‘Gender investment gap’ widens among high earners – Financial Times

Women are investing less than their male peers and the gap is getting wider year by year for high earners, according to the latest figures from HM Revenue & Customs.

In 2011-12, the gap between what men and women earned as income on their investments was £9.6bn. In 2015-16 — the most recent figures available — this gap had increased by 151 per cent to £24.1bn.

The annual Survey of Personal Incomes, published by HMRC, has revealed that women with a taxable income of £100,000 or more made £10.7bn from their investments in 2015-16, compared with the £34.7bn made by men in the same income bracket. This compares with £3.9bn made by high-earning females in 2011-12 and £13.5bn made by men.

Investment income includes taxable income received from property, dividends and interest on savings, with high earners defined as those with an overall taxable income of £100,000 or more.

The HMRC figures were published ahead of International Women’s Day (IWD) on Thursday, and revealed a growing gap between the pensions income that wealthy men and women are receiving.

In 2015-16, high-earning women received £1.3bn in income from their pensions, compared with £6.6bn received by high-earning men — a difference of £5.3bn. This gap has increased by 39 per cent since 2011-12, when the difference was £3.8bn.

Handelsbanken Wealth Management, which analysed the figures for the FT, noted that the “gender investment gap” has also widened at lower income levels, albeit to a lesser extent.

“When it comes to savings and investments, women are still playing catch up,” said Christine Ross, head of wealth advice at Handelsbanken Wealth Management. “Men have historically earned more, from an earlier stage, than women. Their earnings have also been uninterrupted. This has not been the case for women, who have tended to take time off to have children.

“This means that high-earning men have been quicker than high-earning women to reach their £1m lifetime pension allowance — leading them to look into alternative savings and investment options available to them.”

However, Ms Ross points out that while the gender investment gap has continued to widen, the tides are turning.

“As equal pay issues are addressed and as childcare is increasingly shared between both parents, rising numbers of women are not only seeking financial advice but are becoming actively engaged with the management of their wealth,” she said.

“This is a really positive development and it is important that women continue to take this high level of interest in planning for their futures and maximising their savings potential. If this trend continues, it is likely we could see the gender investment gap beginning to close in the future.”

Separate research from the Boston Consulting Group estimates that 66 per cent of the world’s wealth will be in the hands of women by 2020.

The investment management industry has been criticised for failing to engage with female clients — with many pointing to the low numbers of women employed within the industry.

Jane Goodland, responsible business director at Old Mutual Wealth, said the financial services industry had a job to do, both as participants and consumers.

Noting IWD’s “Press for Progress” theme, she said: “It’s high time that this sentiment is embraced fully by the financial services industry, in both the employment of women but also in the provision of products and services.”

Ms Goodland pointed to research by Old Mutual which found that the sexes approach their finances fundamentally differently from one another. Its research shows that in general, women tend to be slightly more risk averse than men. For example, it found that 84 per cent of women aged 50-75 years old were uncomfortable taking risks for financial rewards, compared to 64 per cent of men.

“This illustrates how financial advisers might need to think differently to ensure their clients are comfortable with the investments they are making, but still setting them up for prosperity in later life,” she added.

“It’s not just risk appetite that varies between men and women, they also have different priorities for their money. For example, our research shows that women are three times more likely than men to retire for family reasons.”

She believes that advisers and providers need to take a close look at their products and processes for inherent biases.

This Article Was Originally From *This Site*

Powered by WPeMatico