On International Women’s Day, Sarah Chapple (pictured), head of client engagement at direct lending specialist BondMason, asks what’s causing the investment gender gap
Between 1998 and 2013 the number of working mothers who were household breadwinners rose by over 80 per cent. Yet despite the fact that women have more earning potential than ever before, the number of women who invest their money is at odds with the number of men. Research suggests that by 2020 the majority of women will be in charge of every household financial decision, but only 38 per cent of women feel confident making investment decisions. A quick look at our own data showed that just over 20 per cent of BondMason’s investors are women. Why is this?
The consensus amongst researchers is that there is a real difference to how men and women approach their finances. For women, maintaining financial security is a key driver, whilst men’s priorities are centred around ‘making money’ – with a focus on elements like returns and profits.
Often the rhetoric and imagery used reinforces the idea that investing is risky and that to succeed you need to take an aggressive approach. With women making up 50 per cent of the population, it’s in the industry’s interests to de-bunk this myth.
Like any important decision, you do have to invest some time and commitment. As individual investors, we all need to understand our goals so that we can make informed decisions and put a plan in place to meet our financial needs, whether that be saving for a deposit, investing for school or university fees, or as part of a pension plan to fund retirement.
One element to get more people, both female and male, investing needs to be the clearer presentation of financial advice and information. Women surveyed by consultancy firm BritainThinks felt that much of the language used in finance is inaccessible and full of unnecessary jargon. Access to less confusing information would help build confidence through knowledge.
This would also help to de-bunk the idea that investing is too risky. Not all investments carry the same level of risk and there are elements of investing that can be controlled through knowledge and informed decision making. Conveying this message clearly would help address some of the concerns that surround investing in terms of financial security.
Celebrating the role women play in financial planning and money management has a positive impact, too. For example, at BondMason one of our clients is a young woman who is using direct lending to save for a deposit on a house – one of the biggest challenges faced by the young today. Highlighting positive role models like this may go some way towards breaking apart the mentality, felt by some, that aspects like youth hinder financial achievements.
Just like any other financial decision we make, investment decisions need to come down to our own individual financial priorities and have nothing whatsoever to do with our gender. If I revisit our own client base in a year, five years, or 10 years, I would hope to see a shift towards a more balanced reflection of society’s investment attitudes as a whole – here’s hoping.