As we look towards the future of finance, one question looms large: is a revolution coming? Are women on the verge of taking control of global wealth?
With an estimated $30 trillion set to transfer to women over the next few decades[1], women have the potential to dramatically reshape the financial services and investment landscape. Yet, despite this impending shift, women still face formidable barriers when it comes to managing their wealth.
Addressing the gender investment gap will be crucial to unlocking women’s full potential as investors.
Currently, women invest significantly less than men, often due to lower financial confidence and fewer tailored financial products. However, when women do invest, they perform well, outperforming their male counterparts by 1.8% annually[2], achieving higher returns and prioritising sustainable and ethical investment strategies.
So, what are the challenges women investors face? Why do they remain underrepresented in the investment world?
Firstly, financial confidence among women remains a significant hurdle. Studies show that women often feel less confident about their investment knowledge which can lead to less engagement with financial markets. This lack of confidence is not necessarily tied to a lack of ability as women who do invest generally see better returns than men. The discrepancy suggests a need for targeted financial education and advisory services that can build confidence and encourage more women to participate in investing.
Secondly, the availability of financial products tailored to women's needs is limited. Many financial products and services have traditionally been designed with men in mind, overlooking the unique financial goals and life circumstances of women. For example, women typically live longer than men and may need different retirement planning strategies. Additionally, women are more likely to take career breaks for caregiving, which can affect their long-term financial planning.
Another critical factor is representation within the financial sector at all levels, but significantly in senior roles. HM Treasury’s Women in Finance Charter 2023 annual review of signatories noted a slow and steady uptick with female representation in senior management, edging up by 1% to 35% in 2023. This one percentage point annual rise has been a consistent occurrence on average since the launch of the Charter. Assuming this pace remains constant, women won’t achieve an average of 50% representation until 2038[3].
14 years seems a long way off and this ongoing lack of representation will perpetuate the cycle where women's perspectives and needs are not fully understood or prioritised in financial product development and advisory services.
Yet the potential benefits of addressing these challenges are immense and could be very positive for the bottom line of the financial services industry. According to some estimates, if women invested at the same rate as men, it could add up to $700 billion to global investment markets annually[1].
So, is a revolution coming? Are women about to take control of wealth? The signs are promising, but the financial industry needs to grasp this opportunity and act decisively to support this shift.
Because the revolution is not just coming; it's already underway.
[1] https://www.weforum.org/agenda/2024/06/women-shape-influence-revolutionize-financial-markets/
[1]https://www.weforum.org/agenda/2024/06/women-shape-influence-revolutionize-financial-markets/
[2] https//www.weforum.org/agenda/2024/06/women-shape-influence-revolutionize-financial-markets/
[3]https://assets.publishing.service.gov.uk/media/65fb084d9316f5001164c432/HMT_WIFC_Review_2023.pdf