Robo-advisers are trying to tackle the gender-investing gap
Women are less likely than men to invest but some robo-advice platforms are hoping to change that.
There is a gender-gap in the UK and investing is no different, as men are not only more likely than women to invest, but they often invest more.
Nearly half of women in the country have never saved for retirement, and only 17 per cent have ever invested in capital markets, according to a study from YouGov and digital wealth platform Scalable Capital.
It’s a trend that seems to be prevalent among robo-advice, or automated investing platforms as well.
Robo Advice News asked the top UK platforms the gender gap of their clients. While not all robo-advisers answered a request, on average 20 per cent of investors who invest in robo-advice are female. It’s a ratio that seems to be in line with how many women invest in wealth managers, although there is not much data or research available on this topic.
There’s also stark difference in how much women and men invest. Men have three times that of women in their pensions pots, according to a recent report from Aegon. On average men have saved £73,600 in 2017, while women have only saved £24,900. While the numbers are drastically different, the amount that women are saving is increasing. In 2015, women had on average £16,700 saved in pensions, while in 2016 it was £20,400.
Some robo advice platforms are trying to figure out the best way to attract female investors.
ETFmatic is trying to gain more female clients by offering free services. The platform was offering its services for free for women who signed up during the month of July. Only about 10 per cent of the firm’s customers are women.
Moneyfarm, which operates in the UK and Italy, has tried to simplify how it talks about investing and reduce jargon, a spokesperson for the firm said. While this strategy isn’t aimed at women, “there is quite a lot of research on how the rhetoric of the industry is off-putting for a female audience,” the spokesperson said.
A report from the Boston Consulting Group found that women around the world are more dissatisfied with financial services than men. However female consumers present a huge opportunity for businesses, the study notes, as more women join the workforce. Still, women face a lot of hurdles before they even begin to think about investing. They tend to make less than men and face challenges when it comes to climbing the career ladder and having a family. Women also live longer, which means they need to save more for retirement.
In the UK, there is a 18.6 per cent salary difference between men and women for all types of work, with the difference going down to 9.4 per cent for full-time work, according to 2016 data from the Office of National Statistics.
It’s not just with pay that there’s a gap however. Women also tend to go into careers that on average make less money, such as social and communication jobs.
In the U.S., there are a few robo-advice platforms that just target female investors. Worth Financial Management, was started in 2016 by Amanda Steinberg, who runs a personal finance website for women. She created the platform along with Michelle Smith, CEO of Source Financial Advisors as a way to empower women to grow their net wealth.
Ellevest is another female-lead robo-advice firm aimed at women. Sallie Krawcheck, who Fortune magazine once called one of Wall Street’s “last honest analysts,” launched the platform in 2016. She and her co-founder Charlie Kroll raised $10m from investors and spent hundreds of hours of research and interviews with women to structure a platform that would address their financial needs.
The financial world itself is male dominated, but some women leaders in the sector are trying to make a difference.
Ella Rabener, co-founder and chief marketing officer at Scalable Capital, is trying to combat the gender ratio through education. She is one of the few female co-founders of a robo-advice platform, in a sector generally dominated by men. Women only founded 21 of the 260 member companies that make up fintech association Innovate Finance. Its 2016 power list of women has many impressive female leaders, but the list is dominated by PR and marketing roles.
Rabener’s firm often hosts webinars for potential clients, which are often attended by men, she says. That is one reason why she is trying to tackle the gender-investing gap, hosting various women-only webinars and putting on a women only investing Q&A event with a fashion brand. The company is also committed to gender-equality among its employees and has nearly a majority of female staff in its UK office.
Getting women to commit to an investment takes time, and can only be combated through education, Rabener says. Many women she talks to feel they don’t have enough knowledge to invest.
“And they might be wrong about that, but if they are not confident enough, it’s still a factor that deters them from investing,” she said.
While the answer to why there is a gender-gap is complicated, investing is one way to close it. And as the newest entrants to the financial services space, robo-advisers have the opportunity to gain the trust of women and help close the gender gap.