As Charlotte Yonge sorted through boxes of her grandmother’s things this year, she found a pile of handwritten share records from the 1970s. It triggered a memory: when she was young, Yonge had always seen women as the ones who invested, as her grandmother had throughout her life.
But as she grew older, Yonge realised she was relatively alone in this assessment. In most homes, men handled the finances, and on a professional level, men were the ones that took on careers in the field.
It was something that Yonge, a senior fund manager at Troy Asset Management, did not understand. “Loads of my friends could have been really great investors if they’d had access to it. And when I talk to them, sometimes I think they’re quite interested, but they just never had the information. For me, it was becoming aware of an anomaly that didn’t make any sense,” Yonge says.
While Yonge saw a hesitation among women to become investment professionals, she also recognised a hesitation among women to invest altogether. These reservations have led to a disparity between UK men and women’s investments that equates to the GDP of Sweden: £567bn. According to a 2024 report by Aviva, men are almost twice as likely as women to invest in a stocks and shares Isa, Sipp or general investment account.
See also: Women continue to lag behind men in financial education, confidence and literacy
Camilla Esmund, senior manager at interactive investor, says: “The reality is that shying away from investing can severely limit your financial potential and stability. Stockmarket investments have a strong track record of producing inflation-beating returns that far outstrip those of conventional savings accounts, albeit with higher risk.
“Whether it’s buying a home, funding your children’s education or ticking off items on your bucket list, not investing can make these aspirations harder to achieve due to the lack of substantial growth on your funds. So – fundamentally, if even fewer women are investing – there will be fewer women having long-term financial security, and fewer women reaching their financial goals.”
Wasted opportunity
The drawbacks of women investing less is not limited to a personal level. It means there is less money throughout the market and, from a management perspective, a loss of clients.
Maxime Carmignac, chief executive officer and director of Carmignac UK, says: “It’s a huge mistake, because it’s having a negative impact on women, on society and on the industry.
“All this money now is in cash. It’s not invested, which means it is not benefiting the system. It is a wasted opportunity, also for wealth and asset management, because no fees are being made on this wealth. Also, it is not compounding.”
The effect could also spread beyond the quantity of investments to the quality.
“All women are different, but we read some studies saying women are more likely to be long-term-driven, more sustainability- and more purpose-driven. Therefore, I think it would change the allocation,” Carmignac says.
Mooka Maboshe, money coach at Octopus Money, adds: “More women investing means it’s good for the economy as it allows businesses, governments and institutions to be able to grow and use those funds in a way that is in line with their values, especially if you’re thinking about more ethical investing in ESG options.
“Using this strategy for investing means women can put their money to work. They can help the economy grow as a result, and they can do it in a way that aligns with their values and the way they want to shape the world.
Companies that align with those values can show them that, not only is the money growing for them but it’s also growing in a way that’s good for the environment.”
Currently, though, the shift is simply not happening. While the imbalance has many different roots, it has become clear that while women are saving, they are not necessarily investing.
Eighty-eight percent of women hold a savings account, according to the Schroders Women & Wealth Report, yet just 26% of women have a stocks and shares Isa. Thirty-three per cent more women invest in cash Isas than men, according to the HMRC, but this money is not compounding.
While sometimes this can result in fewer shakes when the market dips, it also harms overall returns. According to a report by Vanguard, if an investor maxed out the allowance of their Isa for the past 25 years, the total for that money invested in the MSCI World index through an Isa would be £898,361. That same money put into a cash savings account would total £360,019.
Katie Nutting, financial planning director at Schroders Personal Wealth, says: “Women are still generally behind their male counterparts when it comes to investing. There are a number of reasons why this happens and it’s likely to take years for women to close this gap, particularly as we know the importance of compounding when it comes to trying to grow your pot.
“I work with a number of female investors, who begin the planning process by apologising for their lack of knowledge when it comes to investing, which tells you we are already starting on the back foot when it comes to women and investments.
Some have found that women stray away from investing because they have less confidence in the field or are more risk averse. Octopus Money’s Maboshe says she has anecdotally found this to be the case among her clients, especially at the beginning of the investing process.
“When it comes to getting started with investing, I find my female clients tend to need more information so they feel like they’re doing the right thing. That helps them with building confidence, because they know they’re making an informed decision,” Maboshe says.
“Whereas with my male clients, I see the confidence doesn’t necessarily come from knowing everything about where their investments are going. It tends to come more from the expectation and the expected returns. So, ‘I’m putting my money here, and because the platform says this is the forecasted expected returns, I’m more confident I’ve put my money in the right place’.”
However, studies from interactive investor have found that among their investors, there is little difference in the confidence between men and women. In fact, it found a slightly higher percentage of men than women are concerned about making the wrong decision in their investments.
“We’ve done a lot of research on how men and women invest on interactive investor, and they run their portfolios along very similar lines. Tackling the persistent pension gap and investment gap is absolutely vital, but the reasons for these gaps are not necessarily due to fundamental differences between men and women,” interactive investor’s Esmund says.
“In fact, when women do invest – they do very well. Our quarterly interactive investor Index shows consistent outperformance of our female investors, and most recently it showed that both men and women enjoyed very similar performance over the past five years. This data shows that the gender investment gap is not due to differences between men and women in capability or even, necessarily, approach.”
‘Motherhood penalty’
“Naturally, the persistent gender pay gap plays a key role. This is then thrown in the mix with many other factors such as taking career breaks for children or caregiving, and longer life expectancies,” interactive investor’s Esmund says.
