OPINION Why the financial services industry is failing female customers and what can be done

Jessica Robinson

Jessica Robinson is a leading expert on sustainable finance and responsible investing, and author of Financial Feminism: A Woman’s Guide to Investing for a Sustainable Future.

 

Women own over a third of the world’s private wealth and it’s growing at a faster rate than ever before. Yes, women are undoubtedly now significant and powerful influencers of capital. Yet despite this increasing economic power, women remain largely underserved by the financial services industry.

Research continually confirms that too many financial institutions rely on broad (and often incorrect) assumptions about what women are looking for when it comes to money and investing. The result is that many women feel disengaged with the industry and with financial products, services, and communication that just doesn’t hit the mark.

What’s more, many women report feeling condescended to or patronised by the industry and those that offer financial advice. Because it is not simply about recognising that women are customers or even feminising financial products. It’s about understanding the attitudinal and behavioural differences that women have when making investment decisions. We need to change this and here are some ideas on how.

 

Messaging must reflect women’s situations and needs

We can do a much better job at the way we communicate with women about finance and investing, building their confidence and encouraging engagement through sensible and intelligent messaging that accurately reflect their situations and needs.

But the problem is, when it comes to money, research indicates that the media, as well as the financial services industry itself, often portray women as excessive spenders, in need of guidance to help them save and restrict. The comparison with how we communicate with men is stark – men are encouraged to ‘dare to invest’ and defined by the glories of financial success. Is it any surprise then that many women hold the self-perception that ‘investing is not for them’?

 

Developing tech with a female lens

Technology can also play a critical role in supporting the finance industry to better engage with women. Through leveraging technology to broaden access to financial services, we can find new pathways to connect and communicate with women in different ways from the past. However, to get there it is imperative that we employ a female lens, in particular, when designing tech-based investment solutions.

But yet, the harsh reality is that men dominate the fintech industry – a recent report from Deloitte revealed that fintechs with female founders or co-founders comprise only 12.2% of the total start-ups.  Fintech solutions run the risk of being largely designed by men, for men, possibly leaving many female investors out in the cold. For this reason, we need to customise tech-based investment products and services that fit best for what women are looking for today.

 

We need to tackle gender imbalance in the industry

Most will admit, the financial services industry is not doing a good job at connecting with women. As I have already highlighted, many women report feeling talked down to by (mostly male) financial advisors.  So let’s get more women into the industry – this has to be one of the most important steps we can take.

Why does this matter? Because better gender balance is vital. Diversity of thought, experience and action are core components of what the finance industry needs to be fit for the future. More women working within financial institutions will hopefully bring about products and services that are better aligned with the needs of their female clients.

 

The majority of women want to invest sustainably

One thing we know for sure is that many women are concerned about impact and sustainability, and increasingly this is being applied to their investment decision. Across the globe, women care about where their money is going. For example, research from Moxie Future found that 83% of women surveyed care about where their money is invested, while 69% of women surveyed feel a sense of urgency to invest responsibly.

Doesn’t this tell us that it’s time to listen more carefully to what women are thinking about when making investment decisions? Women want to understand the environmental and societal impact of the companies and sectors they invest in. They want to be able to support businesses that are aligned with their values. They want to be able to make a difference in the world.

This is where sustainable investing comes in – thinking beyond just financial returns and looking to achieve certain positive impacts in societies and our environment. Sustainable investing is a lever of change and financial institutions can do more to engage with women in terms of their sustainability priorities – whether this be combatting climate change, cleaning up the supply chain or working with local communities.

 

Women are more engaged in managing their money since Covid

As we look ahead, one good thing to come out of the COVID-pandemic is that many women are more focused on their financial futures. For example, a survey on women and money from UBS found that 63% of women felt that COVID has affected how they think about money, and they’re more likely to discuss issues such as financial reviews and investing with their spouses and children. In a study by Fidelity Investments, 67% of women interviewed said they are more engaged in managing their money and have expanded their efforts to help shore up their finances.

These shifts in attitude and the broader rise in financial feminism is certainly exciting – but addressing it isn’t just about financial equality or simply rebranding products for a female audience. It’s more nuanced than female-focused marketing campaigns. It requires deeper thinking about how women think and interact with their wealth, and what they look to achieve. As women’s wealth is set to grow at a rapid pace, the time is now for the financial services industry to sit up and take note.

 

Image credit: mapodile

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