The facts, the figures, the reasons, the solutions why women have less money
Of all the money that is managed by financial institutions, 70% belongs to men. Numerous statistics indicate that women are less interested in money and so rarely try to grow their assets. Why is that? Let's look for some reasons and solutions.
When footage from Wall Street comes on the TV, how often are there any women visible in shot? Why is the film The Wolf of Wall Street about a man and not a woman?
The world of finance is incredibly male-dominated. That is true everywhere, not only in the US and in big exchange business, where just 11% of professional fund managers are female. This figure came from Citywire's Alpha Female 2020 report. And yet it does not appear to be a job that gives any advantage to either men or women.
Women have much fewer assets
The fact that money is a topic in which men and women display differing levels of interest is evident when you look at the clients of a bank. First of all, nearly 51 percent of people are female. They are slightly in the majority over men because their life expectancy is longer. However, the following is apparent at financial institutions. Only around 40% of wealth management customers are female, and these women hold only 30% of the assets under management in this area.
One reason for this is the pay gap. According to the Swiss Federal Statistical Office, Swiss women earned CHF 6,211 per month on average in 2020, while men made CHF 6,963 per month. That is a difference of 10.8%. Moreover, the higher the management position, the greater the difference. Nonetheless, the discrepancy in terms of assets is even greater than it is for salaries.
The Austrian newspaper Der Standard addressed the topic early in 2022. In the article, Bettina Fuhrmann from the Vienna University of Economics and Business gave an important reason for the wealth gap between women and men, explaining, "There is actually a systematic difference in knowledge between the sexes." There is probably a difference in interest, too. A study by U.S. Bank showed that 52% of women discussed finance with their friends. Among men, however, the figure was 61%. Finance apps were used by 48% of the men surveyed, but only 36% of women. What the eye doesn't see, the heart doesn't grieve over.
Fuhrmann believes that there is a second reason for the difference, which is that men are more willing to take risks than women. BASE jumpers tend to be male, and the same applies to traders. A risk is very often an opportunity at the same time. In other words, more men end up in the debt trap, but more men get rich as well.
Narrower career choices
The third point that Fuhrmann pinpoints as a reason is the choice of career. She identifies three typical "women's jobs" in Austria: office assistant, retail worker and hairdresser. Things are unlikely to be all that different in Switzerland. These are jobs that tend not to offer major career opportunities. Men, says Fuhrmann, are more creative in their career choices. "It is unlikely that the interests and aptitudes of girls are less wide-ranging than those of boys," says Fuhrmann.
What does society do with findings like this? Is it just a case of saying "It's your own fault; you'll just have to deal with less money in your account"?
It's not so simple. Our Western world is based on solidarity, and our social welfare system is designed to ensure that there is enough to go around for everyone wherever possible. In Switzerland, part of this social welfare system involves pensions with a first pillar comprising Old Age and Survivors' Insurance, which is looking increasingly insecure over the long term. The other two pillars, particularly the third pillar (private pension provisions), are becoming more important, partly because our society is getting steadily older. The aim is for as many retirees as possible to be in a position to live off their own financial resources in their twilight years, rather than becoming a burden on their own children. Or indeed on the national economy, which has to support older people without financial reserves. This is an issue that affects women in particular.
Fewer resources in old age
Women are at greater risk than men of ending up with fewer financial resources in old age for three reasons in particular. One is that motherhood often means taking a break from work and so represents a setback in their careers. Another is that they live four years longer than men on average. Finally, as mentioned above, they are less interested in money and have less in their accounts. One final figure, which comes from an OECD study: in Switzerland, women aged 65 or over receive 32% less money in their pensions than men, on average. This is known as the "gender pension gap." There is very little they can do to change that once they reach this point in their lives.
Businesses and economists have recognized this problem; after all, the statistics speak for themselves. Government agencies and banks are working to improve financial literacy among women and to get them interested in the subject. Some suggested solutions include:
- Increasing the visibility of women in relation to financial matters. Experts can be female, too. Role models such as female bank managers can help to tear down barriers. After all...
- It helps to be able to discuss issues on an equal footing. Women should raise awareness of financial matters among other women. They know best how challenging it is to juggle an interesting and lucrative career with a family.
- It is crucial to encourage women to think about pensions early in their careers and invest in private pension provision. That applies in principle to both men and women. However, it is all the more important for women owing to their lower reserves and longer life expectancy.
- It is more important for women than for men that they invest wisely throughout their life cycles – especially if they are or intend to become mothers. For example, they should not completely lose sight of their pensions even in those years when their families take up a lot of their time and they may temporarily be working less.
Things have been getting better in recent years, but progress is still painfully slow. The percentage of female fund managers in the US mentioned at the beginning of this article was previously 10%. This means that an increase to 11% cannot really be considered a success. What is crucial is change, which decision-makers such as governments, businesses, researchers, and various organizations wish and need to drive forward. This is necessary so that women are in a position to improve their finances. After that, actually improving them is something that every woman must do for herself.