New research from Milford reveals women’s multi-faceted approach to their money
Hands up if you tend to talk to your friends and family before making important decisions with your money? Perhaps you’d only invest in a company if its values align with your own. Maybe you’ve been learning about investing from a podcast, rather than hitting up the local library or reading articles online. These are just some of the ways in which women approach investing differently from men, according to revealing new research from Milford.
It’s important to treat these differences seriously, says Milford’s Chief of Staff Sarah Mitchell. She notes that while the industry has worked hard to change the perception of investing being somewhat of an intimidating “boys’ club”, with the rise of initiatives aimed at encouraging more women and young people into investing, more needs to be done to integrate these strategies into everyday interactions.
“It’s incumbent on us as industry providers and fund manager providers to make sure that we’re making things accessible and easy, and recognising that a 25-year-old woman will want to know and understand things in a different way to a 55 or 65-year-old male investor,” says Sarah.
Milford recently surveyed 3,800 members of its client base, to better understand this shifting demographic. The research found that when it comes to investing, 24 per cent of women engage with people around them prior to making a decision (versus 12 per cent of men). This was further supported by 57 per cent of women noting they put trust in others to guide them in investment decisions, versus 49 per cent of men. Overall, talking to others (friends, family, partner or advisor) was key for 65 per cent of women versus 46 per cent of men, who relied more on personal research. Younger women (under 35) also reinforce the collaborative information-gathering behaviour, with a higher reliance on friends, parents, podcasts and social media.
This community-minded approach is reflected in the reasons women invest in the first place, whether it’s through KiwiSaver, property or starting a diverse investment portfolio with guidance from a provider, as many women are just as interested in family financial goals as their own, says Sarah.
Women are choosy too when it comes to finding the right fund provider. The Milford research found that female investors are “multi-dimensional”, taking into account a broader range of considerations than men. Seventy-eight per cent of men prioritise a fund manager who “offers strong return on investment” versus 65 per cent of women. Women placed lower priority than men did on a fund manager who helped them understand how their investment was performing and a manager who has a great app or interface. Instead, women prioritised a manager who offers a sustainable or ethical investment option, someone who offers education and support, and a company that has women in leadership positions at high level.
Women are also more likely to show interest in investments that align with their values, seeking out information that validates a company’s ethical intentions. Women were found to be more likely than men to want more information about ESG (Environmental Social and Governance) investing and ESG funds (46 per cent versus 31 per cent) and more likely to prioritise sustainable and ethical practices in regard to their provider choice (26 per cent versus 16 per cent).
When it comes to researching investing, women also approach this differently to men, according to the Milford research. Women, particularly those under 35, are more likely to use parents, podcasts and social media when researching, whereas men are more likely to use more traditional sources including online articles, financial advisers and books.
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Advertise with NZME.The rise of DIY online investing platforms allows people to invest themselves, however those who use a fund manager can leave the “heavy lifting” involved in doing more formal investment research and due diligence to them.
“When you’re embarking on an investment journey, it can be quite overwhelming,” says Sarah. “The reality is, you’re either interested in that sort of stuff or you’re not. Personally, I still want to understand what’s going on with my money and I want to understand why my manager is making those decisions broadly, but I don’t have interest in doing individual company research myself.”
As the numbers of female role models in the investing industry continues to rise, and the breadth of voices increases, the industry needs to respond to its diversifying clientele by ensuring everyone is welcomed and engaged in the right way, says Sarah. Just as it’s easy to encourage more people to invest, it’s just as easy to put them off by using complicated jargon or by failing to consider what information investors want, and why.
“Money is part of people’s every day and investing should be too,” she says. “It’s not scary. It’s not smoke and mirrors, it shouldn’t be complicated. Practically everyone is an investor. The reason that message is so important is because investing can be transformational in the lifestyle that you wind up having. And everybody should have access to that.”
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This article does not take into account your investment needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Past performance is not a reliable indicator of future performance. Investment involves risk and returns can be negative as well as positive. Milford Funds Limited is the issuer of the Milford KiwiSaver Plan and Milford Investment Funds. Please read the relevant Milford Product Disclosure Statement at milfordasset.com. Before investing you may wish to seek financial advice. For more information about our financial advice services please visit milfordasset.com/getting-advice.
