The industry is missing the boat when it comes to getting women to invest at the same rate as men, suggests a report commissioned by BNY Mellon Investment Management.
The report announced Wednesday — Pathway to Inclusive Investment — found that asset managers’ products and features are geared more towards men.
The research was conducted by Coleman Parkes Research.
“Pathway to Inclusive Investment emphasizes the traditional stereotype of the person who is interested in investing is outdated. Young women are interested in investing too, but they need to be inspired to do so,” stated Anne-Marie McConnon, global chief client experience officer at BNY Mellon Investment Management, in a press release Wednesday.
Among the 100 global asset managers interviewed for the report, 86% expressed that the default investment customer they target with their products is a man. Further, 73% of these asset managers noted their firms’ investment products are predominantly targeted at men, which suggests they focus on the benefits and features that generally appeal more to men than women.
“As a result, potential female investors are met with language, imagery and messaging targeted mainly at a male customer,” the report stated, adding how these materials use high-risk sport metaphors related to high performance and achievement.
The report found that women’s participation in investment is held back by three primary factors.
One is that when it comes to engagement, only 28% of women, globally, feel confident about investing some of their money. “With so few women comfortable investing any of their money, the urgent need for better communication and engagement is clear,” the report noted.
Across all important aspects of financial decision making, investing is the area where fewest women feel confident, compared to making decisions related to savings, property and pensions, according to the report.
A second primary factor is what the report calls an “income hurdle.” On average, globally, women think they need $4,092 of disposable income per month (or roughly $50,000 per year) before they can begin investing some of their money.
The report also found that 27% of women interviewed described their financial health as poor or very poor. For women to think they need that amount of money in order to invest is “clearly unrealistic,” the report added.
“For the investment industry, overcoming this misconception and explaining that only a small amount of money is needed to start investing should be a key focus.”
The third major factor is what the authors call a “high risk myth.” Almost half of women interviewed (45%) said investing money in the stock market, either directly or in a fund, is too risky for them. Only 9% of women reported having a high or very high risk tolerance. Conversely, 49% said they have a moderate risk tolerance, and 42% stated they have a low risk tolerance.
“Work needs to be done by the industry to better communicate the risks and rewards of investments, especially in the context of missed potential opportunities from not investing, to bring women into an investment dialogue that is both fair and accurate,” the report said.
The report consisted of the participation of 8,000 women and men across 16 markets, as well as 100 asset management firms with AUMs of approximately US$60 trillion.
The study uses retail market investment data from Cerulli Associates. The report claims that if women invested at the same rate as men, there could be an extra US$3.22 trillion available for investment today. This calculation is based on the average volumes of investments held by men and women to find the difference.