There is a huge opportunity for fund managers who can shrink the gender gap, with women increasingly controlling household wealth
- The consequences of the gender gap in fund management are stark, with women disenfranchised and storing their long-term savings in cash
- By 2020, women are expected to control two-thirds of private wealth.
- There is an opportunity for fund managers to expand their reach
It is International Woman’s Day on Friday 8th March. Despite some progress in recent years, fund management remains a male-dominated industry, a ‘blue’ job rather than an ‘pink’ job. This influences women’s saving habits, with most of them taking one look at an industry filled with men in suits and deciding that they prefer to keep their money in cash.
We all know the consequences of that. There is a yawning pensions gap. Women long-term savings aren’t growing ahead of inflation, which contributes to the problem. This leaves women vulnerable or dependent in later life.
There are also consequences for the fund management industry. Women’s wallets and net wealth are growing. In the US, women started to control more than half the personal wealth in the US in 2015. By 2020, they are expected to control two-thirds of private wealth. That’s $22 trillion. There is a huge missed opportunity in failing to make a connection with women.
This is getting better. A natural consequence of adopting environmental, social and governance (ESG) rules is to bring in a new generation of investors for whom these values are important. As the investment industry gets better at this, and women can see that it changes corporate behaviour, it gives them a reason to invest. It helps that many women are at the helm of ESG funds at a time when this area is increasing in importance.
The fund management industry is reaching out to the next generation of women. Rathbones, for example, has been working with schools, encourage women to consider a career in financial services. Many groups have signed up to the Women in Finance charter. Schroders has set a target of 30% female representation in senior management roles by the end of this year.
Encouraging women into stock market investment will be vital for equality of pension provision and retirement wealth. However, this is unlikely to happen to any meaningful extent while fund management looks like something in which women don’t really participate. The best fund managers recognise this and are changing their practices. There is great potential for the industry to expand its reach and for women to improve their wealth prospects.