The UK financial services’ sectors fixation with the ‘confidence gap’ is actively turning women away from investing, a trading platform has warned.
An analysis by Etoro of more than 80 UK reports on women investing by the financial services industry, found a repeated belief that the gender investment gap was caused by a lack of financial confidence in women.
In over 50 per cent of the reports, women’s ability to invest was portrayed in negative terms, describing them as ‘too nervous’, ‘unsure where to start’ or ‘too scared of losing money’.
These perceptions had a “damaging” impact on women, with one in five saying it put them off investing altogether, while 17 per cent said it left them less motivated to invest.
This reflects the state of the investment gap, which now stands at £678bn, roughly the size of Switzerland’s economy, according to financial advice platform Boring Money.
The findings come as the industry and the government prepare to roll out their ‘targeted support scheme’ by the 2026 ISA season, aimed at encouraging more retail investment, while rumours over potential slashing stamp duty on UK stocks to 0.5 per cent also grow.
Dan Moczulski, UK managing director at Etoro, said: “The constant negative framing is not harmless commentary, it’s damaging.
“By recycling lazy stereotypes, we’re creating barriers instead of breaking them down.”
Missing the point
However, studies including one conducted by Warwick Business School, found that female investors outperform men by nearly 2 per cent a year.
This was credited to women’s likelihood to take a long-term view and trade less often, which contributes towards getting higher returns, with Moczulski noting their ‘natural reluctance’ to be overconfident is what allowed them to deliver better returns.
Trading stocks can lead to weaker returns due to taxes and other fees eroding profits, while over confidence from early wins and panic selling during market downturns can cause increased losses compared to those who wait.
Dr Ylva Baeckstrom, senior lecturer in finance at King’s Business School, said: “Branding women as underconfident undermines women’s excellent investment abilities.”
Flipping the script
When women were shown examples of other females performing strongly, including the instances of outperforming men, their reactions toward investing changed.
Over 40 per cent said it gave them more motivation to invest and a quarter reported wanting to learn more about investing.
While many wished to gain further knowledge about retail investing, they felt that they did not know where to look for advice.
Four in ten admitted they don’t relate to those who talk publicly about investing, with more than half believing it is mostly men who discuss the topic both in professional and personal settings.
Elsewhere, 54 per cent said they believed it was mostly people who work in finance, such as asset managers and analysts.
Moczulski said: “It’s time the industry stopped telling women they’re missing the ‘secret confidence’ ingredient.
“We don’t need women to invest like men, we need them to invest like themselves.”