Women are economic powerhouses. They create, they control and they influence a huge amount of wealth. Yet, women are the single largest underserved group of customers in financial services.
Research suggests that financial institutions are failing to connect with female customers at every stage of their journey – from advertising to advice to product offerings.
Women often report having a difficult relationship with money and the financial industry as a whole – disengaged from personal finance, less confident about managing money, and feeling patronised or talked down to by financial advisers.
At its most obvious, the financial industry is missing out on a huge revenue opportunity, particularly as women’s private wealth grows.
It is also worth bearing in mind that attracting and building lasting relationships with female clients is a worthwhile investment for financial institutions. Women are twice as likely as men to recommend their bank to someone else, and typically hold more savings, mortgages and general insurance products.
But there is more to this – our push for achieving gender equality requires that we also push for the financial empowerment of women. The calls for financial feminism are growing louder. To address the demands of this movement, it is timely to consider what can we do to make the financial services industry more female-friendly?
Encourage more women to work in the financial services industry
We have a fundamental problem – there are simply not enough women working in the industry.
A McKinsey study compares the rates at which men and women climb the ladder in banking and consumer finance.
The financial industry is missing out on a huge revenue opportunity, particularly as women’s private wealth grows.While 51 per cent of entry-level banking and consumer finance employees are women, only 26 per cent of the industry’s C-Suite roles are occupied by women.
Portfolio management is particularly devoid of women, for example, Morningstar found that in the United States, the ratio of male to female fund managers is 9 to 1.
A better gender balance is critical because diversity of thought, experience and action are core components of what the financial services industry needs to be fit for the future. Let’s face it - any efforts to rebuild trust, design new products, rethink investment practices are undermined without more women in the industry.
Change the way we communicate with women on money matters
Many women hold the self-perception that ‘investing is not for them’. This is no surprise when you look at the way that both the industry and mainstream media communicate with women about money.
Research indicates that we often portray women as excessive spenders, in need of guidance to help them save and restrict.
The comparison with how we communicate with me is stark - men are encouraged to ‘dare to invest’ and defined by the glories of financial success. We can do better.
Leverage tech to democratise the way that we invest
Importantly, the digital divide is more generational than gender-specific – with younger people highlighting the importance of good mobile apps to manage their personal finances and investing habits. Both women and men older than 55 find these to be less important.
This gives us an opportunity to develop gender-neutral tech that is not modelled on the needs and preferences of men as a default. It presents the opportunity to bring younger women into investing at an earlier stage of their lives.
Think more deeply about women’s financial needs - ‘pink washing’ will not cut it
Simply rebranding products for a female audience will not achieve the change we are looking for.
The financial services industry also needs to think more deeply about the kind of products and services that women want.
Research indicates that we often portray women as excessive spenders, in need of guidance to help them save and restrict.We have overwhelming evidence that women care about the bigger picture, they care about where their money is invested.
Increasingly women are seeking out sustainable investing products and services to include in their personal portfolios.
Yes, women need to invest more in order to address the gender investing gap. However, the industry also needs to wake up to what women are wanting and that is to invest more consciously.
Sustainable and responsible investing is a huge opportunity for financial institutions to attract new female clients and build better relationships with existing ones. Women stand at the forefront of aligning investment decisions with personal values – and the financial institutions that act on this opportunity sooner rather than later will be the ones to secure loyalty from their female clients.
Jessica Robinson is a the author of Financial Feminism: A Woman's Guide to Investing for a Sustainable Future
