When philanthropy-based fund manager Future Generation emails its clients to inform them of upcoming women-only investment seminars, tickets across the country sell out immediately.
“We send it out to our shareholders, and wham! They get filled within minutes … we always have a huge waitlist for each one,” says chief executive Caroline Gurney.
“When we look at the feedback, it’s because they really like being able to ask questions in a non-critical environment.”
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It’s a finding shared by top investment banks, retail banks, fund managers and superannuation firms across the country.
Female investors in general want to be surer and ask more questions than their male counterparts before they invest; and they prefer female advisers who might better relate to issues ranging from child-related career gaps to lower incomes and the fact that women are statistically more likely to outlive male partners.
As it stands, there is still a clear gap between the money that women and men have to spend now and retire on later.
An ASX survey showed that over a lifetime, a woman earns on average $1m less than a man and has less than half the amount of shares. According to a KPMG report, women retire with 28 per cent less superannuation, and a National Australia Bank report says they have 78 per cent less in savings.
But this gap is narrowing. Women are the largest beneficiaries of the transfer of wealth because the Australian population is ageing and women live an average of four years longer than men.
Gurney says these women want clearly spelled-out advice.
“A lot of the women attending have had a partner who has died and suddenly they’ve got to work out how they’re going to manage their money for the future,” she says.
“So they’re looking for advisers who can help them do that and actually present in a jargon-free way.”
Fund manager Jun Bei Liu from Tribeca Funds agrees that women need to be taught more of the fundamentals around investing.
“Women need to be financially educated, just like men,” says Liu. “So the starting point is education … followed by education around investments that are more aligned to a female cohort.”
While Liu says that financial wants are largely the same between men and women, there are differences in how they invest, with women taking a greater interest in environmental, social, and governance (ESG) issues. They also often having a longer investment time frame.
“Women investors are more holistic, taking into account things such as environment, social factors and other ESG matters more than men do,” says Liu. “This in my opinion drives better outcomes over the long term.”
Morgan Stanley financial adviser Bernie Connolly doesn’t see any obvious differences between what men and women want from their investment portfolios, except “possibly there are more men engaged in the ‘sport’ of trading and speculating” as opposed to true wealth management.
But she does believe that a lack of confidence holds some women back from investing.
“The statistics tell us that when going for a job or a promotion, men will go for it with about 60 per cent of what they need to do the job, whereas women feel the need for 100 per cent before making a move,” Connolly says.
“I suspect that it might be similar when it comes to women and investing.”
A survey last year by global bank HSBC found that in Australia, female investors start later, with the key reasons being issues around confidence and lack of investment knowledge.
The HSBC Investor Insights Survey found 43 per cent of Australian male investors started investing at a young age – between 18 and 24 – compared with 28 per cent of females.
Across all age groups, 24 per cent of female investors did not invest regularly compared with only 14 per cent of men.
The result is an investment gap, the HSBC report found, with fewer women taking part in the financial markets, affecting women’s total wealth over time, which in turn exacerbates the gender wealth gap.
Donahue D’Souza, head of investments at HSBC Australia, says that superannuation industry data points to there being problems for women as they reach retirement age.
“Most women, given the current trends, aren’t going to meet the minimum requirements, and that’s been predominantly determined by the gender pay gap,” says D’Souza, adding this gap is then amplified.
“Life expectancy for women is higher than for men, and women are more likely to take career breaks, which also affects their contributions,” he says.
But there are ways for women to try and invest more, even if it’s largely through their superannuation portfolio, he adds.
D’Souza’s tips include the extreme basics such as women being on top of what their super balance actually is, to looking for female finance role models they can relate to. “I am very encouraged that there are women who have lived through it and have had career breaks to look after young families, who then have built up their income stream and financial independence,” D’Souza says.
“I see these new female investors, these female entrepreneurs, female chief executive officers, as absolute lighthouses, for future generations.”
Rest Super, one of the nation’s largest superannuation firms with $66bn under management, is certainly seeing a “persistent increase in demand” from women for simple financial advice.
Rest members often have lower than average super balances and work in part-time or casual employment. The firm accounts for one in five women in Australia aged 20 to 34.
“Across all our channels, women make up about 56 per cent of our advice interactions and are twice as likely as men to seek phone advice,” says Deborah Potts, chief member officer at Rest.
“More women than men seek advice on choosing their investment option, insurance and contributions. Women face distinct challenges, from pay inequality to multiple career breaks, so seeking financial advice can help them make more informed decisions about their financial futuress.”
The twist in the story of how men and women invest is that there are signs that the latter – when they have the confidence to play the markets – may be better at the task.
“There are so many studies out there that show that women actually make better investors than men,” says Gurney.
“Women outperform men in our investments by about half a per cent … mainly because they are far more disciplined in their investing, are more considered, and are open to advice.”
This figure might not seem like much, but when compounded over many years it becomes significant. A recent study by Fidelity showed their female investors outperformed the men by 0.4 per cent.
In a well-known 2001 paper for the Quarterly Journal of Economics entitled Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment, Barber and Odean wrote that men were more overconfident than women, which led to excessive trading and decreased returns.
Perhaps that will mean that the female predisposition – in Australia at least – towards asking lots of questions before making investment decisions will pay off in the long term.
“It’s really important for women to start talking more about money,” says Gurney.
“It gives us security and it gives us freedom.”
This feature appears in The Deal/Barron’s Top 100 Financial Advisers 2023 magazine, online and in The Australian on Thursday.
