How women investors are dealing with ‘risk fear’

UNDERSTANDING the thinking that drives our decisions will help us make better decisions. This maxim applies as much to finance as anything else. 

That’s why the latest data in the Fidelity’s Women and Money study, now in its fifth year, can be useful. 

Among the questions put to investors was one on barriers to investing. We found that 32% of women cited fear of risk as a barrier to investing. Some women may, as a result, be more hesitant to begin investing or to keep contributing. Fear of risk was also cited as a reason not to invest by men, at 23%.  

We also found that nearly three-quarters (73%) of women now feel confident when making financial decisions about products and services to use, up from 69% in 2018 - when we first launched our campaign.  

The improvement comes amid significant financial turbulence. Britons, both households and investors, have had to make money decisions against a backdrop of economic uncertainty, from Brexit to the invasion of Ukraine. Markets have been buffeted, inflation has been rampant and interest rates have soared.  

2018 vs 2023 - What kind of barriers to investing are women investors facing?

^{*Percentage of women surveyed combines those that answered moderate and major barrier.}  

^{Source: Research was conducted by Opinium Research commissioned by Fidelity International. Fieldwork ran from 15th – 18th May 2018 and 24th May – 5th June 2023.}

What has driven this shift? 

While there may well be multiple factors - two-thirds of women (66%) believe the pandemic and the cost of living have forced people to take more control of their money. 

More than half of those surveyed even said that people are more engaged with their money than they were five years ago. However, there’s still work to be done. 

Amber King, a client services team leader at Fidelity who is also a certified financial coach for women in her spare time, said that that the most pressing issues for women investors right now is that they have less disposable income monthly. This is especially true through the summer months. As a result, they are investing less. 

She mentioned that there’s a noticeable difference between the priorities of male and female investors. 

“My female clients will budget in spending on their family, friends, and children and then what is left over they will invest. Whereas I hear their male partners/family members will adopt the opposite approach,” she said. 

Fear of risk is a barrier

Emma-Lou Montgomery, Associate Director for Personal Investing at Fidelity, said that while the growing financial confidence is an encouraging sign, it must fully translate into women investing their money; a fear of risk may be holding back some women.  

This is echoed in the latest data on ISA holdings from HMRC, the UK tax office. Although women are more likely to hold an ISA than men, they’re more likely to opt for a cash ISA, which is the wrapper for a savings account, than an investment ISA, where the risks are higher but with the potential of higher returns.  

Between 2020 and 2021 - 5.6 million women contributed to an ISA and over 4 million of these were cash ISAs. For men, 5.2 million men contributed to an ISA and over 3.1 million of these were cash ISAs.   

Interestingly, only 1.1 million women contributed to a stocks and shares ISA, compared to 1.7 million men.  

Amber said female clients are leaning more towards cash ISAs that are fixed for one or two years.  

“The stability of knowing what growth they will get feels safer,” she said. 

Emma-Lou has previously explored this issue. See here: why sticking to cash can cost women more.  

There are other reasons cited for not investing - 48% of women said concerns about the economy was either a major or moderate barrier, which is a rise on data from 2018 where 44% of women surveyed provided the same answer. That worry may ease if inflation continues to fall. 

For more information on the unique financial challenges women face go to our dedicated Women and Money pages on our website. 

Source:

¹ Research was conducted by Opinium Research commissioned by Fidelity International. The survey is based on a sample of 2,068 UK adults, 1640 with investible assets of £10k + and 428 with investible assets of £1-£10k. Fieldwork ran from 24^th May – 5^th June 2023

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.