There remains a stark gap in both the investment women receive and female representation in wealth management.

Speaking to Private Banker International, Alvarez & Marsal senior director Nneka Orji, Over Being Underfunded (OBU) co-founder Sarah King and E2Exchange founder and CEO Shalini Khemka highlight that just 2% of investment funding goes to women – and this statistic is even lower for black female founders at just 0.2%.

“It’s a definite known fact that investment houses don’t support women as much as men,” says Khemka. “And that’s been going on for a very, very long time.”

Orji, who has over ten years of management consulting experience and three years as COO at Morrison Wealth and now oversees the wealth management sector at Alvarez & Marsal, notes the stark level of inequality in representation in financial and wealth management advisory positions, with 84% of positions being occupied by men, as per a FOI request by FT Advisor.

King, whose company OBU connects female angel investors to female-founded start-ups looking for funding, emphasises that currently only 14% of angel investors in the UK are women, while in Khemka’s own E2Exchange network of over 24,000 entrepreneurs only 30% are women.

These statistics represent the persistence of gendered inequalities both in the investment women receive and the careers of women in finance and wealth management in 2023.

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Khemka draws attention to NatWest Group’s Alison Rose report, which outlines that, although there’s been significant progress for female entrepreneurs, there’s still a way to go.

The report states that “in 2022, women in the UK established over 150,000 new companies – more than twice as many as in 2018,” and that “all-female-led companies represented 20% of all businesses in the UK in 2022, up from 16% in 2018”.

However, it also notes that “50% of female business leaders and entrepreneurs reported finding access to funding and investment hard in the past 12 months, compared to 40% of their male equivalents”.

For King, this comes down to the fact that, in financial services, the power and decision making is held “within the hands of a very homogenous population of people and the influence of that has meant the way the products are designed the way that services are designed.

“Whether consciously or not,” she says, “we design products in a way that mirrors those who are designing the products. The reality is that they haven’t been designing products and services, particularly in the investment space, for both women entrepreneurs and women angel investors. And that’s what really drives this extreme level of inequality.”

The language used in conversations with women about money is one reason for this persisting gap, Orji believes, warning that firms need to be careful of the overuse of jargon.

She says firms need to speak simply and avoid using jargon unnecessarily actually – without this being a matter of “dumbing down” language.

“I’m always really clear on that because women are more than capable of understanding clear language, but when it’s just unnecessary terms actually it’s sometimes used as a mask.”

The importance of representation

For Orji, there should be an emphasis on ensuring “sufficient representation” and inclusive conversations. Discussing representation in panels and boardrooms, she points to obstacles for female entrepreneurs.

“I call them soft barriers, but, basically, those hurdles that aren’t necessarily explicit so when you go to pitch,” she says. “For example, if you’re speaking to an all-male panel, if you’re focusing on a product that is focused on women, the likelihood of getting an investment is much more limited.”

Corroborating this, Khemka outlines that it’s not necessarily conscious discrimination within fundraising, explaining: “I think it’s more of an unconscious bias. You look at how investment committees are set up in venture capital firms and private equity firms. You don’t have equal representation of men and women making that investment decision. So, we are still in a period of needing more support for making investments into female-led companies.”

She adds: “There’s been a big agenda around getting more women into science and technology in the stem. In a similar way, if there’s an agenda to encourage more women to go into the field or not banking so much, there are a lot of women in banking, but less so in investments, as in private equity, venture capital, and family office. So more female investors starting earlier would be my strong suggestion.”

The Alison Rose report indicates that £250bn ($305bn) could be added to the UK economy if women in the UK matched men in starting and scaling businesses – and Khemka emphasises that its platforms like E2Exchange can facilitate this.

E2Exchange is focused on creating an expanding network for entrepreneurs to raise funds and seek specific advice about starting and scaling up businesses. It ensures that there is ample female representation at the networking events it hosts and has been publicising the representation of successful women in finance with its Female 100 List in The Independent.

The need for education

Khemka, Orji and King all stress the importance of education and representation in addressing the gender gap in wealth management – and wealth management firms, King says, should “recognise the size of the opportunity”, with women set to control £30trn ($37trn) by 2030 due to the wealth transfer that is underway. Similarly, Orji notes that women will control 60% of the wealth by 2025.

Our education system today is as far as I’m concerned, failing young people when it comes to financial education,” says King.

The three highlight several platforms and initiatives tackling the educational and representational issues head-on. King’s firm OBU has worked towards this by helping to extend the SEIS deadline from two years to three years accounting for the various barriers women face in getting seed investment, such as time spent childcaring and not being taken as seriously by investors, therefore needing the time to approach more.

Orji and Khemka highlight Girls Are Investors, Vestpod, Enter The Arena, WEALTHiHER, Black Women in Asset Management (BWAM), Go Henry and Female Invest as organisations all doing great work to boost education and representation of women.

Orji also emphasises the importance of mentorships and community in addressing the gap, particularly for those wanting to pursue a career in wealth or asset management.

What can wealth management firms do?

The Alison Rose Report provides actions and tangible goals for closing the gender gap. One is to increase the pool of female angel investors from 14% to 30% to 2030 through the Women Backing Women campaign, which OBU and E2Exchange are both helping to address.

The report also highlights the need for greater amplification of opportunities offered by the EIS and the SEIS to women and increased awareness of diverse UK focused funds.

With women “accumulating wealth at astonishing rates”, King emphasises that “there is an opportunity here for wealth management organisations to be real change makers and market leaders in terms of recognising that growth and recognising that there is an opportunity to offer new products and services to that audience.”

She adds: “I think that it requires an acknowledgement that a woman’s life experience around money is different. Therefore, those well-thought organisations need to really lean into understanding what that experience is. Fundamentally, if you’re not redesigning your product or your proposition in some way, then you haven’t understood that life experience well enough.”

In this respect too, Orji notes that financial advisors need to consider that women live longer so need to plan more thoroughly for their retirement and that this must be integrated into financial advisers’ responses.

Khemka, meanwhile, elucidates that the female approach to choosing wealth management boutiques is different too, adding: “there’s a lot of due diligence, that when women are thinking about where to go, they do more due diligence than probably men do.”

Elaborating on this, King calls for a greater appreciation from wealth management firms that women’s motivations for investing are not necessarily just for financial gain.

“Within the wealth sector, we need greater validation of the reasons women choose to invest that wanting to invest with purpose and with impact,” she says. “Beyond just financial return, there are entirely valid motivations for wanting to invest. Sometimes angel investment focuses on purely that financial return – and, of course, financial return is a key part of being an angel investor – but it’s not the only part. What we know is that for women, there is there is that real breadth in their motivations for wanting to start angel investing.”

King also mentions conversations with women who had never heard of the SEIS and certain tax incentives, suggesting that wealth advisors need to provide greater education about these sorts of schemes. Both OBU and E2Exchange have been working to raise awareness about these schemes and talk to the government directly about the female investment gap and generate solutions.

The role of technology in tackling educational and information gaps in wealth management and financial advice is also key, Orji argues.

“Technology has the ability to actually really help the wealth management sector to become more sustainable in the sense that it can help close the financial advice gap,” she says. “Fundamentally we can look at different pockets of society, whether it’s women or ethnic minorities, but essentially the structural problem exists.

“It’s not just about gender and race, it’s about a more fundamental challenge that industry faces.”