What if women ran the financial services industry? It’s an intriguing thought. Arguably, things would work a little differently than they do now. Imagine a world where, even with the same incomes, women:
- had twice as much in their savings as men
- retired with three times more in their pension pot than men
- were five times less likely to be in poverty once they reached their 60s
- invested more and ultimately, made their money work harder than men.
Quite a paradigm shift, eh? And, if you feel outraged at the suggestion of such a change in this historical narrative (those poor men!), then we need to ask – why aren’t we equally outraged that this is the real-life financial situation women face today?
But let’s take a step back. How did we get here? The financial services industry overlooks two critical elements in fostering engagement among both genders:
- women lead vastly different lives than men; therefore
- women have vastly different need-states when it comes to money; and, therefore
- women behave very differently when it comes to their money.
The industry has, for far too long, administered a ‘one-size-fits-all approach’ to financial services, products and engagement channels. In doing so, it has overlooked the fundamental needs of half the population.
Qualitatively, we have observed an incremental increase in women’s spending. Even when we account for shared household finances, women are more likely to absorb incremental expenditures than men. Buying ‘top-up’ shopping more frequently, paying for childcare, or pocket money for their adult children. At every stage of a woman’s life, she’s often the one picking up these additional costs – ensuring the family unit is functioning financially.
This is further exacerbated by unexpected life events. She is more likely to raise children in a single-parent household, halt her career to take maternity leave, serve as a carer to elderly parents or even financially support a relative.
In other words, women’s pockets are more likely to have more ‘holes’ compared to men’s. As such, women prioritise savings – specifically, a financial cushion to account for these sudden dips. It is not surprising then that women view savings as more important than investing. A considerable amount of women’s money engagement is in the here and now, not in 20 years’ time.
Saving is more important than my pension – I might be living off my pension, but what do I do if the tiles start to fall off my roof? Kath, 52
Yet, women also save less than men. The average saved by men is £38,500 compared to £20,275 for women.22 The industry needs to change and adapt to the needs of women as it has before.
After the first World War, the UK Government needed to raise money quickly, which it accomplished with War Bonds: long-term investments, overwhelmingly bought by men. But women needed instant access to these funds. The moment the industry made the bonds instant access, they saw an unprecedented uptake in bonds taken out by women. Flash forward a hundred years later, and we’re yet to apply the learnings of a gendered lens in the financial services sector.
But there is hope. There is an appetite for industry change and more appropriate products and services for the overlooked women – 51% of the population. One of the changes could, and should, be in how these organisations communicate.
We know that while women and men both engage with social media equally, the channels they use vary. Men are more likely to use informative, data-sharing channels such as LinkedIn and YouTube; the same places that you see financial advice columns and DIY videos on investing.
Women are more likely to use Instagram, Facebook and Snapchat; channels that involve sharing and ‘word of mouth’ recommendations. The industry can explore what role these can potentially play in disseminating information to women in a more direct and targeted manner.
Now let’s imagine another world. Where the financial services industry recognised the unique lives, needs and behaviours of both men and women. Where both were actively engaged in making their money work harder in both the short and long term. The prospect of this new world is not only attractive for women, and men, and the financial services industry, it’s also entirely achievable.
Which begs the question: why isn’t the industry making this happen?