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Mind the investment gap




By Johann Bornman on 21st August 2017


Johann Bornman (pictured), product director at ETFmatic, explains why the firm is trying to close the gender investing gap. 

 

On the 23rd of June, we launched a campaign called Mind the Gap to help address some of the challenges women face when it comes to making their money work best for them. The campaign, which ran for one month, allowed anyone that identifies as a woman in the 32 European countries we serve to get 6 months of free investment management fees when they opened and funded an account with ETFmatic. So why did we launch this campaign and what results have we seen since?

 

Robo-advice and fintech are generally all the rage these days. As incumbent firms and business models struggle to cope with the technological changes all around them, new firms offering new ways of doing things are aiming to democratise finance. Within the investment industry, high fees have long been a huge problem, with ordinary investors still to this day sacrificing tens of thousands of pounds in returns. Product offerings that are overly complex, esoteric and created, built and delivered during the days when paper communication was the norm has further discouraged the average investor. So it is with the aim to use technology to eradicate these costs, and pass them to the consumer, whilst offering straightforward and transparent solutions that firms like us have made our core mission.The problem, however, is that despite the democratisation of finance, it still seems only certain investors seem to be benefiting from this trend. Looking at the core demographics of your typical robo-adviser investor, it is perhaps not surprising to learn that men between the ages of 30 to 50 working in business services make up greater than 80 per cent of the user base. We as an industry are not doing enough to ensure we make our offerings and services as open as possible.

 

A study by the Telegraph revealed that women are just as likely as men to have savings accounts and cash ISAs. However, only 10 per cent of women have stock and shares ISAs compared to 17 per cent of men, and only 7 per cent held other investments or unit trusts compared to 14 per cent for their male counterparts. In other words, women on average are chronically underinvested and prefer to keep their earnings in cash, an option they deem far safer than the risky stock market. This is incredibly interesting given that, statistically, women on average, tend to outperform men when it comes to investing.

 

Given what appears to be less vulnerability to overconfidence and overtrading, women have edged ahead of men when the returns of ordinary investors are compared. This investment gap is perhaps less well known compared to the pay gap. There is much research and government policy on this issue and we certainly don’t have the expertise to contribute to the discussion. What we can do however is allow all investors to let their money work best for them. So it is very much with this aim in mind that we launched our Mind the Gap campaign.

 

Since the launch in late June, we have seen a marketable increase in the amount of women visitors to our website. The chart below is from Google’s analytics and tracks website visitors by gender.

 

Source: Google Analytics

 

We find this data incredibly encouraging but absolutely recognise that it is nowhere near good enough. We need to work much harder in making sure that we democratise finance for all and ensure that we have a far more equitable split in our client base. We spend a lot of time speaking to all our clients to ensure we refine and improve our product offering, content and communication. As we expand beyond our current core demographic we continually work on where we reach our clients, how we communicate with them and how straightforward and transparent our solution is. On the campaign side our Mind the Gap launch is only the first in what we foresee to be many. So in order to achieve our core mission, we will continue to work as hard as we can to reach women investors and assist them in making their money work best for them.

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