We must make investing more open and inclusive for women

All of us will be pleased to see the back of winter, when many people saw their energy bills soar to levels unprecedented in living memory.

While the weather may be improving, the economic forecast continues to be troubling – inflation remains at high levels and government support on energy bills is set to end later this month.

With the pressure on households remaining acute, it is more important than ever that people can make the most of the money they have. 

Entry-level investments 

One of the key tools at the disposal of savers as they look to combat inflation is the Isa, specifically the stocks and shares Isa.

Without action to open doors to women and other marginalised groups, then the savings and investment gap will only continue to grow

However, recent research conducted by Tisa and Oxera Consulting has shown that more than 70 per cent of participants who have either a cash ISA or a bank account with more than £5,000 in savings had never considered investing in a S&S Isa.  

This alone is a sign that the industry is not reaching the wider population. However, on a more concerning note, even after controlling for other factors, if you found two people who were almost identical apart from their sex, the woman would be 8 per cent less likely than the man to invest in a S&S Isa.

This only further perpetuates the risk of a gender gap in savings growing further. 

Risk tolerances differ between the sexes 

Tisa’s research also showed that – even after controlling for other factors such as income – those from the lowest socioeconomic group were 18 per cent less likely than those in the highest to invest in a S&S Isa (instead of a cash Isa).

As such, we can infer that women in these low socioeconomic groups are even less likely to experience the benefits of a S&S Isa.

One of the key problems we identified was the difficulty many women had in engaging with the journey of starting a S&S Isa. Compared with men, women were less likely to think that “people like me” invest in S&S Isas. They were also more likely to be loss-averse. 

Of the women we surveyed, 84 per cent were found to be highly loss-averse compared with 76 per cent of men. This may not seem much, but when combined with the fact that women are 7 per cent more likely to think they will lose money when investing over 10 years than men, the barriers to involvement in investing begin to stack up on each other. 

Jargon remains an obstacle

All of these factors are before we get to the fact that women find it harder to get through the time-consuming process of opening an Isa.

Even the language is off-putting, with women citing it as one of the top reasons for finding S&S Isa information difficult. This makes it hard to compare different S&S Isas and have any idea whether they are getting a good deal.

Women are more likely to react negatively to terminology such as “tax-wrapper” and “diversification”, with many finding these terms a turn-off, uncomfortable or anxiety-inducing.

Clearly, an environment has been created where many people – especially women – do not feel that S&S Isas are for them.

This is a particular concern in light of the estimates that 60 per cent of UK wealth is expected to be held by women by 2025, and if the trend of women investing less is not reversed, this is wealth that some women may not be able to take advantage of, through no fault of their own.

What can be done?

Inclusive marketing is vitally important to raise awareness of investment among women, especially those outside London. Widening accessibility of information and improving targeting through wider media could help. 

Demystifying the language and reducing the complexity around comparing S&S Isas or choosing funds would be a big step forward.

Simplifying the journey consumers take when they are investing is another obvious change given around a third of savers who did start looking into investing did not complete the process of opening a S&S Isa.

Closing the savings gap

If we are to get more people investing, or even to consider investing, then we must take away the confusion and misconceptions that exist within large swathes of the population. 

International Women’s Day was on March 8. In the modern world, there is no reason for women to be left behind or have their investment opportunities reduced. 

Inflation continues to erode savings and consumer buying power. Without action to open doors to women and other marginalised groups, then the savings and investment gap will only continue to grow.

This is the reason Tisa is embarking on new research to further help the industry deliver more inclusive services.

Faith Reynolds is an adviser to the board at Tisa