This reflects the fact that the UK pension gap stands at £311 billion per year, according to research by Aviva, implying that, for example, a 30 year old has to put aside £2,700 each year to obtain an adequate standard of living in retirement, while a 40 year old already needs to save more than £4,100 per year. However, 56% of the pre-retirement women surveyed haven’t started to save for their retirement at all, compared to 49% of the men.
Only 17% of all women surveyed are currently or have previously invested in capital markets, compared to 31% of men. Almost two thirds of women (62%) said they do not have sufficient levels of financial knowledge to feel comfortable with investing, compared to less than half (48%) of men. Both men and women were afraid of unexpectedly high losses, with 23% (women) and 22% (men) citing this as a barrier to investing.
"Our results did not confirm the preconception that women are more risk-averse than men when it comes to investing. The reasons for the different investment behavior of men and women are the unequal financial resources at their disposal and the lack of financial knowledge of women. As a result, women do not succeed in properly preparing for their retirement and miss out on the long-term growth potential offered by investing in capital markets," said Dr. Ella Rabener, UK Founder at Scalable Capital. "As a financial service provider, we need to better address the needs of women so as to take away the fear of capital markets.
When asked what would make them more likely to invest in capital markets in the future, most women mentioned greater transparency around fees and performance as well as a better understanding of downside risk (how much money could be lost in a bad year), both selected by 17% of respondents. Women were less cost-conscious than men, with only 13% citing lower fees as a major factor, compared to 19% of men.
Adam French, Founder & CEO of Scalable Capital, said:
“Wealth managers need to help investors better understand investment risk. For example at Scalable Capital we ask clients to select, in percentage terms, how much they are prepared to lose in a bad year. Our technology-driven approach means every portfolio is customised to the risk suitable for each investor and is managed to keep the level of risk stable over time, limiting unexpected fluctuations. By providing a professional, transparent, low-cost investment service, we can overcome some of the concerns women have about capital market investments and can help them achieve their financial goals."
