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Female investors bring opportunities to the wealth management industry

A growing proportion of women are owning investable assets, a UBS Global Wealth Management report finds.
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In 2020, female investors controlled 33% of total global personal investable wealth, up from 31% in 2016, and are projected to further increase this share to 35% by 2025, according to the report.

The growth in women’s investable wealth has outpaced men’s between 2016 and 2020 (CAGR of 8.2% versus 5.9%), and women’s investable wealth is expected to continue to grow more rapidly than men’s over the period 2021- 2025 (projected CAGR of 6.0% versus 4.2%).

Women’s share of regional wealth is highest in North America, but is growing fastest in Asia. In Asia ex Japan, women’ wealth was $4.8trn compared with $9.8trn for men in 2020, and by 2025, UBS GWM estimates that women’s wealth will be $7.3trn and $13.9trn for men, translating into a CAGR of 8.8% growth for women and 7.4% for men.

Opportunities for WM industry

A 2022 study by BNY Mellon Investment Management calculated that if women invested at the same rate as men, there could be more than $3.22trn of additional capital to invest globally with over $1.87trn flowing into more sustainable and impactful investing.

To deliver the experience and wealth advice that women are looking for, wealth managers need to reimagine their value proposition, the report said.

Women are looking for advice and are often happy to pay a premium for an advisor that they trust. Specifically, a recent survey showed that older, affluent women are twice as likely as older, affluent men to favour paying a 1% or higher fee for an account managed by a financial advisor, versus paying 10 basis points for a digital-only service.

The UBS Investor Sentiment survey also highlighted that women value the need of expert advice more highly than men. Furthermore, when women ask for advice, they are more likely to be referring to wealth advice to help them meet their objectives and linked to their goals, rather than trading strategies to help beat the market. 

Younger women are also more likely to invest for specific goals, with two-thirds of young women stating this intention compared with 56% of young men. Women identified honesty, knowledge, and transparency as the top values they sought in advisors and financial institutions, according to UBS GWM.

Women investors perform better

Once women do invest, they tend to perform better than men. A recent study by the Warwick Business School concluded women outperformed men at investing by 1.8% per annum.

This is largely because women trade less often, therefore incurring fewer trading costs, which subtract from market performance. Women also display less disposition bias, for example: the tendency to sell at lows. 

During major drawdown events, the data suggests that women are around 25% less likely to withdraw their investments than men. They are also less likely to change their risk profile amid volatility and are in general more disciplined and invest in line with their goals.

Women also spend more time researching information, are more likely to follow a plan, and less likely to try to time the market. They also benefit from more diversified portfolios. Thus, while men tend to put more weight on pure performance and make investment decisions based on historical performance, women tend to prioritise risk reduction and positive impact, said UBS GWM.

Part of the Mark Allen Group.