The relationship between women and the wealth management industry is in need of repair, according to two recent studies.
The surveys, by UBS Global Wealth Management and BNY Mellon, point to all the ways the industry is not meeting women’s needs. Among the findings of both studies, women don’t feel that they are the target audience of wealth managers, they say investing is confusing and filled with jargon, and that advisors don’t relate to their investment objectives, which are to achieve their life goals and make the world a better place.
As a result, the studies find many women are shying away from investing even though they want to take control of their finances. The BNY study found that if women invested at the same rate as men, there could be more than $3.2 trillion of additional capital to invest worldwide with more than $1.8 trillion flowing into sustainable and impact investments.
“We see that women are interested in investing, but there is a gap between intention and action,” said Marianna Mamou, the author of the UBS study and the head of Advice Beyond Investing at UBS Global Wealth Management’s Chief Investment Office.
“If the advice was suited to what they’re looking for, there could be a huge jump in assets invested,” she said, referring to that $3.2 trillion, much of which might go into impact investing, since the UBS Investor Sentiment Survey referred to in this study found that 71% of women take into account sustainable considerations when investing compared to 58% of men. “There would be wins at the individual and societal levels.”
BNY found that more than half of women, 55%, would invest — or invest more — if the impact of their investments reflected their personal values, and 53% would invest or invest more if the funds they invested in had a clear mission to do good.
This is even more pronounced among younger women, BNY found. According to the research, 71% of women under 30 who already invest prefer to invest in companies that support their personal values, compared with 53% of women over 50 who invest.
The asset manager research BNY did highlights the extent to which the investment industry is still oriented toward men. It found that 86% of asset managers admit that the person they automatically target with their products is a man.
The UBS study found, as Mamou put it, that women are “more calculated and less emotional investors. It is important to note that there are differences in how women make investment decisions, how they go about processing information,” she said. “They ask more questions, the advisory process takes longer, (until) they can do enough research to be confident that an investment will meet their goals.”
Mamou said the study found that women tend to trade less, are less likely to sell at market lows and are more disciplined.
When the questions they ask are met with industry jargon or confusing terms, women tend to tune out, the studies find.
“We have to change the language by which we speak about products,” said Stephanie Pierce, CEO of Dreyfus, Mellon and ETFs at BNY Mellon Investment Management, one of the leaders of the study. “The jargon may help us sound smart, but it doesn’t help the client.”
UBS referenced a survey by PIMCO suggesting that 72% of women and 81% of millennial women actually said the investment system was “set up to be confusing,” citing the use of jargon, which women questioned by PIMCO found to be more off-putting than men did.
BNY identified three barriers to women taking the plunge into the investment world. One is that women believe they need more than $4,000 in disposable income a month before investing. Pierce said this leads into the second barrier, the perception that investing is inherently high-risk.
“And we found that only 9% believed they had a high risk tolerance,” she said. “Forty-nine percent said they had a moderate tolerance for risk, and 42% said they had a low risk tolerance.”
Pierce called the third barrier “the engagement crisis. Only 28% of women felt confident about investing their money,” she said.
The pandemic was a double-edged sword for women when it came to investing, UBS found. It prevented women from taking control of their finances because so many left the workforce to take care of children as a result of school closures.
But the study found that increased precaution has led women to take more action, prompting many to review their financial situations. UBS cited research from Fidelity in 2021, which showed that the number of women in the U.S. who say they are more interested in investing has risen by 50% since the start of the pandemic.
