Costly Women's Investment Gap

Photo by Nick Grappone on Unsplash

In this article, we look at a potentially costly mistake women make with money.

Women budget, men invest - but it doesn't have to be that way.

I had a conversation the other day with another female advisor, where we discussed the need for our society need to do a better job educating women about investing and finances. She said, "Women budget, men invest." As a female advisor with many female clients, I talk to women all the time about what they are doing with their money, and what they could be doing with their money - or rather, what their money could be doing for them!

A recent article by CNBC highlights this discrepancy between men and women. The article says, "If women invested at the same rate as men, there would be at least an additional $3.22 trillion in assets under management from private individuals”.

But the reasons why women don’t invest are more nuanced. First, there’s the gender wage gap. In fact, one study cited by the article finds that when controlled for income, women and men invest at the same rate. This implies that the cost to women of not earning the same as men is over $3 trillion!

Women think they need $$$$ before investing any of it

Also from the article: “Then there is the high hurdle of the disposable income women think they need to have before they invest. On average, women around the world believe they need $4,092 a month before they would consider investing any of it, BNY Mellon found. In the U.S., women, on average, think they need over $6,000 a month — or just over $72,000 per year.”

Plus, over 25% of women surveyed feel that their financial health is poor or very poor. How can they possibly consider investing if their financial health feels poor?

Financial advisors may perceive women as different from men

Female investors say financial advisors make assumptions about them that are unhelpful - for example, that their risk tolerance is lower than men. Or that women tend to be more interested in sustainable investing than men. These assumptions can get in the way of financial advisors being able to connect with women clients.

The investment industry doesn’t typically engage women at the same level as men. There are significantly fewer women financial advisors than men. For example, less than 24% of the CERTIFIED FINANCIAL PLANNER professionals are women.

Costly Life Expectancy - get financial education today

On top of women having less investments than men, women have another challenge: they tend to live longer. This means their limited resources may be even more stretched over their lives.

Women typically live longer than men, so even women who remain married may become widowed and need to know more about their finances than they ever did before. Why not start learning about investing and financial planning now?

Talk to your financial advisor about your specific situation.