I have started going to the City for the first time in years. The Square Mile has changed dramatically. There are new streets, buildings and shops, and the people are different too: more women, more people of colour, fewer pin stripes, more stripy t-shirts.
Alas there has been no surprise about how the financial services sector engages with women as consumers. Being the sort of person I am, I started to look at if there was a difference in male and female attitudes to money and investments.
It was hardly a shock to find that women invest less than men – we have less money. The gender pay gap in the UK is 18.4%. If your income is lower, your ability to invest for tomorrow is hampered by your need to pay for today.
When we do have money, we do different things. Men spend twice as much of their disposable income on investments than women, while HMRC data indicates that women hold more ISAs than men and prefer cash ISAs to stocks and shares, which are favoured by men.
All this matters. The financial inequality arising from gender pay gaps is exacerbated by the fact that we invest less and we tend to go for cash rather than the markets. As one investment firm recently illustrated, over four years if you put your entire allowance in a cash ISA you would have got around 0.44% return whereas investing in a stocks and shares one would typically have yielded over 25% – a difference of more than £16,000.
If you are a financial services company selling pensions and investment products, it means you’re missing out on a large group of potential customers. So, what can we do? Structural issues like gender pay and the rules which mean that if you take a career break you can only make up three years of missing pension contributions are big and hairy, although you can take action in your own organisation.
Getting women to take control of their finances, to make sound investments, is good for them, the sector and us all.
But marketing professionals within financial services can and should do something. I can’t claim to be a great expert in financial services – I have only worked in the sector for a few months and on the retail banking side. But I have spent a career trying to get people to change their behaviours; whether it is to eat more fruits and vegetables, attend NHS appointments, or getting more women and girls to be active. Success is driven by the extent to which we understand what are the factors inhibiting the behaviours we are seeking to change.
So what stops women investing less money and makes them more cautious when they do? It isn’t that we don’t have an interest in our finances. The evidence I’ve seen suggests it is a lack of trust in providers and a fear of risk. The sector as a whole and individual investment providers could and should address this.
I know that building and maintaining trust is a long-term commitment but simple changes that will make a difference can be made quickly. For a start, use more straightforward language in the right tone of voice, which has been tested on the target audience to ensure that it doesn’t come over as patronising or finger-wagging.
Create product material that is jargon-free but doesn’t treat us as simpletons, and which describes risk in meaningful terms. This would make a massive difference. As long as product brochures and guidance notes are impenetrable to women, we will continue to take the cash route; it might make us less money but at least we know what we will get from it without being made to feel like idiots for not understanding.
Think about the messengers and role models, and who is most likely to connect with the audience. Use more women who can engender trust, and talk about why investing doesn’t need to be complicated. Getting women to take control of their finances, to make sound investments, is good for them, the sector and us all. It’s in no one’s interests for women to have less money than they could have in retirement.
Tanya Joseph is director of external relations at Nationwide.