Female Equity Investors on the Rise

Only a quarter of deposits into U.S. brokerage accounts were made by women in January 2021, according to market research company Cardify. While this is encouraging in the respect that female-led risk aversion may see to fewer households losing money on stock exchanges—the bubble fuelled by “meme stock” GameStop’s meteoric rise, for example, has burst—but there is other evidence that more and more women are driving their wealth into share investments.

1. Women more conservative investors than men

A Credit Suisse survey of its clients found that almost half of its female customers have 90% of their wealth in low-yielding cash and fixed income—the bank recommends a figure of roughly half of this as prudent for investments. Meanwhile, equities brokerage eToro reports that female investors comprise only 14% of its registered users, most of whom are in the U.S. and Europe.

Women tend to be more conservative investors than men, preferring to put their wealth into real estate, cash or bonds while steering clear of equities. How to invest in Amazon shares, for example? Over the past decade, Amazon’s stock has grown from a market capitalization of $88.1 billion to $1.7 trillion, a 1,588% increase—a healthy return on investment by any measure!

2. Female users of Robinhood up to 30%

The meme stock phenomenon has caught on, however, with more and more women engaging with online trading platforms—female users of Robinhood were up to 30% at the beginning of this year, from 20.5% a year before, according to Cardify. One reason for this is that—according to a report by Northern Trust Asset Management, a Chicago-based ETF (exchange traded fund) brokerage—clients are significantly more likely to desire a financial advisor of the same demographic, therefore, as more women enter the profession, the more likely it is that female clients will follow.

Among consumers that indicated an advisor’s gender is important—72% attribute it to wanting an advisor of their own gender. Women today are five times more likely than men to use a female advisor, up from four times in 2019.

3. Client universe becoming younger, more female

“Advisory firms of all types need to match their workforces to better reflect the current and future client universe, which is becoming younger, more female, and more racially diverse,” says Laura Hanichak Gregg, a director of Northern Trust. “While the industry is working toward change, more needs to be done. Our research aims to educate firms about the business imperatives of diversity efforts to support the industry’s push in this direction.”

As the face of wealth changes in the U.S. with a growing portion of racially diverse and female investors, most advisors (63%) indicate that attracting a diverse client base should be a strategic priority for financial advisory firms. Advisors are harnessing this opportunity to increase the size of their eligible market and to educate a wider group of people about the benefits of planning and investing. It is a fact that women are increasingly turning to investing. This phenomenon should continue to grow and become more democratic.