A Look At Women's Investment Trends

With each generation, women's financial participation increases. As noted in Fidelity Investment's 2024 Women & Investing Study, 77% of Gen Z women and 74% of Millennial women are investing, versus 65% of Gen X women and 70% of Boomer women. Though the percentage differences between the demographic cohorts are noteworthy, what is most important is that women, overall, are increasing their participation in the financial markets. As noted in Fidelity's report, 7 in 10 women own investments in the stock market, an 18% annual increase compared to 2023. 

As we continue to see women participating in the financial markets and holding leadership roles in the broader industry, it is important to recognize the benefits that women bring. 

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Improvements In Wealth Segments

While the existence of a wealth gap between men and women remains, that gap has narrowed slightly in recent decades. As reported by Pew Research, in 2024, women earned an average of 85% of what men earned, an increase from the 81% reported in 2003. The research further clarifies its findings, stating that the wage gap is smaller for workers aged 25 to 34, with women earning an average of 95 cents for every dollar a man earns in the same age range.

For financial institutions seeking to empower women, the United Nations Environment Programme Finance Initiative (UNEP FI) has a framework for doing so, entitled "Advancing Gender Equality and Women's Empowerment: Target Setting Guidance for Banks." Through this framework, banking institutions are given guidance as to how they can (i) prioritize women's empowerment as a pathway to gender equality, (ii) understand how banks can integrate gender equality and women's empowerment across their value chain and (iii) act as advocates for gender equality, accelerating its advancement within the financial industry.

For financial institutions, serving women equitably should be a strategic initiative they seek to actualize, not only for the institution's financial benefit but also because it will ultimately enhance their quality of life and that of society at large. 

Widening The Investment Paradigm

With more women entering the financial sector as either clients or professionals, change is necessary. In recent years, it has become clear that how women and men engage in financial matters is starkly different. For example, in the realm of investing, research from RBC Wealth Management indicates that women are twice as likely to incorporate ESG factors into their investment activities. Women also invest in their communities through philanthropic giving, increasing their charitable activities as their income rises.

While understanding their needs is essential, understanding their risk tolerance is paramount. Research from the Warwick Business School found that women outperformed men by 1.8% when investing. This outperformance was attributed to their relative risk tolerance, in that men were more likely to pick more speculative investments, while women had a more long-term perspective.

Given the realization that women often invest more holistically and intentionally than men, an emerging cohort of women-focused investment institutions has been established in recent years, led by women who aim to fulfill the financial goals of their fellow females. A prominent example of such a firm is Ellevest, a primarily women-focused company that serves high-net-worth clients with a team of all-women financial advisors and planners. These advisors and planners help clients build and manage their wealth through intentional impact investing and financial planning. In the realm of private investing, as well, women have a record of strong performance; as noted by the World Economic Forum, hedge funds managed by women have delivered returns twice as high as the average hedge fund, and female clients and female-founded companies have been shown to generate an average of 10% more revenue over a five-year period than male-founded companies.

Inheritors Of Impending Wealth

The Great Wealth Transfer is an impending transfer of wealth from baby boomers to the next generation. The estimated amount is $124 trillion, of which $54 trillion is expected to first be passed through inter-spousal transfers to widows, with more than 95% going to women. With women poised to receive vast amounts of wealth, it is crucial for the financial services industry to elevate its engagement with women to understand how their financial needs and outlook differ from those of men. Furthermore, building a financial ecosystem that will support the values-based perspective and holistic nature of women will benefit society collectively.

Cboe: Supporting Women In Financial Markets

To learn more about women’s empowerment and financial engagement, you may want to check out the webinar featuring Cboe Global Markets CBOE – the world’s leading derivatives and securities exchange network –  which touched on the increase in women participating in financial markets. Click here to watch.

 Featured photo by LinkedIn Sales Solutions on Unsplash.

This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.