Women are not only becoming more financially independent and savvy. They’re controlling more wealth than ever. But before asset managers can win a share of this growing and lucrative market, they’ll need to win the hearts and minds of female customers.
By 2025, women are expected to control over 60% of the UK’s wealth, according to the Centre for Economics and Business Research. In the younger generations, the distribution of wealth is more evenly split between men and women than ever before. Women are increasingly likely to earn top salaries or to be entrepreneurs.
But the real shift in wealth is happening in the older, richer generations. Since women have a tendency to outlive their partners, much of the wealth held by over 65s is either currently controlled by women or will be transferred to women in the next decade.
What does this mean for asset managers?
The rise in wealth for women has not, yet, been reflected in a similar growth in the numbers of female investors. In their 2021 survey of 4,000 women across 10 European countries, J.P. Morgan Asset Management found that less than one in five women invest regularly compared to nearly four in five who save in cash. This means, according to J.P Morgan’s calculations, that women aged 30-60 have €177 billion to invest. Most importantly, low interest rates mean that thousands of women are not seeing their savings grow.
To help female savers do more with their money, asset managers have two key issues to address.
The first is understanding the reasons why the majority of women do not invest. The second is learning how to create brand appeal for both the older generation of women who are controlling more wealth, and the next generation of female savers. Both groups are, by choice or necessity, making decisions about their finances that were denied previous generations.
Why don’t more women invest?
One of the main reasons why many women (and men) don’t invest is because they think that investing is difficult. It’s seen as complicated, time-consuming, jargon-laden and one step away from placing a bet.
Tellingly, J.P Morgan found that nearly four in five women who do invest have a financial plan. Wealth management and financial advice appear to be key in giving women the confidence to look beyond savings accounts for ways to meet their financial objectives.
New money needs fresh thinking
The landscape of wealth creation and investment is changing. As we’ve seen, the next generation of potential investors is shifting towards women. For the older generation, an understanding of their individual needs is key. Among the one in five women who change their financial adviser after the death of their husband, common complaints include being patronised or ignored by their previous adviser. Affluent women tend to be more risk-averse than men and focused on life goals over market-beating performance. From this, it’s clear that female investors are looking for advice and investment solutions that communicate relevance and understanding, as much as they show financial expertise.
As with the older generation, Millennial women want personalisation and ownership of their financial decisions. And, in common with Millennial men, they’re taking a greater interest in sustainability, ESG investing and financial inclusion. They’re also increasingly adopting DIY investment options such as fintech apps and cryptocurrencies, which are seen as more egalitarian than traditional investment choices.
Asset managers are certainly providing women with the opportunity to invest responsibly. The rise in ESG investing is accompanied by a narrative that brings investment into the real world, with benefits that go beyond the bottom line to include society and the environment. There’s also been a rise in funds that focus on gender equality, in particular funds that look for equal pay and boardroom representation.
Looking beyond sustainability, more investment solutions must evolve to meet women’s individual circumstances, attitudes to risk and financial objectives. And brands must transform too.
To bring in the new generation of investors, asset managers need to move away from brands built purely on investment potential. Younger clients, women and men, expect good results. But they also expect more. Investment companies must lead with emotion and connection. Savers and investors will be drawn to the brand that appeals to their hearts and minds as much as their pockets.
Facing up to the new reality
Recently Starling Bank created a stock library of images of modern women, taken by the photographer Denise Maxwell and available to all, as an antidote to the outdated and cliched pictures of women prevalent in financial marketing and media.
The initiative is part of the bank’s long-running #Makemoneyequal campaign, led by CEO Anne Boden – showing that a commitment to better serving and communicating with women must be more than skin deep.
Asset managers need to show a similar long-term commitment to helping women invest their money with confidence. That means rethinking how they create value for female investors, and realigning their brands accordingly.
They must develop powerful, relevant propositions and creative campaigns that engage women on emotional and rational levels. Backed by tailored educational content and tools that empower women to make the best decisions. It’s what we do at Arthur London. We’d be glad to help.
The face of investing is changing. It’s time for asset management brands to change too.