Stop saying women are cautious investors

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At my girl’s grammar school in the 90s, our math teacher introduced us to trigonometry, saying that female brains often found it violently. At least half of the classes were quickly turned off and probably never interested in mathematics again.

I recall this episode when research from the wealth management industry discovered that women lacked confidence in their finances. As a result, it is said that women are less likely to invest.

The gender investment gap is real. Boring Money, a consumer investment website, estimates it has risen to £6780 billion this year, based on the fact that more men invest more money in higher revenue products. A survey by the Investment Association this year found that men are more likely to hold twice the ISA of women’s stock and share.

The wealth management industry is fully aware that it needs to attract more women. According to McKinsey, it currently manages about a third of all retail financial assets in the EU and the US, which is expected to rise to up to 45% by 2030. It was born to deal with this by women-only investment companies. Mainstream wealth management companies are looking to recruit more female advisors while producing leaflets aimed at women to encourage women to be more confident.

But what if they have this in the wrong way? The theory appears to assume that women are more likely to hold cash because they have less confidence. However, this idea accuses women of being cautious rather than blaming the industry for allowing women to be cautious.

It’s like having a vulnerable female brain that can’t handle the rotation of the shape.

This industry approach – don’t be scared of stocks, sensitive women! – Has a knock-on effect. Firstly, for those who find finance boring, this gives them out, like the girls in my math class. Men are not supposed to find financial boredom, so those who actually do it may feel more social pressure to overcome this and do their homework. Women may not feel this to the same extent. Secondly, I think certain old school advisors could lead female clients to not take them at the right risk as much as male clients. Some of the gender investment gaps can be easily curtailed in the absence of good advice.

Of course, there are different ways of thinking about investment and risk, and some people are more risk-averse than others. The wealth manager tells me that female clients are more likely to plan for the long term and think about what their money is (usually children and grandchildren) than male counterparts. That’s fine, but I don’t think it’s helpful to assume that women take that approach or that men don’t want it.

Emma Sterland of Evelyn Partners believes that women tend to take longer to understand what they are investing in and ask more questions, rather than to say that women have a lower risk profile. This can be misunderstood by bad advisors.

A bad advisor may not understand that male clients may feel pressured to understand finance. This makes it a paper around a whimsical lack of knowledge and a product that doesn’t take more risk than you feel comfortable with. That’s not fair to them.

Anyone who doesn’t know what is going on due to the unnecessary jargon of this industry, or who knows what the bamboo is soaked in, should feel they can ask a question. Asking a question is a sign of strength. The brave journalist places his hands in the middle of a presentation filled with jargon filled with nodding people and asks, “But what is the security that mortgages support?” (If the presenter can’t give a clear answer, that’s a very bad sign).

Even if there is a chance that women will do X or men to do Y, I don’t enjoy gender stereotypes. That doesn’t mean that all women and men still behave that way, and that they should. It’s better to make money on stocks rather than cash. It is a gender-neutral statement. Similarly, we recommend asking questions and understanding what you are investing in. This should also apply to everyone.

One solution for all of this is to get better at psychological profiling for both men and women, and wealth managers say AI tools are already supporting us here. Another solution, according to the FCA, is to hire more female advisors. That would help, but I think it’s not good for women to have too many people in any business for group thinking, in the general sense that women want female advisors.

According to McKinsey’s research, there is also an age factor. And Alex Roydon, the advice director at St. James Place, says young male advisors often have a more thoughtful approach to all of this than older male advisors.

Finally, of course, there is financial education in schools. Women should not be allowed to think of stocks as a difficult outlook than they should be allowed to think of the triangle as such. Getting messaging correctly as soon as possible will make these lazy gender categories a thing of the past.

This article is part of FT’s Financial Literacy and Inclusion Campaign