Women and Money. The Journey Continues.
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Women and Money. The Journey Continues.

The world has never seen as many female professionals, female entrepreneurs and financially independent women as there are today. 20, 40 and 50: these are the percentages of female breadwinners in Switzerland, the US and Latvia, respectively. And women haven't had the last word yet. Is the finance industry ready for them? 

  • "Are credit cards issued to the women just as to the men?"
  • "Certainly."
  • "The credits of the women, I suppose, are for smaller sums, owing to the frequent suspension of their labor on account of family responsibilities."
  • "Smaller!" ­– exclaimed Dr. Leete, – "oh, no! The maintenance of all our people is the same."

The above dialogue between a 19th century time traveler and Dr. Leete living in the noughties comes from a book "Looking Backward, From 2000 to 1887" written by Edward Bellamy 128 years ago. Back then the concept that women could use financial services and be equal to men was as exotic as the term "credit card" (a term invented by Bellamy, by the way). It is 2015, we are 15 years past the future described by Bellamy, and credit cards are not sci-fi anymore. What can the financial industry offer to women today? Have we exceeded Bellamy's predictions, or is a credit card really the best a woman can get?

Women and Money – a Union that Is Expanding

It shouldn't come as a surprise – there are more female professionals, more women entrepreneurs and more financially independent women than ever before. More women make financial decisions in families and the home, and – due to the changes in the demographic landscape – there will be more women living on their own at some stage of their lives, also as divorcees or widows. Dr Amlan Roy, Head of Global Demographics Research at Credit Suisse stresses that it creates a need for products and solutions that cater to women. He adds that "women's brains, psyches and decision making are different to men's and many industries are accepting and developing women-centric solutions."

According to the BMO Financial Group's report published earlier this year, women control 51 percent of personal wealth in the United States. In 40 percent of American households it is a woman who is the main breadwinner, and that is despite earning less – only 78 cents for every dollar a man earns. The Old Continent also sees a rise in female breadwinners. British Institute for Public Policy Research states that the European average of households supported by women is 32 percent. Latvia is in the lead with a 50-50 split and Switzerland brings up the rear with a 20 percent rating. The factors behind this growing trend, both in the US and in Europe, are job losses and payment reductions after the financial crisis as well as the growing number of single mothers.

Changes in maternal breadwinning rates in selected European countries, 2004-2013

Changes in maternal breadwinning rates in selected European countries, 2004-2013

Source: British Institute for Public Policy Research

Equality is also slowly finding its way into the wealthiest group. Although the number of female billionaires on the Forbes list constitutes only 10 percent of all entries, it is steadily growing. In 2013 there were 138 women listed, a year later the number grew by over 30 percent to 172. And this year saw another record – the number of women billionaires reached 197.

The Rise of a New Client

Does the industry understand needs of these potential new clients? Many women, who often are in charge of their day-to-day household finances, do not feel confident enough to handle long-term financial planning. This year's study by Fidelity Investments "Money FIT Woman Study" states that while 72 percent of the respondents feel positive about solely managing their family budget, only 37 percent think they are capable of planning for their retirement and just 27 percent feel able to choose the correct financial investment. Why is that? The respondents are in agreement here: The majority blame it on the lack of knowledge. And knowledge is what the financial industry has. As long as these two parties talk to each other, both should be content.

What would motivate you to become more engaged in your finances within the next 12 months?

Source: Credit Suisse, Fidelity Investments "Money FIT Woman Study"

That seems pretty easy, right? The tricky part is to communicate in the right way. In a number of surveys, women stress that what's important for them is a clear and informative message. Mike O'Sullivan, Credit Suisse Chief Investment Officer for UK & EEMEA, is confident that changing the communication style will be beneficial also for men: "Women are put off by jargon. They openly ask for transparency and clarity. If such standards were introduced across the industry, men would benefit as well. The industry must get ready for a new type of customer. And it is not a matter of simple exchange men by women; it is a matter of changing men's mindsets. It can be challenging and it is a cultural thing."

What is extremely important in an "ideal" financial advisor?

Source: Credit Suisse, LPL Financial Women and Finance white Paper

Lana Lewin, Managing Director at CS Asset Management US, points out however, that introducing gender diversity within the workforce brings a number of benefits and could help winning over these new clients: "People need to relate to others. Banks have to acknowledge that people want to see people like themselves. Diversity is enriching, and a diverse bank means a diverse client group."

Is The Industry Ready?

Dr Amlan Roy admits that although some parity seems to have been reached at entry and junior levels in developed countries, the finance industry is still infected by gender bias at higher levels. He believes that the financial services industry has more gender inequality compared to other industries. Dr Roy adds that the topic is more widely and openly discussed now and there are measures being introduced to reduce it in the work environment, such as protection against redundancy, protection during maternity leave or support in combining motherhood and work duties.

Despite these efforts, however, the fund managerial statistics across the globe present a rather depressing image. In the European countries (the data collected by Fondsfrauen, a network for female money managers, comes from the United Kingdom, Germany and Austria) the number of female fund managers is below or at 10 percent. In the US it is even less: only 2 percent! While the number of women potentially seeking investment advice is steadily growing, they are extremely underrepresented in institutions which should support them. Dr Anja Hochberg, CS Chief Investment Officer for Europe and Switzerland, has embarked on a fight to address this problem and is actively involved in Fondsfrauen. When asked for reasons for this state of affairs, Dr Hochberg says that finding an answer to this question is crucial and that is why Fondsfrauen is actively engaging in research to find out what is stopping women pursuing a career in the money managing industry. Despite the gloomy picture Lana Lewin remains optimistic: "The statistics should look different in 10 years' time. I expect more female professionals to occupy top positions in the industry, as they start in a different, much more equal, environment which offers more chance for promotion."