“Once again, the impact of the so-called ‘motherhood penalty’ shows itself. Unfortunately, it seems that if women have children, the odds are stacked against them. After all, the UK has some of the highest childcare costs in Europe, and this can mean women are making sacrifices that impact their ability to build long-term wealth.”
A lack of representation could also play a role in how women invest. A report for eToro by Dr Ylva Baeckström examined the gender portrayal of finance leads in films. Just 24% of financial leads were female, and none of the analysed films had a woman as a CEO. Men in these roles were also rated as more knowledgeable and confident than women.
“Portraying women as subservient characters who are treated in a derogatory manner is regressive. Likewise, equating women’s successful finance careers with the need to adopt ‘alpha’ characteristics and still be discriminated against is restrictive and disappointing. These depictions can fail to encourage many women to see themselves as active participants in finance,” Baeckström says.
Looking to ‘real life’, Baeckström also found that having women in the field made a difference to female investors. Women who invested their money with a female adviser took up to 11% more risk.
See also: FTSE 350 surpasses gender target with women in 43% of board positions
To Carmignac, this disparity is not surprising. “I think women might have better empathy and might understand better what a woman is expecting,” Carmignac says.
“[Investing] is a journey. At the beginning if you have a woman as a new client, she will likely be more risk averse, so you will start with more fixed income, less equity. Step by step, if you are the right adviser for her, you can lead your client towards more equity and therefore returns will be higher.
“If a woman doesn’t trust the adviser, and says, ‘Oh no, I don’t want to do that. Markets were down last year’, she will have the tendency not to take enough risk. If you feel a high level of trust with someone who understands you step by step, you will take more risk, and therefore have higher returns.”
Troy’s Yonge believes another piece of this may come from the language used by men versus women in the investing space.
“I do think there’s a tendency on the part of a female investor to talk in plain English, which may or may not be a gender bias,” Yonge says.
“My own experience is that a big barrier to investing is the amount of technical jargon that is used to wrap up what, in essence, is a fairly straightforward thing we’re doing. If you can have whoever’s giving the message describe it in really simple and intelligible terms, that’s critical.”
Across both men and women in the UK, financial literacy continues to be a barrier. In a 2024 study, aberdeen asked a sample of people the ‘big three’ financial literacy questions, encompassing interest rates, inflation and a basic investment strategy. Of those surveyed, 44% were classified as having poor financial literacy.
“Complexity disenfranchises investors and the investment and pensions landscape is undeniably complicated. For self-directed investors, male and female alike, it is not straightforward,” interactive investor’s Esmund says.
“There is a desperate need to give people the tools to build financial resilience and make the most of their resources. This will help encourage more people to invest and build consumer confidence.”
Lip service
The disparity between men and women in investing has led some women to begin to use platforms and other investment tools that are geared specifically towards women, through companies such as Ellevest, Female Invest and Ladies Bank (created by ODDO BHF).
Carmignac has been specifically impressed by the work of Capital Y, an asset manager in Geneva whose clients are 70% women. However, she recognises that just appealing to women can make for a more limited market.
“It makes more sense for a typical asset manager to pay more attention to women, as opposed to specifically women. The problem you are facing is a scale issue because you are addressing a lower percentage of the market.”
The creation of a product aimed only at women can also run the risk of being viewed as an unnecessary separation.
“It really stands out that 40% of women we surveyed said they found investment marketing patronising, compared with 16% of men surveyed. If women are noticing this more, again this emphasises the importance of female writers and commentators in this industry and the influence they have voicing these stereotypes which do not resonate with end-investors,” Esmund says.
See also: FCA and PRA axe plans to impose stricter DEI rules for financial services
“In fact, 22% of female respondents in our research said they felt patronised by the assumption that women do not know what they are doing or need more handholding when it comes to investing. Ten per cent pointed to the generalisation that women are risk averse, and 8% noted the use of pink in advertising.”
Platforms that are specifically geared towards women could also not have the same range of products that are seen on larger platforms, limiting the options for investment opportunities.
“Personally, I don’t believe we need different products based on gender, but I do think we need to look at the marketing of such financial products and how we engage with female clients. We still use language that is directed towards men with regards to long-term financial planning, which can cause a barrier to entry for female investors,” Yonge says.
“Men and women can have similar financial goals, whether that’s planning for their retirement, house moves, helping children or starting a business, which can be met by the same financial products, but the type of cashflow planning they relate to can often be very different. This is more to do with communication rather than the products on offer.
Yonge adds: “What is more of a concern for me is the newer language you see on social media, referring to concepts such as ‘girl math’, which reinforces the stereotype that women are less equipped to deal with their own finances. We don’t need different products; we need a shift in the way that investments are discussed across genders.”
While disparity remains as to why the investment gap is so large, and what the best way is to close it, the idea that closing the gap would benefit not just individuals, but the economy as a whole, rings true.
“I would like to encourage younger women to compound. Money is power. Money will enable you to live the life you want to live, to be independent. It’s not just money,” Carmignac says.
“You have a larger participation of women in higher education and the workforce, and the gender pay gap is closing. So you have those three massive structural changes, which means the problem is getting bigger as more and more wealth goes into the hands of women. And still, this issue is poorly addressed by the industry.” PA
This article originally appeared in the March issue of Portfolio Adviser magazine
