To celebrate International Women’s Day in March, we are taking a look at women and investing from the female perspective and assessing what it is that women really want from investment services. With gender equality and empowerment movements taking centre stage in 2019, what investment options and ideas are out there for the modern woman?
Women and men have different needs in most aspects of their lives and financial planning for women is no exception. A woman’s financial portfolio should differ from a man’s for the following reasons:
Sad but still true: according to a Labour Force survey conducted by Singapore’s Ministry of Manpower1, the gender pay gap stands at 11.8 per cent. Women investors need to address this inequality when making investment decisions because their funds have to work harder to close the gap.
Women’s available funds for investment, and, therefore, available funds for retirement, are also impacted if they take career breaks to raise children, care for a loved one or support a partner in an overseas location for example. Unfortunately, such commitments also make it more likely that women will pass on career advancement opportunities. Forty-five per cent of executive women interviewed in an Asia Pacific McKinsey survey cited “anytime, anywhere” models as reasons for turning down leadership role promotions3. Such missed opportunities and career breaks require women to invest earlier in their lives in order to compensate for these eventualities and get the best return on investment.
Societal norms are changing, and couples today don’t always feel they have to remain within a marriage that isn’t working. As divorce rates rise, or women make the decision to remain independent, they should be making arrangements to be financially independent as well.
Life expectancy is 4.5 years longer for women than for men, according to the Department of Statistics in Singapore1. This indicates that female investors need to save more for retirement than men and calculate for this inevitability in their investment strategy. A longer life expectancy does bring an added financial advantage – women of the baby boomer generation are expected to inherit wealth from both their parents and spouses. Baby boomers are forecast to inherit as much as $15 trillion over the next 20 years, according to Nielsen.2
With women’s financial needs differing in the aforementioned aspects from those of men, is there a demand for women-centred investment vehicles?
In our experience, we’ve come across two schools of thought; when it comes to knowing how to invest money, some women prefer services aimed specifically at them as they feel more confident that their needs will be addressed without having to make a stand. They may feel that the added fees for “women-only” products are worth the spend.
Others don’t want financial services wrapped in a pink bow and take the view that any effective planned portfolio will, without question, take into account their available funds to invest, stage in life and their financial goals, and adjust accordingly as their needs change. For them, this is not a gender issue but simply one of good financial planning. They expect their trusted financial advisor to listen and answer any questions without making them feel financially illiterate. From there, they seek the expertise of their financial advisor to plan their portfolio to address current and future needs, making the continual adjustments required based on their changing circumstances or risk appetite and market volatility.
So, we’ve established the need for women to start financial planning even earlier in their lives to compensate for the differences in financial and life considerations between men and women. Robo-advisory is a financial tool that allows women (or anyone) just starting out in their careers to plan for their financial future secure in the knowledge that their current circumstances and goals are taken into account. With current earning power, age, life expectancy and financial goals all factored in, along with the types of asset classes or portfolios available to invest in and their rates of returns, robo-advisory is able to determine suitable investment strategies aimed to meet clients’ stated goals.
Think of it as a sound investment strategy without emotional and gender bias. In addition, without the higher management fees of personal consulting eating into their profits, women investors are able to potentially grow their funds faster through robo-investing.
With four key reasons to make your money work harder for you as a woman, make celebrating International Women’s Day the trigger to talk to us about how our robo-advisory can set you on the path to meeting your financial goals.