Today is International Women’s Day. Over-engineered PR fluff? Or important day to reflect on remaining inequalities in society?
Let’s look at this through an investment lens. 13% of women have Stocks and Shares ISAs compared to 21% of men. And the average balance is £23,000 compared to £36,000. But here’s the worst – from a survey of 6,000 UK adults the reported average balance in a private pension for women was £33,000 compared to £99,000 for men.
What does that actually mean? If a 57-year-old woman traded in that £39,000 today for 30 years of fixed retirement income, she would get about £1,760 a year. Ouch. Compared to £4,700 from the £99,000 pension.
Talking any sort of gender gap is always tricky
In one corner, hundreds of thousands of confident women investors can shout “Patronising!”. In another, the white, 50+ year old man in a suit can feel personally vilified yet again, as the punchbag of society’s shift towards acknowledging inequality. And yesterday, in response to the facts above, someone observed that his wife spent £600 a year on shoes and haircuts, and he didn’t. So that explains that. (Luckily for said chap, I had neither the time nor the desire to kick him in the metaphorical nuts on social media. I find this sort of commentary more boring than irritating).
Risk is a four-letter word
Even when women do open up investment accounts, more so than men, they are often not taking enough risk for the timeframes involved. Which means that over long time periods they are more likely to generate lower returns.
Women are more likely to spontaneously say words such as ‘security’, ‘family’ and ‘future’ when asked what investing means to them. And in this broader context, risk is felt to be contrary to these goals. Cavalier. Imprudent. Gambling. Doing something you don’t understand. But the deep irony is that it is precisely this fear of risk that creates the acute risk of not making your money work hard enough. And so that pension pot is not as big as it should be when you need it.
• If we look at 100,000s of completed risk profiles, women have lower risk portfolios. Substantially.
• If we look at the funds women hold on DIY platforms, their aggregate risk scores are lower.
• Over 70% of Junior ISAs – investment accounts where women report being more active decision makers – are held in cash.
Let’s change the conversation
Our sisters, mums, women friends, and grans are less likely to invest than men. As a group they don’t feel that this is a club to which they are invited to join. The stories and the examples do not map neatly to their realities of interrupted careers, years with toddlers where you can’t even have a wee on your own let alone read a 20 page jargon-filled investment report, and/or longer lives. Investment brands litter the Premier League, the golf, motor racing and rugby. And at the same time we hear from global brands that proposed content campaigns we want to run for women are a “bit niche”.
This isn’t about making a stupid pink ISA. It’s about changing the conversation. Making it relevant. And I think if we cut the jargon, make it relevant to things going on in our lives, really explain what investment risk means, and talk outcomes not products – well, we’re doing everyone a favour.
The single biggest thing that women tell us they hate is jargon. 42% of women who don’t invest today say they might consider it if we cut the waffle. So over the coming weeks we are launching a campaign - #nomorebull. We are going to actively challenge the industry to stop writing in gobbledygook. And help firms to make this change. If you have seen an ad, a website, a letter or a statement which did nothing other than to confuse or alienate, please send it in. We’re gathering a wall of evidence to highlight the most frequent offenders – and off the back of that, we’ll publish our Boring Money Dictionary.
This won't change the world. It won't fix the problem alone. But my God it would be a very good start.
Have a great weekend everyone!