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The $3 Trillion Question: What if Women Invested at the Same Rate as Men?

By Michael S. Fischer

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What You Need to Know

  • Some $1.9 trillion would flow toward investments with a positive impact on society and the environment, BNY Mellon estimates.
  • Only 9% of women surveyed said they had a high or very high level of investment risk tolerance.
  • Seventy-three percent of asset managers said their organization’s investment products are aimed primarily at men.

Think about this: If women invested at the same rate as men, there would be at least an extra $3.2 trillion of assets under management from private individuals today.

Not only that, some $1.9 trillion of that capital would flow toward investments with a positive impact on society and the environment.

These were among the findings in a new report released by BNY Mellon Investment Management, the first in a series on diversity that seeks to understand the barriers preventing higher levels of female investment participation and the potential effect if investing were more accessible to women.

The research identified key barriers to women investing. First, women around the world believe that they need $50,000 of disposable income per year, on average, before they invest some of their money.

Second, only 9% of women said they have a high or very high level of risk tolerance when it comes to investing. Forty-nine percent reported a moderate tolerance for risk, and 42% said they had low tolerance.

Third, just 28% of women globally said they feel confident about investing some of their money. 

BNY Mellon asserted that the industry needs to consider how to better engage and inspire more women to invest, which could increase their confidence and participation.

“Looking at the research, it’s clear that increasing women’s participation in investment is critical for their personal prosperity and to help shape a more equitable future for all,” Hanneke Smits, chief executive of BNY Mellon Investment Management, said in a statement. 

“Doing so will also potentially help increase the allocation of capital for the benefit of society and the environment.”

Coleman Parkes Research conducted the study among 8,000 respondents across 16 markets in Asia, Australia, Europe and North America, including both consumers who already invest as part of their future financial planning and those who do not invest. 

The firm also interviewed 100 global asset managers representing asset management firms with nearly $60 trillion of combined assets under management as of the second quarter of 2021. Finally, researchers held in-depth discussions with an international advisory panel who provided their perspectives on the research and their ideas on making investment more gender-inclusive.

Values Count

The research found that women want more than just a financial return on their investments, and encouraging greater levels of female investment could see even more capital flowing to funds with social and environmental goals.

Two-thirds of women who invest said they try to invest in companies they like and that support their values.

Fifty-five percent said they would invest, or invest more, if the impact of their investment aligned with their values. Fifty-three percent said they would do so if the fund in which they invested had a clear purpose for good.

This finding is even more pronounced among younger women. According to the research, 71% of women under 30 who invest said they prefer to invest in companies that support their values, compared with 53% of women over 50 who invest.

The effort to align investments with values seems to be stronger among those with children. The findings showed that three-quarters of both female and male parents who invest say that they prefer to invest in companies that support their values, compared with 59% of adults who do not have children.

Still a Man’s World

Eighty-six percent of asset managers interviewed for the study acknowledged that their default investment customer — the person whom they automatically target with their products — is a man. 

Seventy-three percent of asset managers said their organization’s investment products are aimed primarily at men. BNY Mellon said this suggests that the products focus on benefits and features that generally appeal more to men than women.

As a result, potential female investors are met with language, imagery and messaging targeted mainly at a male customer, according to the report. 

This often includes the use of high-risk metaphors, such as those used in extreme sports, and the concept of high performance and achievement as shorthand for investment success.

Seventy-three percent of asset managers agreed that the investment industry would be able to engage more women to invest if it had more female fund managers who could also serve as important role models.

And in their own firms? Half of asset managers said just 10%, at most, of their fund managers or investment analysts are women.

“As women, we all have different hurdles to overcome to meet our individual financial goals,” Anne-Marie McConnon, global chief client experience officer at BNY Mellon Investment Management, said in the statement. “Some of these are influenced by demographics and personal circumstances, but some are a result of how the investment industry has traditionally engaged with women.

“We believe it is in everyone’s interest for more women to invest. Not only will it be good for the future, but also wider society.” 

Michael S. Fischer

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