Why the Gender Investment Gap is Closing

Why the Gender Investment Gap is Closing

www.accumulatecapital.co.uk

ForewordAs the globe slowly recovers from the imminently hard-hitting impact of the pandemic, we must not forget to continue to work towards the integral, longer-standing threats to society such as the incredibly crucial movement towards gender equality, diversity and inclusion schemes and intersectionality awareness.

Especially in challenging times, it is more important than ever to support and promote equality in society. With this in mind, a Forbes article from 2018 broke the silence on the thought-provoking topic of the gender investment gap by claiming that women are better suited to succeeding in this market. Two years later and the gap is finally starting to bridge as the first quarter of 2020 marks a positive uplift for women becoming more involved with and contributing essentially to the investment market. This piece aims to discuss the gender investment gap as we consider the contributing factors as well as evidence and insight into the increased participation of female investors in the UK property market.

Women have been leaving legacies in STEM careers for centuries, Amelia Earhart flew across the world, Mae Jemison launched into space and Margaret Hamilton developed software, but what of Women in finance? The history of finance and economics is largely male focused and yet there have been many significant contributions made by women throughout the ages.

The earliest female association with the Bank of England was in 1694 when Bank’s governing body, the Court of Directors, took the decision to feature a woman on the new institution’s corporate seal. This commonly recognised figure became known as Britannia and has been printed on all Bank of England notes since. However, despite the overtly feminine association, rather ironically, actual involvement was forbidden for the first two hundred years.

The first true association with women was in 1893 when economic hardship led the Bank to consider employing women for smaller wages to replace the boys, aged 15-18, who usually completed this monotonous work. Although, the work was of no difficulty the first two women to be employed to oversee this new faction of female clerks were First Class history and philosophy graduates from Oxbridge. By 1914 this faction had grown to 64 women out of the 1004 Bank

employees, yet the gender pay gap and the rigidly enforced segregation of male and female employees created a problematic inherent differentiation between men and women in the financial workplace and indeed many other typically male-dominated industries. Even after the revolutionary uptake of women in these sectors, due to the conscription of men to the armed forces during the First World War. It was this combined with the notorious suffrage movements that led to the first women gaining the vote in the 1918 Representation of the People Act. Although, it was not until the Equal Franchise Act of 1928 that women were granted equal voting rights to men, the earlier act only provided for a very small percentage of women.

The Second World War inspired another women-in-the-workplace renaissance between 1939-1945, where strict entrance requirements including dress restrictions, age and unmarried status were dropped. Though conditions slowly increased for female employees, the Bank still defended the gender pay gap as a necessary measure due to the fact that the middle-class women in their employment still lived with their parents and so were already provided for. Though, in 1943 the Bank released a statement claiming that women have proved their capability in roles formerly occupied

Exploring the history of Women in finance

by men, and whilst this was a step forward in one sense the requirement that returned men from the armed forces were to be employed over female candidates, or in some cases women were dismissed from their roles to provide job openings, was a step backwards in another sense. Employers maintained an attitude of concern towards continuity issues due to women marrying or leaving to have children. The Deputy Governor Bernard in 1944 commented on his disappointment that there was no scope for outstanding or intelligent women in the bank’s employment ranks due to the only availability being in administration; a factor that certainly made the prospect of women advancing in a financial career even more improbable.

In the years following the Second World War, three important steps were taken towards the improvement of the suffrage movement at this point. The first of which was a special committee report in 1946, which was the first-known incentive aimed towards improving the scope of opportunity for women. Its main mechanism was to encourage women to work across all sectors of employment in the bank and not merely administration, although the great irony of this proposal was that these jobs were ones that women had already successfully undertaken during the war years. However, this did provide useful as it led to the creation of Sir George Abell’s 1955 Special Committee on Women’s work, which delivered a gradual integration of female and male employees and again encouragement of equal opportunity promotion. This resulted in a consequential reorganisation of job classification and though 79% of

these roles were occupied by men, the pathway for talented women to progress was brought into existence. Salaries were also increased to ensure that women did not earn less than 75% of their male counterparts, whilst the gender pay gap remained an inherent issue this was an improvement nonetheless.

Between 1968 and 1997 changes to legislation and attitude ensured that new opportunities arose for women in the workplace. The 1970 Equal Pay Act was incited to ensure, in theory, that the vision of men and women working on equal terms, with more equal pay than had previously been practiced, was achieved. Whilst there are many women who have been recognised for their senior involvement during this period, it was sadly for the rarity of this occurrence rather than for their achievement.

Next came the opportunity 2000 campaign, aimed towards improving the quality and quantity of women’s participation in the workforce by the year 2000. In addition to this a commitment towards equal working opportunities became a more wide-ranging policy adopted by many places of employment throughout the financial sector. This extended to the inclusion of a non-discriminatory, competency-based approach to both recruitment and promotion. What has made a difference to the retention and progression of women in senior management roles in finance is the integration and normalisation of flexible working opportunities. This is something which has enabled men and women to manage their work-life balance effectively.

