Looking at gender statistics, it appears that women are excluded from the investment world, both in terms of personal financial investments, and professionally as institutional investors. The figures suggest women are still not fit for finance, but at a time where the business case for diversity is stronger than ever, why are women still excluded from the world of finance?
More than half of British women who don’t have any financial investments are not investing due to a lack of disposable income, and in the investment world, women are a rare breed as you go higher up the corporate echelons, with only one in ten global C-suite leaders being female.
In a report commissioned by digital wealth manager Moneyfarm, over half of women without financial investments in Britain cite a lack of funds as the most common barrier to investing. Almost one in four say they do not have any disposable income in a typical month – versus just 14 per cent of men.
The gender pay gap in the UK, currently at 18.1 per cent, is seen as the main reason for this correlated investment gap, as it has a direct impact on women’s ability to put money aside and invest in their future. The research also reveals that 46 per cent of women in the UK do not have financial investments at all.
On the other end of the spectrum, three times as many men have investments worth between £50,000 and £100,000 in comparison to their female counterparts. Men are also seven times more likely to add funds to their portfolio on a weekly basis than women, which only 1 per cent of female investors do.
Almost counterintuitively, women are less put off by any fees associated with wealth management, while more than one in ten men without investments cite expensive fees as a barrier to investing. Only 5 per cent of women say the same, indicating they are more willing to pay for expert advice. However, with the rise of financial technology, cost-effective advice on investment solutions is now easily accessible.
Moneyfarm chair and co-founder, Paolo Galvani, sees these survey results as indicative of gender bias more than anything. “In today’s world, it is incredibly disappointing so many more women than men are prevented from investing in their future due to a lack of disposable income. And it is equally unfortunate to see this gender bias extend beyond simply the ability to have financial investments, given men are likely to more regularly contribute to their portfolio, and have more money invested overall,” he says.
“It is important for everyone, even those on lower salaries to be aware that expensive fees and wealth management no longer go hand-in-hand – fee-free investment solutions like ours up to £10,000 are easily accessible and allow individuals to invest at their own pace. Unfortunately, the wealth gap between those who invest and those who don’t, regardless of gender, is only going to grow, so now is as good a time as any to start planning for the future by investing in some way – even if it’s small contributions.”
The gender divide in the investment world
A study of over 5,000 investment professionals by the CFA Institute last year revealed the pervasive industry-wide belief that adding women to all-men investment management teams will not improve returns; held by three in four investors. The study also found that while women continue to make progress within the industry, much more needs to be done to ease the global bottleneck that is preventing their full and equitable advancement within the profession.
In the report, Gender Diversity in Investment Management, CFA Institute found that while women continue to be underrepresented at every level and in every function of investment management this disparity could be addressed by focusing on three key areas: providing young women with early exposure to the investment industry in their college years and early career; emphasising to all investors the positive impact that gender diversity can have on investment performance; and working to bridge the work-life balance gap that disproportionately affects women.
The fact remains that at present, only one in ten C-suite executives in the industry are female, making advocacy and mentorship an uphill struggle.
Diversity: the business case holds strong in the industry
While portfolio performance is often seen as the ultimate criteria in investment management, the CFA Institute research indicates that a growing number of investment management professionals and investors – both individual and institutional – are placing increasing importance on gender diversity. In fact, the study found that 54 per cent of individual investors said that they could expect better investment performance from or would prefer to work with a team of gender diverse investment professionals. A total of 55 per cent of institutional investors held the same view.
While these numbers are encouraging, the fact remains that almost half of the survey respondents do not believe that gender diversity is a significant issue in investment management.
This is one of the likeliest reasons why women are so underrepresented at every level of the financial profession. Compared with their male counterparts, the top female investment professionals only hold 9.8 per cent of chief executive officer roles, 10.2 per cent of chief investment officer roles, 11 per cent of chief financial officer roles, 14.9 per cent of portfolio managers, 15.1 per cent of investment consultants and 17.3 per cent of personal financial advisors or planners. Women are also more likely than men to have jobs that support or service those in investment management (22 per cent for women versus 16 per cent for men).
Unequal responsibilities out of work
The gender gap in the investment management profession can also be explained by the divide that happens in the homes of investment industry professionals. 65.9 per cent of women reported that they were responsible for 50 per cent or more of family care, versus 22.4 per cent of men. The survey results did point to one bright spot – while the investment industry is renowned for being demanding, working flexibility is common.
“It’s unacceptable that a young woman today might feel that the doors of opportunity in the investment management profession are shut to her simply based on her gender,” said CFA Institute president and CEO, Paul Smith. “This is something our industry cannot and should not tolerate. The results of this study and the changes it suggests cannot be more clear: together, we must work to create change now. A focused effort to raise awareness of the benefits of gender diversity in investment management among women and investors alike will allow us to address both the supply and demand sides of the issue.”