexes is also different. Women are more likely to have an ISA, accounting for 52 percent of holders. According to government data, they are more likely to have a cash ISA than men, but less likely to invest in an ISA.
When it comes to retirement planning, 30% of women are confident they can retire, compared to 40% of men, and 28% of people who left financial planning to a partner said they lost track. of it, according to research by Hargreaves Lansdown.
However, Gina Miller believes the main issue is the confidence that keeps women from investing. Research from investment companies shows that women need to know more than men before making a financial decision and this extends to other aspects of life as well.
Sarah Coles, spokesperson for Hargreaves Lansdown, said: âWomen tend to have a higher threshold of confidence – they need to know more before they feel they know enough.
âThis is true for everything, whether they are likely to apply for a job or if they are ready to invest. Meanwhile, society tends to turn women into generalists and men into specialists. “
So if women need the confidence to part with their money, what are companies doing about it?
Gillian Hepburn, UK head of intermediary solutions at Schroders, says less than 10 percent of financial advisers had a proposition to retain, attract and advise women, according to company research.
âA proposal doesn’t necessarily mean having different investment products or services, but it starts with understanding why women can approach investing differently,â she says.
âWomen tend to focus more on health, longevity, risk awareness, but often a misplaced lack of confidence in finances. As a result, they actively seek education, information and, when selecting a counselor, insist that there be a âpersonal fitâ.
While there are clearly a myriad of reasons women don’t invest their money, one area where things seem to be slowly changing is the way investment firms communicate with them, as with the latest launch of SCM. .
Coles adds, âInvestment firms are well aware of all of these risks and are working to make their communications more inclusive. If you open one of the many guides produced for beginners by investment firms, you will likely find clarity and inclusiveness at their heart.
âOn top of that, the growth of communications aimed specifically at women is helping to overcome women’s concerns that the investment world is not for them. It’s not a new idea, but the more companies that take this approach, the more women will feel that investing is part of everyday life.