Ahead of International Women’s Day, UBS Global Wealth Management released a new report entitled "Women and Investing: Achieving Lifetime Goals." It looks at the challenges women face vis-a-vis wealth accumulation and how they can build a strong investment strategy.

Marianna Mamou, head advice beyond investing at UBS Global Wealth Management chief investment office, has highlighted how, in a world where gender gaps persist, women can partially offset such gaps with a sound investment approach.

“For many women, investing appropriately may be imperative to allow for a comfortable life and a high probability of meeting their objectives,” Mamou said in a note. “This International Women’s Day, we can take the opportunity to increase awareness around the importance of financial empowerment and bust any pre-existing misconceptions around women’s abilities as investors.” 

According to Mamou, a study by the Alliance for Lifetime Income shows that 53 per cent of women aged 61 to 65 anticipate that their retirement savings and income will not sustain them for their entire lifetime, contrasting with 36 per cent of men in the same age range. Similar research from Scottish Widows shows that 61 per cent of women have concerns about running out of money in retirement, compared with 52 per cent of men.

In Singapore, only 27 per cent of women say they are confident about the level of savings they will have to support them throughout the entirety of their retirement, compared with 34 per cent of men, a study by Fidelity International reveals.

“Such concerns are also relevant for women at the upper end of the wealth spectrum,” Mamou said. A 2023 RBC survey of high net worth individuals highlighted that 33 per cent of women are concerned about their ability to maintain their lifestyle in later life, compared with 21 per cent of men. In addition, the research shows that more women than men do not know how much wealth is needed to maintain their lifestyle, highlighting the need for financial planning advice.

Pensions gap
“Such concerns are substantiated by looking at the pension gaps between men and women globally,” Mamou said. Data from the Organisation for Economic Co-operation and Development (OECD) shows that women over the age of 65 on average receive 26 per cent less income than men from the pension system in OECD countries. The highest pension gap is in Japan, with 47.5 per cent, and the smallest in Estonia, with a 3.3 per cent. The gap in the UK stands at 40.5 per cent, 31.2 per cent in Switzerland, and 15.3 per cent in Australia, according to the report.

The 2022 WTW Wealth Equity Index, which takes a holistic view of gender inequities across women's lifetimes and aims to quantify the extent of the gender wealth gap, also shows the gender discrepancies of accumulated wealth at retirement. The report highlights how there is a gender wealth gap globally and consistently across countries (with regional variances). Globally, upon retirement, women are expected to accumulate 74 per cent of the wealth that men have. Notably, in Europe the value is 77 per cent, in Asia Pacific 76 per cent, in the Middle East and Africa 71 per cent, in Latin America 67 per cent, and North America 76 per cent.

In addition, EU statistics reveal a big disparity in part-time employment between genders, with 31.3 per cent of women aged 15 to 64 working part-time, contrasting with only 8.7 per cent of men in the same age group. In Japan which, as noted previously, has a high pension gap, 38.5 per cent of women work part time versus 14.3 per cent of men, according to data from the OECD.

In addition, LeanIn.org and McKinsey’s Women in the Work-Place report shows that for every 100 men promoted and hired to manager level, only 72 women are promoted and hired. The report points out that the early “missed promotion” holds women back for the remainder of their careers. As a result, men hold 62 per cent of manager-level positions, while women hold just 38 per cent, UBS said.

“When women do invest, they tend to perform better than men,” Mamou continued. This should perhaps be communicated more broadly to help awareness and increase more women’s confidence in investing. This is particularly relevant as a 2017 Fidelity survey which showed that only 9 per cent of women believed they could outperform their male counterparts.

Mamou believes that the impact of income and pension gaps and longer lifespans on women's wealth can be reduced by accounting for individual circumstances in their lives, including their financial goals as well as recommending portfolios that maximise the likelihood of them achieving their goals. Helping women feel more confident about investing and understanding the relationship between risk and return is another factor, Mamou said.

She thinks that investors should make investment decisions based on their specific circumstances. “Increasing women’s financial confidence will help women achieve their goals, and understand the rewards they may receive by taking some risks within their investment portfolios,” she added.

A 2022 study by BNY calculated that if women invested at the same rate as men, there could be more than $3.22 trillion of additional capital to invest globally with over $1.87 trillion flowing into more sustainable and impactful investing, UBS said.

Mamou sees encouraging numbers of women wanting to take control of their finances and are more actively interested in investing. Fidelity added 48 per cent more new women customers in 2023 compared with 2019, with younger women leading the way, she added.

Mamou believes that it’s important to deliver appropriate advice to suit women’s needs, including investment advice which s personal and relevant to their objectives, and helps them achieve their goals.