Outdated Gender Norms Impact Women’s Interest in Investing
An Aug. 13 academic paper found that women are less likely to be gifted stock than men — receiving just 38.8% of all stock gift cards for an online trading app. When women or girls were gifted stock, the amount on average was 21.9% less than what men received, reflecting a bias that women are less interested in financial matters. “Gift givers usually tailor gifts to the recipient’s interests or at least their perceptions of the recipient’s interests,” the researchers wrote.
Study Finds Women Are Less Likely to Receive Stock Gifts
However, when given a chance to invest free money, women are just as eager to invest as men are. “Following equal encouragement to enter the stock market, roughly the same proportion of men and women continue to participate” in the app, the paper said. This suggests that the perceived lack of interest in investing among women may be due to outdated gender norms rather than a genuine lack of interest.
Equal Encouragement Leads to Equal Participation in Investing
Jennifer Itzkowitz, the lead researcher on the paper, believes that these findings have significant implications for advisors. Many advisors fail to engage women as clients or take the female partner of their male clients seriously. As women’s wealth continues to increase, advisors who fail to engage women will miss out on a significant opportunity to serve the wealth client of the future.
The Role of Advisors in Closing the Gender Investment Gap
Itzkowitz suggests that financial advisors can take simple steps to engage women as clients. They can ensure that both partners are included in communications and portfolio discussions. Advisors should also be mindful of biases when it comes to investing for children and encourage all their clients’ children, regardless of gender, to learn about financial literacy and investing from a young age.
Wealth management firms can learn from STEM employers and create female cohorts or financial literacy classes specifically for women. By providing female role models and a supportive environment, women may feel more comfortable and encouraged to learn about investing. Advisors can also start early by teaching their children about investing and opening small investment accounts for them.
Overall, advisors play a crucial role in closing the gender investment gap by challenging gender norms, engaging both partners in financial discussions, and providing educational resources and opportunities for women. By doing so, they can help empower women to become confident and successful investors.
In conclusion, women’s lower rates of participation in investing can be attributed to outdated gender norms rather than a lack of interest. When given equal encouragement, women are just as eager to invest as men. Financial advisors have an important role to play in closing the gender investment gap by engaging women as clients, challenging biases, and providing educational resources. By doing so, advisors can help empower women to achieve financial independence and bridge the wealth gap.
Analyst comment
Positive news: Outdated gender norms impacting women’s interest in investing are identified as a barrier to their participation in the market. When given equal encouragement, women are just as eager to invest as men. Financial advisors can play a crucial role in closing the gender investment gap by engaging women as clients, challenging biases, and providing educational resources. This will empower women to achieve financial independence and bridge the wealth gap.