According to 100: Women in Finance company, who are celebrating their 20th anniversary this year, approximately 20,000 registered members in 26 locations globally have committed to the 30x40 vision. Essentially, this is the mission to provide equal opportunities and ensure that women reach their potential at every career stage, the goal is to achieve 30% of female involvement in the investment team and occupying executive leadership roles by 2040. The vision is to inspire, equip and advocate for a new generation of industry leadership in which women and men serve as investment professionals and executives, equal in achievement and impact. How close are we currently to obtaining, in practice, gender equality in the workplace?

According to Oliver Wyman’s Women in Financial Services report, the industry is making progress towards this goal as mindsets are shifting, senior management and committee representation are ever-increasing. Whilst, this is positive the report denotes that further improvement must be made to ensure that women in this industry have complete equal access to opportunity for career progression, seniority and various other related

positive outcomes. The company’s attention has turned to how they can better serve not only their female employees but their female customers, in a movement towards taking responsibility and committing energy towards improving gender equality in society.

Leading multinational investment bank and financial services company Goldman Sachs have continued to publish Womenomics reports, the first of which circulated in 1999. When asked why the company felt this was an important initiative they responded, it is not merely an issue of equitability, it’s an issue of profitability. The inclusion and advancement of women is critical to long-term commercial success. As the article concludes, it has been statistically proven time and again that inclusive teams create a variation of perspectives which is essential to generating a successful investment outcome.

The government monitor the gender pay gap in its publication of a report, and its dedication on the website to the latest data, prohibiting regulations and challenges to be overcome.

The 2020 report can be accessed here.

Women in Finance and STEM 2020-21

Considering the history and the contextual issues we have discussed; this piece will now discuss the issues raised by the Forbes article in relation to the Gender Investment Gap. Two years after the publication of this article and the gap is finally starting to bridge as the first quarter of 2020 marked a significant increase in the involvement of female investors. A market trend that was reflected in our own data as investment enquiries from female investors increased from 9% of our intake in 2020 and has grown exponentially to 25% as of January 2021.

It has been suggested that an element of this uptake could be due to the recent political advances towards subverting the lingering remnants of traditional patriarchal society. Essentially, as society makes progress towards eliminating the gender pay gap and achieving equality of opportunity by implementing schemes aiming to involve more women in STEM careers and various other traditionally male-dominated industries or studies, naturally this increases the level of awareness. Furthermore, this implementation of incentivised opportunities creates a direct correlation between this and the increasing participation and involvement of women in these sectors, as the pathway to career progression from as young as secondary education is made more accessible.

However, as acknowledged, it is common that there will be a slight delay before the effects of policy and

political changes are felt and even longer for the shift in societal attitude to mirror this. Interestingly, the article discusses the success of 2018’s most successful investor, Ms. Geraldine Weiss. Her story begins with the prejudice against women working in positions of influence in the financial sector in the 1960s, as she began her investment tips newsletter as a result of a refusal to be considered for any role other than secretary with brokerage firms. In a notable study organised by the Warwick Business School surveyed 2,456 investors, 450 of which were female, evidenced that the women outperformed the men in this survey by 1.2%.

The article also suggests that though less women invest, those that do show more of a flair for achieving higher returns. A study undertaken by Fidelity which included the participation of over 8 million investment accounts, supports this statement as the accounts that were owned by women earned higher returns and proved a greater proficiency in saving money. According to those analysing the results, not only did this dissipate the inaccuracy of the patriarchal belief that women are less likely to separate emotion from business but also provided some evidence towards the suggestion that men can be overconfident in their ability to actively manage a portfolio, a mentality that may lead to loss from over-trading and higher transaction costs that dilute performance. Whether this is a cautionary note or based merely on speculation, is another matter entirely.

The Gender Investment Gap

It seems that the general point which this Forbes article makes is that whilst it is only a minority of women that have ventured into the investment market, evidence denotes that this smaller percentage have been somewhat more successful than the majority of men that invest and this has played a significant role in bridging the gender investment gap. Some of the speculated reasons for this have been discussed, but the most important aspect to take from this is how imperative societal progression towards gender equality is to the long-term success of not merely the economic market but to quality of life itself.

There are many valid and important opinions as to how we can approach these topics in a supportive and progressive light. Whilst it may be a contentious topic of discussion, it is also an important one.

Conclusion

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https://www.forbes.com/sites/michaelcannivet/2018/12/29/why-women-are-better-at-investing/?sh=2e56f74d6f37

https://www.bankofengland.co.uk/-/media/boe/files/news/2017/august/women-in-the-bank-booklet.pdf

https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2019/November/Women-In-Financial-Services-2020.pdf

https://www.womeninfinance.co.uk/london/qa-with-basak-yavuz-on-womenomics-in-emerging-markets/

https://www.gov.uk/government/publications/women-in-finance-charter#history

https://blogs.cfainstitute.org/investor/2019/05/22/the-equality-equation-three-reasons-why-the-gender-investing-gap-is-closing/

https://www.irmagazine.com/esg/investment-association-reveals-uk-gender-pay-gap-challenges

https://www.unbiased.co.uk/news/financial-adviser/women-and-investing

References