As Barclays releases new data looking at the gender disparity between male and female investors, Clare Francis, director of Savings and Investments for Barclays Smart Investor, calls for the conversation around investing to radically change...
Over the weekend, it was fantastic to see so much activity and positivity to celebrate International Women’s Day. At Barclays, we are continuing to work towards gender equity, and to increase the number of women in senior roles.
It’s not just here where we need to see change though. We also need to see it in the way women manage their finances too. At the moment, there is huge gender disparity in who invests and when they start, with men more likely to invest than women.
The UK investment picture
We are approaching the end of the tax year, and, by our calculations, there are approximately 13 million UK adults who have £430 billion sitting in savings accounts, over and above what they need for emergencies and shorter-term financial goals. This is money that could potentially be invested to help growth their wealth over the longer term.
We know that more needs to be done to give consumers the confidence to start investing – even more so for women, who are at greater risk of falling through the advice gap.
The gender investment gap
Analysis of Barclays’ savings customers revealed that of those with more than £20,000 in cash savings, 55 per cent are women. When we look at the gender split of those signing up to Barclays Smart Investor, it is overwhelmingly male, with 69 per cent men and only 31 per cent women.
This tells us that many women are in the fortunate position of having enough savings to consider investing, yet they are less likely than their male counterparts to give it a go.
From recently conducted research, we found that, on average, it takes women four months from the point at which they consider investing to opening an investment account – one month longer than men. Taken to extremes, 10 per cent of female investors say they waited over a year to start investing - that’s almost double the figure for men, which stands at six per cent.
For us to address this issue, we need to understand the factors that are causing this gender disparity.
What's holding women back?
Decision paralysis is where you delay taking action out of fear of making the wrong decision. It is having a huge effect on the UK economy, and it affects women more acutely than men.
Our research shows that 27 per cent of women say they suffer from decision paralysis on major decisions ‘very frequently’ or ‘almost always’, compared to 15 per cent of men.
Attitudes to risk play a key part. From my experience, I know that women tend to be more risk averse than men in general. If you layer in family commitments, many women feel cautious about starting to invest in case it puts their family’s financial security at risk. It’s also common for women to feel they don’t know enough about investing which impacts their confidence to give it a go.
In addition, the research named influence from friends and family as the biggest catalyst in becoming an investor. However, while 72 per cent of men said that they feel ‘somewhat’ or ‘very’ comfortable in talking about investing with friends and family – only 64 per cent of women say the same. So, to make the decision to invest simpler and more accessible, we need to normalise talking about investing.
What are the next steps?
In order to encourage more people to become investors, we’re calling for the FCA, through their Advice Guidance Boundary Review, to update regulation to remove some of the barriers to entry, and encourage more open conversation.
As part of our recommendations, Barclays has put forward the idea that the FCA consider developing a ‘badge’ for an appropriate entry-level investment products. This could help those who perhaps don’t think they have the knowledge and expertise to invest, feel more confident about getting started.
In addition, allowing firms to suggest investment actions based on ‘people like you’ personas could support women with large cash balances to make decisions based on personalised guidance. This could also help to normalise the conversation and help more women feel that investing is something that’s relevant for them .
At Barclays, we want to make the decision to invest as easy and accessible as possible. As the FCA considers proposals for the Advice Guidance Boundary Review, it is our hope that the process delivers an outcome which empowers individuals, both men and women, and results in more people investing in order to help build their wealth and improve their financial security over the longer term.
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