Why are women not investing? And if they are, what is stopping them from getting on top of their investment portfolio?
In this latest interview, Dipika Khaitan, chief operating officer and co-founder of social investment app Gather, tells FTAdviser why women today are less financially resilient than previous generations, and what the financial services industry can do to help more women start investing.
FTAdviser: It has been said that women today are more financially independent than any previous generation. But how financially resilient are women?
Dipika Khaitan: Undoubtedly, we’ve come a long way in advancing women’s economic empowerment. Beyond just achieving basic financial independence, more women than ever are taking an active role in their finances, investing earlier in life and becoming successful entrepreneurs.
Thankfully, women today can also look up to strong female role models succeeding on their own terms.
Yet despite the strides made to break down barriers, it’s an uncomfortable truth that inequality persists. On average, women have less than half the levels of savings and investments held by men.
This is creating a huge wealth gap that cannot be ignored. With inflation climbing to a 30-year high, and the value of savings declining in real terms, this wealth gap is only going to get bigger unless these issues are addressed, and soon.
Income inequality is a huge contributing factor to this issue, and in general women may conclude that they do not have enough disposable income to invest, or that it is simply ‘not the right time’.
But putting off investing until later in life means they are missing out on harnessing the power of compound interest. Ultimately, this makes achieving financial resilience a much tougher task for women, who are already dealing with an uneven playing field.
Other, more subtle differences also exist in the way that men and women manage their finances. For example, women’s investment priorities often differ from men’s, but they go beyond conventional assumptions.
Investing with purpose tends to be an important consideration for female investors, as is building their wealth over time, and yet companies generally tend to market their products towards women encouraging them to ‘save’, rather than offering solutions that are tailored to their investment preferences.
Separately, advisers often run with the assumption that we are more risk averse, when in reality we are risk aware.
FTA: What sort of barriers remain in the investment world that might put women off investing - or even working in the investment sector?
DK: There are a number of factors at play here. Chief among them is the fact that many women simply do not have the financial confidence to invest.
For starters, a shortfall of confidence accounts for a third of women’s lower levels of financial literacy relative to men, while genuine gaps in knowledge account for the rest.