Women are poised to reshape financial markets —as investors and financial decision-makers

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Stephanie Choi, Sustainable and Impact Investing Strategist, Global Wealth Management Chief Inve, UBS, Claudia Ukonu, Growth Lead, UpLink, World Economic Forum, Christine Yu, Co-Founder, Sophia

• Women have the power to fundamentally reshape the financial services and investment landscape, as both investors and from within key financial institutions.
• An estimated $700 billion could be unlocked by financial institutions by better-serving women as investors.
• There is evidence that women overall make better investors, and generate higher returns when making investment decisions at financial firms.

It’s time we reflect on the role women play in shaping financial markets — both as investors and as employees in the institutions that keep those markets running. On both fronts, there is ample opportunity to deliver both societal progress and economic empowerment.

Worryingly, women do not create wealth at the same rates as men. According to the OECD, women receive 26% less income from the pension system than men. Critically important for many women around the world is improving their inclusion in financial markets as investors and closing this gender investing gap.

We must ask ourselves: What role do women play as investors, and how can their participation be further encouraged and supported?

Answering this question could unlock a $700 billion revenue opportunity for firms that effectively serve female customers.

The gender investing gap

Addressing the gender pay gap is crucial to unlocking women’s full potential as investors. UpLink Top Investor and Co-Founder and General Partner of VentureSouq, Sonia Weymuller says: “Accountability is key and clear mechanisms should ensure diversity goals are met.”

Women often handle unpaid caregiving and housework, leading to missed promotions and part-time work. Consequently, women may have less capacity to generate income through employment and wealth creation through investing. While over 80% of women are comfortable leading short-term financial planning activities for their families, only 23% are comfortable leading long-term financial planning such as investing and insurance. This lack of confidence affects wealth creation and impedes engagement in investment activities.

An estimated $3.22 trillion of additional investment capital globally could be unlocked if women invested at the same rate as men. Moreover, when given the opportunity, women investors perform well, outperforming men by 1.8 percentage points annually. Beyond financial returns, women are twice as likely to incorporate ESG factors into their investing activities. Women also invest back into their communities through philanthropic giving, with their charitable activities increasing as their income rises.

Closing the representation gap in financial services

Within the financial industry, there is still much progress to be made on the inclusion of women as decision-making employees in financial institutions.

Despite strides towards gender equality, stark statistics on women in finance persist: in 2023, women occupied only 18% of C-suite roles globally. Further, women represent just 30% of board members, 22% of executives and 27% of senior management positions in companies worldwide with a market value of at least $2 billion.

“In my experience women hold various leadership roles in the finance industry. However, there is a noticeable absence of women in leadership positions with direct financial decision-making responsibilities. Fortunately, this is changing as more women move into these critical roles.”— Christine Yu, Co-founder, Sophia

However, amidst these challenges, there is compelling evidence of the positive impact of increased female participation. 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.

Companies with more diverse Boards are also more likely to demonstrate higher business ethics and corporate citizenship scores, be better at attracting and retaining talent, and have more robust climate strategies.

Increasing female representation at the top is a complex challenge.

When Amy Lo, now Chairman, UBS Global Wealth Management Asia, recalls her early days at the firm in 1995, she remembers attending a senior workshop in Zurich where she noticed a significant gender imbalance: “It was predominantly male, with perhaps only around 2% being women.” This experience fueled her determination to advocate for women and minorities in the workplace. “I felt a strong urge to make a difference,” she said.

In the US, women are well represented at entry levels, comprising 52% of associated finance jobs in 2021. As of August 2023, close to 30% of senior management positions at UBS globally are held by women — but this success is not replicated across the wider sector. In fact, female representation sharply declines as women progress to the senior vice president level, typically occurring 10-15 years into their career, and remains stagnant thereafter. The drop is particularly pronounced for women of colour, with only 4% of black women holding C-suite positions compared to 23% white women and 64% white men. This indicates that recruitment strategies often prioritize women at entry levels, potentially overlooking the need for re-entry programmes for women returning to leadership roles.

“Continued efforts to promote diversity and support women in finance and in entrepreneurship are fundamental to unlock their potential to drive meaningful change. For example, venture capital firms with female leadership enable inclusive and holistic investment decisions based on the diversity of perspectives provided on the investment committee.”— Sonia Weymuller, Co-Founder and General Partner, VentureSouq

Employers should focus on hiring based on skills and potential for growth rather than short-term objectives.

While flexible work arrangements and benefits like extended maternity leave can reduce turnover among women with caregiving responsibilities, they may also impede career advancement by limiting opportunities for networking and collaboration.

A 2021 Catalyst survey highlighted that women with childcare responsibilities who were offered flexible work options were 32% less likely to leave their jobs. Therefore, many companies are implementing flexible work arrangements and benefits like extended maternity leave, which can reduce turnover among women with caregiving responsibilities. However, overly flexible schedules may impede career advancement by hindering opportunities for networking and collaboration.

Ultimately, fostering an inclusive workplace culture is crucial for the success of these initiatives. Embracing diversity not only enhances productivity but also promotes a positive and collaborative environment for all employees. Encouraging women’s participation in leadership positions creates a ripple effect, paving the way for more women to advance in their careers.

Reshaping financial services

To reshape the financial services industry, we must engage with women throughout their lives, providing support and resources to enhance financial literacy and empower them as wealth creators and decision-makers.

Closing the gender gap in financial services could unlock $700 billion in revenue and secure the future of women around the world. There is immense potential for positive impact by promoting gender equality in the industry.

Furthermore, by fostering an inclusive and accountable culture within those financial services institutions, we can pave the way for a future where women play an integral role in shaping and influencing financial markets, ultimately leading to greater prosperity for all.