Closing the Complex Financial Gender Gap

Jalene Hahn |

Statistics indicate that most women will be responsible for overseeing their finances at some point in their life.

Regardless of your demographic, there are some universal truths: We all need to prioritize savings, develop an emergency fund, spend less than we make and make time to be in touch with our finances. In addition to these basics, women have had unique challenges that are often overlooked and have historically created a gap in the financial security men and women face throughout their lifetimes.

The Chartered Financial Analyst Institute identifies five distinct financial gaps between men and women: wages, wealth, retirement needs, retail investing and institutional investing.

Wage gap: Yep, it still exists, and, while progress is being made, the gap will not be eliminated in my lifetime. This impacts our greatest asset, which is our human capital, or the ability to turn labor into wages. While we might earn less on average, we can maximize our personal earning power by making smart career choices, becoming a lifelong learner and keeping our options open.

Wealth gap: This is the difference between how women keep and grow their assets compared with men. In addition to having lower lifetime earnings, women often face a heavier debt burden. Women make up 56% of college students but hold nearly two-thirds of outstanding student loan debt. They are also 32% more likely to receive subprime mortgages than men.

Retirement needs gap: Women on average accumulate less wealth but live longer and therefore need to accumulate more than men for a comfortable retirement.

Retail investing gap: This is an area where women can excel and begin to close the financial gap. The CFA Institute identifies the retail investing gap as the “gap between men and women who invest in the stock market. A greater percentage of men invest in equities than women. Since equities outperform all other asset classes over the long term, by not investing in these assets, women are at a disadvantage.” One cause is that the financial services industry has not historically been welcoming to women.

Institutional investing gap: Most of my colleagues are men, but that is changing. According to the most recent U.S. data from Morningstar, fewer than 10% of money managers are women, compared with 37% of doctors, 33% of lawyers, and 63% of auditors and accountants.” Money managers are the people who select investments for mutual funds, exchange traded funds and other investment vehicles.

Busting the myth that women are not good investors

I work with clients on identifying the things we can control. We can’t control investment returns, inflation or the economy. We can control our spending and savings habits, and we can control how we invest those savings.

Typical reasons women choose not to become investors include a belief that they don’t have enough money, the perception of risk in stock investing or the belief that their partner will take the lead. A 2018 report from S&P Global found women on average have 68% of savings “invested” in cash, and only 26% of American women invest in the stock market.

Yet with all this doubt, studies continue to show that, when women do take the plunge and become investors, they have better investment performance than their male counterparts. Research shows one reason for men’s underperformance is overconfidence. Men tend to trade investments more frequently and make riskier decisions. Women, on the other hand, tend to seek out financial advice and invest for the long term and, as a result, trade less frequently.

There are a variety of resources to help you learn about investing. One of the best ways to learn about money is to start talking about money. I recommend checking out the Women’s Institute for Financial Education (, whose tag line is, “A man is not a financial plan.” The group has detailed information about how to start your own Money Club. So, grab a group of friends and a beverage of choice and start talking.