Listen to this article
I am the female editor of the FT’s personal finance section. The majority of my readers are male. The majority of people I meet in the investment, financial advisory and asset management industries are also male.
Many of the stories I report on, however, concern how deeply uncomfortable many women — who have their own salaries, earned from their own careers — feel about doing their own financial planning. I do not think this is a coincidence. Many women feel that investing is not for them. Why?
Sue Noffke, one of the UK’s highest profile fund managers, thinks it boils down to confidence.
Investing money in the stock market is not a complicated process, but it requires making decisions. Will you buy funds, exchange traded funds or equities? If so, which ones — and in what proportion? And on which platform will you choose to hold your investments? These are the practical barriers, but bigger decisions are needed to guide these choices — namely, what am I saving for, and how can I do so in the most tax-efficient way?
Average pension wealth of women in the UK by the age of 60-64: one-quarter of the amount held by the average man
— Chartered Insurance Institute
Anyone can find the information to answer such questions in the personal finance sections of newspapers, on the internet, and even on videos from investment providers — Ms Noffke has made quite a few of these at Schroders, where she is a UK equities fund manager. Yet men are more likely to decide to invest.
“I don’t think men are any more educated in taking these types of decisions — they rarely fully understand what they’re doing,” she says. “The difference is that women want to understand, but get bogged down in all the jargon.”
In the UK, the simplest route to investing is arguably the stocks and shares ISA, which allows adults to save up to £20,000 a year tax-free. Yet men are much more likely to have one.
This could be because they earn more, and have spare money to invest. Yet women are much more likely to hold a cash ISA, or indeed any form of cash savings, even though average interest rates on these have been below inflation for years, meaning their long-term cash savings are shrinking in real terms.
What is behind this lack of confidence? We are told that men are more likely than women to apply for a promotion for which they satisfy only some of the criteria, whereas women think they must satisfy all of them. Could the same forces be at work when it comes to investment decisions?
There is glaring evidence that women need to be saving more into pensions. By the age of 60-64, women in the UK have an average pension wealth of £35,700 — one-quarter of the amount held by the average man, according to a study by the Chartered Insurance Institute.
It forecasts that the rising cost of housing and childcare means young women risk ending up with even less. Clearly biology, career choice and the pay gap between men and women are factors at work, but saving into a pension as early as possible would help lessen the blow.
I ran a workshop with BritainThinks, the research and strategy group, at which we asked a group of women about their attitudes to investing. These women ran every aspect of their family finances; some of them also ran businesses. They were confident enough to remortgage, take out loans, switch insurers and even dabble in buy-to-let property.
Yet they felt investing in the stock market was akin to gambling and something they did not understand.
Many wanted face-to-face advice from a financial adviser — but they did not know how best to choose one they could trust, and were put off by the cost. Fearing that the wrong decisions would result in losing the money they were saving for their family’s future, they had in effect made no decision, leaving their long-term savings in cash.
Technology is making it easier for both men and women to invest. The so-called robo platforms, such as Nutmeg, Netwealth and Moneybox, ask questions to determine risk appetite, then bundle together low-cost funds with a few clicks.
Yet there is a mindset problem, even among women in business. I gave a presentation about investing last year to 200 women working in the City. At the start, I asked those who would describe themselves as investors to put up their hands. A smattering of hands were raised, one of them mine.
Then I asked them to put up their hands if they had a pension, either privately, or through their company. This time, nearly every hand was raised. You are investors too, I said.
Most company pensions today are defined contribution — a structure that means you can decide the mix of investments they contain. Otherwise, you will end up in the “default fund” of pedestrian, low-risk investments.
So pay attention to your company pension. Enlightened workplaces are doing more to make women in particular aware of these benefits.
The industry could do more, however — starting with the way it markets itself. The workshop with BritainThinks found that women were “alienated” by jargon-filled marketing campaigns they assumed were designed to appeal to wealthy men. Yet all of them had thousands potentially to invest.
One sage piece of investment advice that I would pass on to anyone is that regularly saving small amounts into the stock market over the long term is the best way to achieve steady growth in investments and ride out peaks and troughs. Ideally, this should be done tax-efficiently through a pension or ISA, all of which are designed to take regular monthly savings.
So I throw down the gauntlet to the financial services industry. Why not launch an advertising campaign in conjunction with sanitary protection brands, such as Tampax, Always or Bodyform? Packets could remind women that it is the time of the month to pay into their ISA, and promote some easy routes to investment.
Yes, some people will think a stunt such as that is not acceptable. It is far less acceptable that women are not maximising the power of their retirement savings and will suffer in later life as a result.
If it takes shock value for this industry to engage with the half of the market that it is currently ignoring, so be it.
The writer is the editor of FT Money