The financial future is female. That is the rallying cry of the latest research from Standard & Poor’s as we celebrate International Women’s Day, and let’s face it, S&P knows a thing or two about finance.
By 2020, women are set to control US$72 trillion worldwide, increasing women’s influence as global investors to an unprecedented level. Financial firms wanting to stay ahead will increasingly need to consider how they provide the best possible services to female investors.
The S&P report states: “One thing is clear: Whatever comes next comes down to women.”
In the US and Canada, more than two thirds of women feel they are in control of their financial wellbeing, while elsewhere the figures are considerably different. In the UK, Germany, France and Switzerland more than 70% of both men and women are worried about their financial future, with more women admitting to this than men. In France, 88% of women are worried about their financial future, a similar number to those in Japan and Korea who say they are worried about their personal finances.
However, despite an initial reluctance to take on board the views of – let alone employ – women in financial services, the tide is most definitely turning.
The first female investors had a truly difficult time when they were trying to break into the investment community.
One of the first was investment adviser Geraldine Weiss, who studied finance and business at college, as well as reading around the subject more widely to establish her expertise. Yet in the 1960s, no firm would hire her as anything more than a secretary.
Rather than be defeated, she started her own finance newsletter in 1966, but only began to be taken seriously when she signed it simply ‘G Weiss’ so as not to reveal her gender. It was the mid-1970s before she revealed her identity, having established a highly-successful track record.
Hers is not the only similar story. Muriel Seibert had similar issues when she tried to get her brokerage firm registered with the New York Stock Exchange in 1967 – she could not get a man to sponsor her application. She had to fight harder for funding too, yet eventually managed to register the first female-owned company on the NYSE.
Despite a host of well-known female fund managers now, such as Nicola Horlick of Money&Co and Helena Morrissey DBE, head of personal investing at Legal & General Investment Management women are still under-represented in financial services. But times are changing.
Female buying power means companies not prepared to sit up and listen will fall behind their competitors. Key areas for firms to consider include their environmental and social impact, as many female investors prefer to ‘do well while doing good’. Their increasing control of world wealth by women means these views can no longer be ignored.
Martina Cheung, president of S&P Global Market Intelligence, said: “Women are generally more likely than men to weigh a company’s environmental and social impact when making an investment decision or buying a product. In every country but one, these considerations were even more of a factor when it came to investment decisions.
"With women holding, by some estimates as much as 40% of the world’s total wealth, it seems clear that fund and asset managers’ increasing focus on environmental, social, and governance (ESG) issues is here to stay.”
Aside from the growing female power of investors, there is a concerted push to increase number of women on boards. It makes sense on many levels, since companies employing more women at senior levels are more profitable.
The more diverse a company’s board is, the greater the likelihood of increased profits, according to research by McKinsey & Company released last year.
Companies in the top quartile for executive-level gender diversity are 21% more likely to outperform those companies in the fourth-quartile based on EBIT margin and were 27% more likely to outperform the same group in longer-term value creation based on an economic profit margin, according to the McKinsey report.
So, the future of finance really is female. Both in investment terms, and in the boardroom.