Stop blaming women for not investing

The Gender Wealth Gap is real.

There's a £15 billion investment gap in the UK, and a 38% pension gap. Research by TISA shows that, when it comes to ISAs, men are 1.5x more likely to invest than women.

Yet some in the financial services industry would have you believe that it’s not a problem.

They'll tell you that it's household finances that matter, not an individual's.

They'll tell you that women take time off work for childcare reasons, so of course they're not earning as much and aren't as wealthy as the men in their lives.

They'll tell you that women aren't educated enough on the benefits of investments over savings. If only we could educate women more.

I call bullsh*t

A couple of years ago I met over 40 women in their 40s and 50s, conducting my own research to uncover the reasons behind the Gender Wealth Gap. The result is the Good Future Project report (check it out, it's pretty cool).

I can tell you that the women I met understand the potential benefits of investing. They want to build wealth, just like men.

I can tell you: we don't need no education. The women I met understand how important financial planning is. But there are specific things putting them off investing; things the industry can do something about.

I can tell you that women in a relationship are put off investing too, and that they want to build wealth individually as well as part of their household.

In fact, it's imperative that women think about their finances separately as well as jointly, as proven out my the many stories of financial hardship post-divorce and separation.

When my husband left, I was only working two days a week and my salary didn't even cover the mortgage. So I couldn't buy food, gas, electric, clothes, shoes for the kids, school uniforms. It was so stressful, not having enough money to pay for anything.

Women need to protect themselves from these potential future harms.

Old-school sexist attitudes from the industry need putting in the bin.

Want specific examples of such attitudes? Sadly the women I spoke to had them in spades, here referring to their experiences with financial advisors:

"He gives me the feeling he is humouring me by making time for my questions. After all, my husband had already understood his explanation."

"He makes assumptions about what my background is, and that I'll be okay, because I'm married... My feeling is he knows that my husband is wealthy, and therefore I'll be okay. So basically, my stuff is just kind of trivial, a bit of pocket money in comparison."

Is it any wonder that the products and services we're offering to women aren't hitting the mark, when for so long the industry has centred itself around catering for white, wealthy men?

Better design = more inclusion

Designing products and services with women in mind will improve women's outcomes.

This week The Investing and Saving Alliance (TISA) launched a new report, Rethink ISA Investing Communications, outlining research conducted with the University of Nottingham. The report provides new evidence that inclusive design can get more women investing. It also references my Good Future Project research (thanks TISA!).

The team started by focusing on the reasons given by women surveyed as to why they weren't investing.

In one of their surveys, over 40% of women with over £5,000 cash savings said they don't invest because it's "too risky".

Of course, investing is riskier than putting money into savings. But based on historical data, the probability of losing money invested in the FTSE100 over 10 years is only 3.5%; whereas the perception of risk from those surveyed was a whopping 30%.

Why was the perception of risk so much higher than the potential risk?

One potential reason was the generic risk warning presented to people when buying any investment product, regardless of the risk profile.

By testing alternative risk warnings and giving more context, TISA found they could help women in particular make more informed investment decisions.

One new design for a risk warning highlighting long-run returns increased the amount invested by 21% for women, compared with 7% for men. A huge uptick, all because of a simple design choice.

Open new markets + avoid foreseeable harm

Inclusive design is not just an ethical imperative; it's a strategic advantage, too.

The FCA has identified 5.2m people who have £10k or more investible assets in cash who have some appetite to take investment risk. That's a huge market opportunity for firms who want to design their products and services better for women and other underserved consumers.

And with new regulations like the FCA's Consumer Duty coming into effect, ensuring products and services deliver good outcomes for ALL consumers regardless of background, there is both a moral and compliance imperative to get this right. As the FCA states, firms must "avoid causing foreseeable harm to customers" and "make sure communications are clear, fair and not misleading."  Failing to account for gender differences could absolutely qualify as causing foreseeable harm.

So, to my conclusion. Designing with women in mind improves outcomes for women (duh).

To be advocating for financial inclusion is to advocate for more inclusive design. What is financial inclusion if not a concerted effort to correct imbalances from centuries of exclusion?

Using Inclusive Design is one of the answers. Luckily I know of a pretty decent, practical guide to inclusive design practices written for Fair By Design and the Money Advice Trust by a very reputable author (ahem, it's me).

I'm also available to work with teams who want to do the hard work of correcting financial exclusion.

For the last few years I've worked on a range of initiatives that span financial inclusion and fintech, often using inclusive design principles in practice. I can come in to train your team or run more in-depth projects; if you want to work with me, get in touch via my website: bailey.work.

This International Women's Day, let's move beyond the bullsh*t that women just need more financial education. Let's inspire real inclusion by transforming financial services from the ground up, and finally giving women what they need to build long-term wealth.

References:

• Good Future Project report, where I spoke to 40+ women over 40.
• TISA's report, Rethink ISA Investing Communications
• The Inclusive Design in Essential Services guide that I wrote for Fair By Design and the Money Advice Trust
• My website, where you can see what I've worked on and get in touch