New research by BLEND Network highlights the gender gap between male and female investors in terms of both number of investors and risk they are willing to take.
The financial services sector needs to do more to combat gender inequality in investment according to new research from BLEND Network, a leading property-backed P2P lender.
Fewer female investors
Speaking at the Women in Finance Summit yesterday in London, Roxana Mohammadian-Molina, chief strategy officer at BLEND Network, will say that the firm’s new research based on an analysis of the investing patterns of over 1,200 of its lenders revealed that not only are there significantly fewer female investors than male, but also that female investors emerge as more risk-averse than men.
Roxana argues that the wealth management sector needs to embrace change to encourage more women to invest. A recent study by Warwick Business School has shown that women are better investors than men, with the men who invested achieving 0.14% above the performance of the FTSE 100 compared to 1.94% for women.
Roxana believes that BLEND Network’s research underlies a deeper set of issues within the financial services sector, including financial management not being widely taught in schools, a lack of female role models working in the financial services industry and the continued existence of the ‘Old Boys Club’, all barriers to women entering the profession.
She also argues that within this climate women need to take the initiative and do more to challenge the status quo and drive change within the industry. She sets out the following key recommendations to help unlock the power of women investors:
· Create supportive networks: Women should not pursue this change alone but should network to create supportive communities in which they feel free to share information, experience and advice. These communities, either online or person, will provide safe spaces to encourage women to discuss money, from unpicking jargon to making recommendations for the best wealth advisors for women.
· Education is critical: As money management and investing are still not part of the national curriculum, women should educate themselves and spend time to understand the basics of financial management. Greater knowledge will lead to greater confidence, which will allow women to become less dependent on wealth managers and more independent when it comes to investing. Learning sooner rather than later is important as money management skills last a lifetime
· Embrace the difference: A woman’s more risk-averse nature should be embraced. Female investment priorities are different, not inferior. Investing does not have to be full of risk to be successful and if women understand that their individuality is an asset, it will help encourage them to invest.
· Start small: Women need to spread the message and understand that you don’t need to be rich to be an investor. Women can start with the smallest amounts, e.g. £1 per day, and build up their confidence
· Celebrate success: It is important for women to see and celebrate successful women in finance. To do this, and tackle the ‘Old Boys Club’ perception, it is important to change the composition of the financial services industry, as currently, only 10% of wealth advisors are women. Their positive stories will encourage other women to work in the industry and also to take action and see what they can achieve by investing.
Roxana commented: “Money and investing should not be an issue that women shy away from but something they should take control of and master. With over half of women not ever holding an investment product there is a long way to go to encourage female investing. The private wealth sector needs to change in order to reap the benefits that increased female investment can bring. But women should not wait on the sidelines for this change to happen.
“They need to be proactive and seek to affect change themselves. Women no longer accept second best in the home or at work, and they should not accept second best in private wealth management either. Ladies take action!”