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The £100bn opportunity for asset managers

 

June 2018

While fund managers scout around for the next big thing, the real answer to increased flows may be right in front of their noses.

  • If men invested as much as women, there would be an extra £100bn in the pot
  • Just 12% of women have a stocks and shares Isa compared to 19% of men
  • Women don’t like jargon and want to understand what they are investing in

Jane Wallace, head of the innovation unit at the FCA, recently admitted that the asset management industry had been among the slowest to innovate. Yet while asset managers sprinkle cash on different projects hoping to find the magic ‘disruption’ formula, they are missing an easy trick: encouraging women to invest. 

Speaking at the Boring Money Fin-k Tank conference, Wallace said that asset management lagged most other financial services sectors but that when disruption happened, it tended to happen very quickly. Yet the conference also highlighted another surprising stat – if men invested as much as women, there would be an extra £100bn in the pot for the investment management industry.

It’s not that women don’t have savings – they may save marginally less, but most have a savings habit. Equally, it’s not that they don’t control household wealth. Over half are running the household budget. Yet just 12% of them have a stocks and shares Isa compared to 19% of men. Their average balance is £22,907, compared to £35,616 for men. 

The solution to getting more women investing is actually pretty easy. Women are clear what they like and don’t like. They don’t like jargon. They want to understand what they are investing in, whereas men aren’t quite so bothered. At the same time, they also don’t want to be sold to. The message on which many asset managers have relied – ‘buy our lovely fund because it’s brilliant’ – isn’t cutting it. 

At the same time, the risk warnings that fund managers now routinely plaster all over their fund literature is likely to have a disproportionately detrimental effect on women. ‘You might lose all your money’ resonates, while the opposite message ‘you’re losing out in real terms by investing in cash’ doesn’t seem to have the same potency. There are regulatory pressures of course, but some asset managers are prone to letting their compliance departments become excessively zealous. 

Auto-enrolment is gradually make progress in getting women into the investing habit. Either way, there is a huge opportunity for those investment managers who can make themselves female friendly to snap up some of that £100bn pie. 

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