Overcoming the confidence barrier to help women invest

These investments – offered by Lloyds Bank, Bank of Scotland and Halifax – are designed to help people who want to take their first steps into investing, but have limited time to research or aren’t sure how to get started. They can open an account online, starting with £50 a month or a £500 lump sum, and pick their level of risk from cautious, balanced and progressive.

Lloyds’ analysis found the lowest risk fund is where the highest number of female investors choose to invest. However, when women do invest in shares and funds, they tend to put in more than men. Ready-Made Investment accounts held by women are worth 14 per cent more than those held by men. Women are also less likely to withdraw funds once they are invested.

Separate figures from Scottish Widows’ Women and Retirement Report also highlights a female reluctance to invest. It revealed just 34 per cent of women aged 18 to 24 say they invest, outside of pensions, compared to 64 per cent of men in the same age group.

It found that the biggest barrier for 42 per cent of women is that they think they need more money to save. Almost half of women aged 18 to 24 said they feel that investing is for “people like them”, more than any other age group. But only 34 per cent actually went ahead and invested outside of a pension. And women feel less comfortable talking with friends and family about investments than men – 46 per cent versus 65 per cent.

Jackie Leiper, pensions and investments managing director at Lloyds Banking Group, says: “The confidence barrier is still majorly holding women back from investing – and it mostly starts when women are in their 30s, usually when they take time out to have children. They typically take more career breaks to care for children or work part-time, missing out on pension contributions. They often earn less too, so their pension pots are smaller.“It’s not about a lack of money management skills, as in all of the research we’ve done, it’s often women who run household finances. They pay the bills and they save, they are just more likely to save cash than think about investing.

“Improving education and understanding around investing and long-term saving is vital so that women can make their money work as hard as possible for them.”

She adds that systemic issues, such as the gender pay gap and inequalities in caring responsibilities, continue to weigh heavilyon women’s finances, and says that while progresshas been made in the last 20 years, more change needs to happen faster.

Janice Dallas, independent financial planner at Aberdein Considine, observes: “When we speak to women about their financial wellbeing, it is important to acknowledge that there are quite clear differences between them and men.

“Women tend to live longer and many take career breaks to have children or forego higher-earning careers to prioritise childcare or care for elderly relatives. Thus, they tend to save less than men, have a more cautious approach to investing and, in many cases, pay insufficient attention to their own long-term financial security.”

She adds that many women find it difficult to know where to start with financial planning, but encouraging them to open up discussions with their peers can help.

Dallas comments that enlisting the help of a financial planner can empower women to navigate their own path to financial security – whether that be through protection, savings and investments or retirement planning.

Andy Bolden, financial planning director with 7IM, points out that the theme for International Women’s Day this year is “Accelerate Action”, and asks how this can be achieved in the financial space. He refers to the FCA’s 2023 Financial Lives survey, which found that 46 per cent of men are likely to invest, compared to 29 per cent of women.

Bolden adds: “When it comes to investing, women are more likely to see their money as the family’s money and will therefore be more cautious with it. However, this caution can be limiting in terms of long-term potential returns. When considering investment, a lot can be made of women needing a female adviser, but that isn’t necessarily the case. It should be about an adviser, of any gender, taking time to understand fully the client’s priorities – financial and personal. This is important at the outset of an advisory relationship, but vital over time in order to develop a trusted relationship.”

He explains that by taking a much broader view and using an overall financial strategy, rather than just focusing on investment options, trust can be gained.

Financial modelling and tax optimising strategies can be presented to show how investments can assist in delivering the client’s objectives, but they should not be the main driver, according to Bolden. He says that for many women in particular, cash or property – the go-to options for many who want to be more cautious and secure – can still play a key part, with longer-term investing then shown to be a further core part of an overall solution.

concludes that the key lies in advisers bringing something different to the table in the form of emotional intelligence.