Women face having to take on more investment risk in a bid to achieve higher returns to compensate them for lower pay than men, research by UBS has found.
Differences in income, pay discontinuity, and a lack of financial confidence can exacerbate gender wealth inequalities, according to the report, which brought together and analysed various recent research into differences in wealth between the genders.
Lower pay and career breaks were found to negatively impact long term wealth and comfort in retirement for women.
This will be further exacerbated if women have investments that only deliver low returns, for example 1 per cent a year.
Considering women are expected to live longer, low yielding investments would make it harder for them to maintain their lifestyle in retirement, according to the research by UBS Wealth Management.
The research found a pay gap of 10 per cent will result in a woman having 38 per cent less wealth than a man at age 85 and with a short career break 43 per cent less wealth than a man at the same age.
UBS Wealth Management: Women and Investing revealed many women need to invest more for the long term and take more long-term risk in their portfolios to meet their needs.
The research showed how investment decisions and behaviours widen the gender gap in addition to income disparity, pay discontinuity, work flexibility and longevity.
Mara Harvey, managing director of UBS Wealth Management and head of UBS Unique said: “On average, women’s investment decisions and behaviours are found to be different from men’s.
“Research shows that women have historically been more reluctant to take risks and tend to be less confident when making investment decisions.
“This is despite studies demonstrating that women have considerable financial knowledge and discipline relative to male peers.
“Not taking enough risk often means people aren’t able to receive the returns they require to achieve their life-long ambitions.
“Increasing women's financial confidence can help them achieve their goals and maintain their lifestyle in later life: an appropriate investment approach can make a lifelong impact on a person's financial situation.”
UBS Unique is a five-year plan to better serve female clients and increase the financial confidence of one million women by 2021.
The company said it is committed to hiring, retaining and promoting more women at all levels across the firm and aspires to increase the ratio of women in management roles to one-third.
Kay Ingram, director of public policy at LEBC said: "Women in the job market need to ask prospective employers what their policy on diversity and equal pay is before accepting a position.
“Studies have shown that companies which champion diversity in the workplace perform better as they more accurately reflect their client base and benefit from diverse inputs into the business.
“When dealing with their personal finances women do have a tendency to be both more risk averse than men but also more disciplined in their approach to saving and planning.