Part one - Unconscious bias
Only one in five women in the UK hold investments... why? In the first of this three-part series I’ll be exploring this question and sharing some of my experience working in the male-dominated world of finance.
I’ve never been too worried about standing out. I’m the only lawyer I know that has pink hair, has never owned a suit and has always loved techno… but even I felt the pressure of being the sore thumb when I first started work in finance.
Earning and managing money was traditionally the ‘man’s job’
Sadly, it makes sense that the financial industry is lagging behind in the equality marathon, as historically everything to do with money was men’s jurisdiction. Men went out to work, men managed the finances, men did the planning... while women were denied any responsibility at all.
It was only in the 1960s that women going to work and earning their own money became commonplace. In the 1970s the Equal Pay Act was introduced (thank you, Ford sewing machinists), but women are still fighting for equality in the workplace and battling gender pay gaps even now.
We’re up against unconscious bias that was centuries in the making
It isn’t just in the workplace, though. Even at home, women are still struggling against the subconscious, institutionalised belief that men know more about money.
While women are now more likely to be in charge of the family finances, a recent report from UBS found that 56% of married women still leave investments and long-term financial planning decisions to their husbands. Of those 56%, 85% believe their husbands know more about those decisions.
That bias affects the growth of our money
By not investing, women potentially miss out on large sums of money over their lifetimes.
There are lots of reasons why women don’t invest, but research has shown that one of the main ones is confidence. Lots of women don’t feel as confident as men making big financial decisions (there’s that centuries of unconscious bias again). We tend to err on the side of caution, opting for savings accounts over investments, because we’re more likely to feel nervous about how our investments will perform, and perhaps even less confident in making an initial choice from the thousands of investment options out there.
Saving is a good thing, of course, but your money isn’t working as hard for you in a savings account as it might in a portfolio of investments. This is because savings rates are low (and getting lower), while inflation is increasing.
Between 2010 and 2019, the average UK savings account interest rate was between 1-1.5%, while the average inflation rate was around 2%. This means that the money in savings accounts during that time actually lost value. Compare this to the stock market that has averaged an annual return of 7.55% over the last 25 years, and investing sounds like the more considered option.
But who knows those kinds of stats off the top of their head?! Probably only people that actually work in finance.
We need to make our money work harder
On average women are paid £260,000 less than men over their lifetime, even though we generally live longer. More years means you need more money and, unfortunately for us, this is creating a retirement income gender gap, where women are having to retire later than men because they don’t have sufficient retirement savings.
In an ideal world all pay would be equal, we’d all retire at the same age, and we wouldn’t need to look for ways to make up the difference – and hopefully one day that will happen. For now though, we need to make our money work harder for us, and investing can be a way of doing that.
Don’t get me wrong, I’m not saying that all women should invest, because it isn’t right for everyone and your capital is at risk when you do, so it shouldn’t be taken lightly. But what I am saying is that women should not be put off because they think they don’t know enough or it isn’t ‘for them’, because it’s probably right for a lot more women than are currently doing it.
And it isn’t just women who think investing isn’t for them – while I’m very aware of that segment, I also know that a lot of us Brits, regardless of demographic, aren’t investing because we think we need a degree to give it a go (more on that in the next part).
Investing may seem daunting for a number of reasons. We might feel intimidated by the sheer choice of investments out there, which can lead to inertia in taking a first step. Or it might be that the investment world comes across as exclusive; a private club surrounded by a huge, intimidating fence made up of extreme wealth and outdated jargon. But, as someone who has worked on the other side of the fence, I think it’s time to tear it down.
Everyone should feel confident in accessing helpful financial products
Whether it’s ETFs or non-listed funds (or, depending on your confidence, specific shares or bonds), financial products should be accessible to everyone, so that they can make the choice about what’s right for them. No one should believe that the choice has been made on their behalf by exclusivity or intimidation.
That’s where I come in…
While it hasn’t always been easy working in finance as a woman, it has been worth it. Now I’m in a position where I can use what I know to affect change in an industry that desperately needs it. And I get to be part of a new kind of finance company that’s looking to revolutionise people’s relationships with their money, which is brilliant and exciting.
Our team at Project Imagine are working to do this by redesigning the process of investing. Through our consumer brand Dozens we have a very simple affordability check and swipeable risk assessment, we offer financial products for all different risk appetites, and our ETFs are themed so people can invest based on their interests. Through our B2B technology and financial services platform, Pi1, we’re also helping other investment managers to streamline their investment process, use data to help their customers save and invest, and design future cutting edge financial products.
My personal mission is to help create and provide accessible, simple financial products and take a great big chunk out of that collective unconscious bias. This is the future, women can do everything, and we can definitely invest.