Why the relationship between women and money may not be what you think

Kondi Nkosi, Schroders Country Head in South Africa

Key qualitative findings by Schroders challenge prevailing gender stereotypes and highlight the importance of the female investor

A recent report by multinational investment management firm, Schroders emphasised the need for the financial services industry to get to grips with the gender dimension of investing and wealth transfer. Asserting that the “future is female,” the study highlighted the role of women as influential decision-makers in the investment arena.

Providing a perspective on this topic is Gillian Hepburn, Head of UK Intermediary Solutions at Schroders, who says: “Understanding the fundamental differences between women and men in terms of their relationship with money is key to building more inclusive economies and tailoring financial services to women’s unique needs.”

The rise of the female breadwinner

To delve deeper into gender and its place in wealth retention, Schroders engaged with the work of Dr Eliza Filby, a historian of generations. Foregrounding the importance of societal change, her findings pointed to the fact that the archetype of the male breadwinner is all but redundant.

Over the last forty years, a woman’s place in the household, the workplace and society at large, has changed. As a result, their attitudes and access to knowledge of investments has changed significantly.

According to the report, 80% of women in the UK will be solely responsible for their finances at some point in their lives. Women are playing increasingly larger roles as custodians of wealth and in determining how wealth is transferred. The financial advice and investment models of the future therefore need to be structured in a way that pays closer attention to their opinions, perceptions and financial priorities. Hepburn expands: “Contemporary women are more independent and financially empowered. While we cannot say that the playing field between men and women investors has been leveled, it is becoming noticeably more difficult and riskier to make casual assumptions and generalisations about women’s financial behaviours.”

Women have a balanced outlook on risk

One prevailing stereotype that has moulded the investment landscape of the past is that of the risk-averse female investor. The report suggests a generation of “female maverick investors” who are decidedly more bullish is emerging.

Homing in on the local South African environment, the 2022 Global Investors Study (GIS) conducted by Schroders showed that women in South Africa are 7 percentage points more likely to invest in private digital assets such as digital art, when compared to men. Considering that digital assets are an investment industry newcomer catalysed in part by the recent emergence of blockchain technology, Kondi Nkosi, Country Head of South Africa at Schroders, says that women investors are demonstrating more eagerness to become first-adopters and take risks on emerging technologies.

This is not to say that South African women have higher risk appetites in general. “According to the GIS, the portfolios of women are fairly balanced in terms of risk. Women are 8 percentage points less likely to invest money in stocks and shares but 3 percentage points more likely to own cash assets in interest-bearing bank accounts,” he explains.

Generally speaking, Nkosi says that this higher rate of liquidity among women could be a key indicator of their high regard for having faster access to money, in the event of emergencies and unforeseen expenses.

Understanding the role of money within the female psyche

Another compelling statistic that emerged from the most recent GIS was that men appear to mentally internalise the performance of their investments more than women. When asked whether the performance of investments has a direct impact on their mental wellbeing, 61% of men answered in the affirmative, compared to only 45% of women.

For Nkosi, this finding challenges the stereotype that women are “overly emotional decision-makers”.

“Women investors tend to be good at setting boundaries when it comes to separating their financial wellbeing from their mental and emotional health. This is a key insight for financial advisers who want to learn how to communicate with women more effectively when giving advice.”

Women care about impact

Furthermore, women investors also appear to be more in tune with “conscious” or impact investing. In South Africa, women investors are 15 percentage points more likely to invest in funds that are built around their needs and principles, when compared to men.

Nkosi concludes: “Both this year’s GIS and the Schroders’s study on female clients in the UK and their role in the transfer of wealth, are illustrative of the fact that women are becoming increasingly more interested in global ESG (environmental, social and governance) imperatives. This points to the pivotal role that women will play in shaping the future of the industry for the better, both locally and abroad.”