Women lacking confidence when investing: Vanguard

The majority of women are less optimistic about their financial decision-making than their male counterparts, new research reveals.

Vanguard’s latest How Australia Retires study, which surveyed over 1,800 working and retired Australians, reports women are lacking confidence in their financial abilities.

Only 33 per cent of female respondents felt “very” or “extremely confident” about making decisions related to managing their finances, compared to 50 per cent of men who indicated the same.

On the other end of the spectrum, 23 per cent of women were “slightly” or “not at all confident” about their financial decision-making, compared to only 11 per cent of men.

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The figures also highlighted that women’s confidence levels weakened when it came to investment products and services. Almost half (47 per cent) responded “not at all confident” in understanding stocks, while 64 per cent said the same for bonds.

In comparison, just 22 per cent of men were “not at all confident” with stocks and 37 per cent with bonds.

One-fifth of female respondents were not at all confident in understanding superannuation, while just 8 per cent of men felt the same.

“Many studies including Vanguard’s own investor data show that women are typically very disciplined investors. They are less likely than men to take on too much risk and tend to maintain a long-term view rather than engage in trading behaviours to score a quick return,” said Shannon Nutter, executive consultant at Vanguard.

“These traits are considerable strengths which can enable women to take charge of their own financial lives.”

Nutter recognised the wide spectrum of circumstances preventing women from being on equal footing when it comes to retirement preparedness. 

“On average, Australian women earn 13 per cent less than their male counterparts, often work in industries with lower wages, take time off to manage home-related issues, care for children, and live longer,” she said.

“All this means that women need to save or invest more to retire well, but have less assets to start with.”

In May, Vanguard’s report highlighted that Australians with a clear retirement plan had the highest levels of confidence about their future. 

This included seeing a financial adviser, having a detailed plan, and making extra superannuation contributions on a regular basis.

The firm’s newest study revealed that nearly 46 per cent of women “had no plan” or “did not know what they needed for retirement”. 

For their male counterparts, 73 per cent exhibited having a “general”, “good” or “exact plan” for how they will financially prepare to reach the retirement lifestyle they want.

“We all need to take ownership of our financial futures and take actions that will help us retire the way we envision. This might mean women, whether single or partnered, take time to understand the different aspects that contribute to retirement. 

“For instance, being aware of their household finances, getting smart about debt, planning and seeking advice, investing regularly, making additional contributions to super and getting comfortable with negotiating better compensation,” the executive consultant continued.

A majority of pre-retirees have never consulted a financial adviser. However, this figure was particularly higher for women at 70 per cent, compared to 56 per cent for men. 

“This analysis has highlighted the areas in which the industry can provide for female clients to ensure everyone, equally, can move more confidently towards a great retirement,” Nutter said.