The Motley Fool

Where are all the female investors?

The finance industry has a dirty little secret. Except it’s not that secret. You only have to be at an industry event to see it, clear as day.

Like the curious incident of the dog in the night-time, it’s not what’s there, but what isn’t. What’s missing, of course, is women. At least in meaningful numbers.

Now, it’s important that I don’t, in that observation, wipe out the many women in the industry who are capable, successful and making a difference. Thankfully, many of them also have high profiles, and are seen on our screens and in our newspapers.

But financial services is still overwhelmingly dominated by men. And, if my experience is any guide, most of our customers are male, too.

Which is clearly a problem. When the population is essentially evenly split, and these days, female participation in the workforce is around 73%, women should be utilising the services of finance professionals in large numbers.

But they’re not. At least not to the degree they should be. And the reasons are many and varied.

In talking to women — both inside and out of the financial services industry — and looking at the data, some causes leap out.

First, there remains a gap in pay between men and women. The result, of course, is that women have less money to invest.

Second, women tend to spend more time out of the workforce than men, when they have kids. That impacts professional progression and superannuation contributions. The impact of foregoing a few years of super contributions in your 20s is enormous, given the four decades of subsequent compounding you miss out on.

Third, our society implicitly tends to make finance and money a “men’s topic”. While women often historically managed the ‘housekeeping money’, and some of them were responsible for paying the bills, the decisions around large purchases and investing often fell to men. And those expectations are, deliberately or otherwise, passed to the next generation.

Lastly, I think it’s fair to say that the industry hasn’t exactly done a stellar job in making finance accessible and welcoming for women. Culturally, it has favoured risk-taking and testosterone-fuelled behaviour — the movies Wall Street and The Wolf of Wall Street nicely book-end three decades where not much appears to have changed. And whether the reality is different or not, those depictions aren’t exactly likely to attract more women to the industry.

Anecdotally at least, I’ve heard enough stories of female clients being treated much the way the stereotypical mechanic or car dealer does — talking down to them, and/or discussing the “serious” issues with their male partners — to not be surprised when women hand over control of their finances to the men in their lives, or just not bother at all.

Now, to be clear; the above observations are, by necessity, generalisations. There are wonderful financial professionals who treat women appropriately, and women who are fantastic investors and who have successful careers.

But we still have a very long way to go. Applications for investment roles at the company I work for continue to be 90% male. At an educated guess, our customers are probably 80% male, too. Maybe more.

There is nothing in our biological makeup to suggest men are likely to be better investors. Indeed, the data suggests that stereotypically feminine traits might actually be more correlated with success in the field.

The conclusion, then, must be that our society’s implicit and explicit choices and actions are limiting women’s engagement with financial services, and their interest and willingness to take control of their financial lives.

We must do more, and do better.

Some of it is structural. Some is circumstantial. And some is behavioural.

To my colleagues in financial services: please have a think about your inherent, subconscious (and conscious) biases. Actively look for great female candidates. Make it a point to remember that our mental image of a financial analyst, financial planner or stockbroker is likely to be a professionally-dressed man — and that impacts our decisions.

To our male customers: please include the women in your lives in financial discussions. Our female partners should be equal participators and decision-makers. Please, empower your daughters by having those financial discussions with them too. And remind your sons that finance isn’t just for guys.

And to our female customers (and non-customers): Please give finance a go. You may have been told, implicitly or explicitly, that finance isn’t for you. You might find it boring, or feel unwelcome. That it’s all too hard. I don’t blame, you, but would ask you to take another look. To get involved.

Foolish takeaway

The irony of a bloke writing about women investing on International Women’s Day isn’t lost on me. And I hope I haven’t been guilty of mansplaining. I try to regularly ask women about their experiences with financial services, rather than assume I know, and those responses have informed my observations, above.

Just as in politics, merit should rule in finance. And there is no way that merit, alone, is responsible for the current gender imbalance. Find me someone who thinks men are somehow inherently better suited to managing money, and I’ll show you a card-carrying sexist.

We must all do more to address the imbalance.What will you do, today, to help?

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