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06/12/2024
The rise in women’s wealth is reshaping finance. Germany shows how asset managers can play key roles in increasing their market participation to bridge gender inequality.
The investment landscape is evolving, and women are playing a key role in this shift. As we explored in a recent publication, societal changes now largely taking for granted have been swift.[1] Consider, for example, the changes seen just within the lifetime of a German woman now approaching retirement age. Around the time she was born - until the country’s Equality Act went into force 1958 - married women generally needed their husbands’ permission before accepting gainful employment and even to open a simple bank account.[2]
Many women globally are still confronted with barriers, but even where these have shrunk, the consequences of traditional societal norms linger. As our Chart of the Week shows, there remain distinct gender differences in chosen investment vehicles, even in Germany. According to surveys, only about 30% of German women invest their savings in financial products, broadly defined; for adults of both genders traditional bank savings accounts remain the vehicle of choice (67% of women, versus 66% among German men).[3]
Low share of female investors
Sources: Klarna study, as of 3/8/24
Distribution of investments in different vehicles by gender
Sources: Klarna study, as of 3/8/24
While women currently hold around a third of global wealth, this number is poised to grow significantly in the coming years. In Germany as elsewhere, this rise is driven by several factors, including increased participation in the workforce, higher earning potential, and a growing awareness of the importance of financial security.
But it's not just about the numbers. Women are investing differently than men. Research suggests women are often more risk-averse than men,[1] a factor attributed to societal expectations and historical roles. However, it's important to note that women are not simply “risk-averse” but rather more focused on long-term goals and financial security, often leading to more disciplined decision making.[1] This approach tends to translate into a preference for investments that offer stability and predictable returns, aligning with their priorities of securing their future and supporting their families.[1] This might be reflected in women's preference for Exchange-traded fund (ETF), which can offer Diversification across a basket of assets like individual stocks, which carry higher individual risk.
What to do, especially in countries like Germany, with strong preferences for bank savings accounts? In our view, the growing participation of women in the investment market presents a significant opportunity for clients and asset managers alike. By understanding the unique investment preferences and priorities of women, asset managers can develop products and services that cater to their needs and contribute to their financial success. This not only benefits individual women but also contributes to a more inclusive and equitable financial system.
For example, research suggests that women are more likely to benefit from education on investing and wealth management that resonates with a female audience. Additionally, more than two thirds of women prefer to speak to a female financial advisor, highlighting the need for greater representation of women in the financial advising field.[1] In many countries, including the U.S., Germany and the UK, no more than 20% of financial advisors are women.[4]
The increasing participation of women in the investment market is a positive development, but it's important to recognize that there are still significant barriers to overcome. By addressing these barriers and tailoring investment products and services to meet the unique needs of women, asset managers can help create a more inclusive and equitable financial system that benefits everyone – including the next generation of German retirees.
DWS.com “How asset managers can support female investment trends” 07/10/2024
German Bundestag (2022) “65 years ago: Bundestag passes equal rights law” 04/27/24
Klarna, March 08 2023, “German women are reluctant to invest, Finns are in first place.”
McKinsey (July 2020). “Women as the next wave of growth in US wealth management”; Universitaet Mannheim (June 2023). “Women and finance”; FT Adviser (July 2022) “FCA data shows just 16% of advisers are women”
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