Canadian women are expected to control more than $3.3 trillion in financial assets by 2026 according to TD Wealth. But currently, they’re investing less and retiring 30% less wealthy than men.
According to a recent Google study run by Ipsos, most women in Canada report having equal agency to men in making financial decisions in their households.1 Despite this, there are still other barriers that hinder their investment opportunities, like pay inequality, which can and do affect women through to retirement.
And financial literacy among Canadian women is low — in fact, when asked 10 questions related to financial literacy, including “what is a credit report?” and “what can affect the amount of interest you would pay on a loan?”, 66% of Canadian women did not pass the literacy test compared to 46% of men.2
Adding to these stressors is the reality that much of the burden from the COVID-19 pandemic has fallen on women. In fact, during the pandemic, women in Canada have been disproportionately forced to postpone paying bills, use savings for monthly expenses, delay retirement, work reduced hours, and seek new employment due to layoffs.3
All of this points to a major opportunity for the finance sector in Canada right now: Investing in women. So how can marketers promote stronger financial literacy among Canadian women, and ultimately, help them grow their wealth? This article will look at why women are retiring with less wealth than men, the reasons women aren’t investing, and how marketers can put these insights into action to break down barriers and help close the gender wealth gap.
The challenges: The gender gap in retirement, wealth, and savings
In Canada, women retire with less wealth than men, which means they have to work several more years and save more than men, or else risk a lower standard of living during retirement. This is in part because women still make 27% less than men on average. Added to that is the fact that women have a longer life expectancy, which makes financial matters even more crucial as many women will be living off of their savings for longer.
The wealth gap between genders continues to widen. The average net worth gap rose to $262,000 in 2021 (up from $203,000 in 2020), and the average difference between the value of investable assets grew to $137,000 in 2021 (up from $116,000 in 2020).4 So women are making and saving less money, and on top of that, they’re also investing less. Only 51% of women have investment products compared to 67% of men5 — these investments include guaranteed investment certificates (GICs), bonds, stocks, mutual funds, and exchange-traded funds (ETFs). In today’s high inflationary environment, women risk losing the value of their cash if they are not growing it through investments.
It’s not only women who stand to miss out when they’re left out of the financial advisory equation. Over the course of two decades, a study by the University of California, Berkeley, showed that women investors outperform men by up to 4.6%. The investment industry as a whole will forgo tremendous opportunity if it doesn’t quickly adapt to the needs of this increasingly powerful demographic.
Root causes: Barriers that cause the wealth gap
Our research has uncovered a number of behavioural barriers that can deter women from investing. Many of these are due to systemic financial biases against women that have existed since childhood.
One of the biggest barriers for women is the fear of being stereotyped when they seek financial advice. A recent study by Boston Consulting Group in the U.S. reported that 30% of women said their financial advisor spoke to them differently because of their gender. And a Merrill study, using eye-tracking technology, revealed that when financial advisors are meeting with heterosexual couples, the advisor — regardless of their own gender — spends the majority of their visual attention on the man.
This stereotype threat, combined with lower financial literacy among Canadian women, can create a strong deterrent when it comes to investing. In fact, 63% of Canadian women say they feel stressed out when making financial decisions, compared to 46% of men.6
The good news is that women also say their overall satisfaction with their finances increases with their financial knowledge: 45% of women with high financial literacy say they are satisfied with their current financial situation, compared to only 32% of women with low literacy.7
Women’s confidence and satisfaction with their finances increases with their financial literacy.
How marketers can help: Lessons and solutions
The road to financial gender equality is multifaceted. Here are five solutions marketers can put into action to help close the gender wealth gap, and empower women to gain more control over their finances.
1. End the stereotype threat
Openly acknowledge and discuss the presence and nuances of stereotyping, and consider building messaging that speaks directly to it. A 2020 campaign from Bank of Montreal, “Jane’s Story”, is an example of how a brand can addresses this issue straight on, in an effort to “change the future of women and money”:
2. Improve financial literacy
Fifty-two percent of women say they want more advice about how to best manage their finances.8 Many are turning to women creators on YouTube for investing advice. Be a trusted source, and build simple and educational content that’s easy to digest.
3. Rebrand the advisor experience
Financial advisors should be accessible and nonjudgmental, and should provide customized recommendations based on their clients’ personal needs and goals. First and foremost, advisors need to respect the level of each woman’s investment knowledge and be good educators.
4. Show up at the right time
Financial institutions offer content, initiatives, and advice directed towards women, but those are often hard to find when women are searching for guidance. Though it may be true that almost half of women in Canada don’t have investment accounts, research indicates that many women want to.9 Banks can help by building campaigns with specific calls to action, such as booking an appointment or jumping on a virtual call with an advisor.
5. Be aware of limiting beliefs and risk aversion
Be intentional with language and representation in your campaigns. The type of language you use matters — using positive, communal language that directly tackles limiting beliefs correlates to a greater willingness for women to make their own investment decisions. Consider saying something like: “I am here to make you comfortable and to answer all of your questions. It’s normal to have many questions when you begin this journey. We’ll go step by step.”
Women should be seated at the financial table, and that starts with inviting them to sit down with you. Marketers should include women of all backgrounds, and act on opportunities to promote financial education and gain their valuable trust. Every action to remove barriers that hinder women will help bring us closer to gender equity in investing.
