There has clearly been a marked increase in women wanting to take control of their finances and we believe it is important to tailor our wealth management services to account for known differences in the female financial journey.
Until recently it was common for men to take charge of financial affairs but there has been a notable shift in this regard and by 2025 women are expected to control 65% of the UK’s wealth.
More women are pursuing financial independence than ever before and a survey by BNY Mellon Investment Management found that if women invested at the same rate as men there could be in excess of £2.39tn1 of additional capital to invest. Globally, just 28% of women feel confident about investing their money, according to the same survey.
Life events and situations, risk tolerances and investment preferences are some of the areas where research points to clear differences in the wealth journey of women compared to a man. Many life events and situations hinder the creation of women’s wealth, with disparities in pay, career breaks and often a greater need to work flexibly for childcare all detrimentally impacting wealth.
Shared parental leave is becoming increasingly popular, but it remains the case that women are far more likely to take a career break, or move to part-time work, after having children. While there has clearly been progress made in each of these areas, there is still more that can be done to level the playing field.
On average women in the UK live four years longer than men, yet they typically have 51% lower retirement savings, according to the global women and money report from Fidelity2. A longer life expectancy means the need for wealth planning spans a longer time horizon and this is directly related to investment risk tolerance.
Although a longer timeframe increases the ability to take risk, research suggests that women are often more reluctant to do so. BNY Mellon found that only 9% of women reported having a “high” or “very high” level of risk tolerance when it comes to investing, while 49% have a “moderate” level and 42% consider their tolerance “low”. This can also be seen in women’s pension allocations, which often favour bonds over equities – the opposite preference is true of men.
Investment preferences and purpose also differ, with women twice as likely to say the incorporation of environmental, social, and governance (ESG) factors are extremely important, according to UBS research3. Furthermore, the UBS Investor Sentiment Survey showed that when investing, 71% of women take into account sustainable considerations, compared to 58% of men.
Increasing inclusivity
While progress has been made, there is still a strong tilt in the investment industry towards male clients. Almost nine in 10 asset managers stated the default target of their products – in their view their typical investment customer – is a man, according to the BNY Mellon report. 73% of respondents believe that the investment industry would be better placed to engage more women if there were more female fund managers, although half of asset managers surveyed revealed less than 10% of their fund managers or investment analysts are women. While we are proud to say that at Quilter Cheviot 16%4 of investment managers and analysts are women, we acknowledge that more can be done to reduce gender inequality further and are striving to improve in this regard.
According to a recent WealthiHer Network Report5 almost half of women were not confident in their finances and did not know whether their long-term financial plans would be sufficient should their relationship end. Part of the reason why women are expected to control nearly two-thirds of the UK’s wealth in just a matter of years is due to a higher life expectancy, and they therefore inherit when their spouse passes, but this figure could be even higher in the future.
While younger women in general have experienced less of a detrimental impact due to life events and situations than previous generations, they are still investing significantly less than men. Out of a total of £32.1bn invested by Generation X, that is those born 1965-1980, women account for £10.7bn, or 33%. For Millennials, those born 1981-1996, women account for just 31% of the £11.5bn invested.
To increase the number of women investing in financial markets, personalised and relevant investment advice and/or investment management is key. A specifically tailored investment strategy aligned with the woman’s investment goals and objectives is imperative in achieving this. A bespoke approach also allows for sustainable and impact investing and a portfolio that reflects individual investment preferences.
Here at Quilter Cheviot, we are committed to better understanding our female clients. As such, we have conducted our first Female Client Survey focussing on how we can further support our current and future female clients on their individual financial journeys.
Listen in to our webinar where we discussed the results of this survey with the WealthiHer Network and reviewed how we can better shape the work that we do for our female clients and their families to reflect their financial ambitions.
1 BNY Mellon Investment Management: It's time to create a more inclusive investment world
2 global-women-and-money-2021-report.pdf (opinium.com)
3 UBS Women and Investing: Financial planning for women | UBS Global
4 Accurate as of employee list dated 22/09/2022
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