Women Don’t Invest at The Same Frequency as Men. Here Is Why It Counts—And How the Disparity Can Be Closed

• Author: Jenny Wolff
• Posted: 2024-04-06

The reasons why women aren't involved in the investment market at a comparable rate as males go beyond just having less earning power. Experts blame a number of obstacles, including how women are viewed and handled by the investment society, for the gender investment disparity.

A study by BNY Mellon Investment control showed that if females invested at a comparable rate as males, there would be at least an extra $3.22 trillion in assets under control from private people. In the company's 2021 worldwide poll, 8,000 women and men from 16 markets were represented. Additionally, 100 international asset managers who are in charge of $60 trillion in assets were questioned by BNY Mellon.

Per the Transamerica Center for Retirement Studies, women are less likely to contribute to an employer-sponsored plan or a stock account when preparing for retirement. The Harris Poll polled a nationally representative group of 5,493 employees in the United States between October 28 and December 10, 2021, for its 22nd annual study of workers, which was published in November 2022.

Consequently, despite living longer on average than men, women have a lower chance of being ready to resign whenever they want. In contrast to 66% of men, only 53% of women feel monetarily secure about retiring at their goal date, according to a BMO study. A pool of 3,401 American individuals were questioned for the study by Ipsos between January 16 and February 12.
 

Obstacles to Get Over

When it pertains to investing, women encounter a number of obstacles. One is that, according to BNY Mellon's research, women aren't being drawn into the investment business to the same extent as males are.

According to the worldwide study, only about 28% of women feel confident investing a portion of their money, and one in 10 women believe they don't completely comprehend investing. About 41% of women in the U.S. feel confident.

However, the poll showed that 86% of investment managers said they were primarily aiming for male clients. As per the Bureau of Labor Statistics, males make up the majority of financial advisers in the United States, accounting for 35% of them in 2022.

Then there's the significant barrier of the amount of disposable money that women believe they must have in order to spend. According to a study by BNY Mellon, women globally feel they need $4,092 per month before they can think about spending any of it. Women in the U.S. believe they need more than $6,000 per month.

Additionally, over 25% of the women polled said their money situation was bad or extremely poor. Women's perceptions of their financial well-being and their extremely high [disposable income] threshold are two barriers that will effectively prevent people from joining the financial markets.
 

Reducing The Gap

According to specialists, building a more diverse financial community is necessary to encourage more women to participate.

"More women should work as money advisers. Beata Kirr, co-head of financial strategies at Bernstein Private Wealth Management, said that was one of the simplest methods to narrow the difference.

In reality, almost three-quarters of the fund managers in BNY Mellon's worldwide poll stated that they thought more female asset managers would help the investment industry draw more female clients.

Male advisers must also comprehend how their own financial well-being may suffer if they blatantly disregard women, according to Kirr. She observed that more women are becoming wealthy, whether it be through company ownership, moving up the corporate ladder, or inheriting money.

Then there's the financial terminology that experts frequently employ. According to 31% of female respondents to the BNY Mellon poll, excessively complex language that can be confusing or unclear discourages them from the investment market or from contributing more than they already do.

She continued, citing the BNY Mellon worldwide survey results showing that over fifty percent of women want impact investing and arguing that the investment community should offer more chances to appeal to women.

In order to achieve this, BNY Mellon recently applied to begin the BNY Mellon Women's Empowerment ETF, which will engage in businesses that exhibit gender-equitable procedures or provide goods to meet the requirements of modern-day women.

According to Lamas of Morningstar, eliminating the female wage difference will stop the disparity in investing. Therefore, these fundamental adjustments are necessary. We need to increase women's pay to have an effect here.