The Financial Services Sectors’ Role In Closing The Gender Wealth Gap

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Tamara Kostova, CEO of Velexa, empowers institutional clients through customized and embedded investing services.

While the gender pay gap has garnered significant attention, there is another equally critical issue that deserves recognition: the gender wealth gap.

After working in financial services for two decades, I not only see this at macro scale but even in my day-to-day interactions. It’s not enough to just talk about what women are earning, but also what they’re keeping and how they’re growing what they’re keeping.

What’s The Difference?

The gender pay gap refers to the disparity in average earnings between men and women in the workforce. It is influenced by various factors, including occupational segregation, discrimination and limited access to promotions and leadership positions.

Despite the attention it has received recently, not much has changed in the past two decades. Currently, women in the U.S. earn, on average, 82% of what men make. It is slightly better in the U.K., at 91%.

The gender wealth gap, on the other hand, highlights the difference in accumulated assets, investments and overall net worth between men and women. That gap is even bigger. The 18% pay gap translates to more than $400,000 of missed wealth over a 40-year career. In the U.S., women-headed families only have 55% of the median wealth as compared to families headed by men.

Similarly, the gender wealth gap is influenced by factors such as lower earnings, longer life expectancy for women, caregiving responsibilities and lower investment participation rates. Women, and in particular, women of color, are not able to get onto the “wealth escalator” of government benefits, tax breaks and employment-related benefits that help men build wealth.

Several factors contribute to why this is the opportune moment to address the gender wealth gap.

1. The rise of more accessible investing products, including robo-advisory platforms and fractional investing, has democratized investing and made it more inclusive.

2. Market fluctuations and technological advancements have created greater potential for larger investment gains.

3. The closing of the gender pay gap enables women to have more disposable income, providing an opportunity for wealth accumulation.

Different Risk Profiles Play A Powerful Role

Women are not a homogenous group, but because of embedded cultural norms, they do tend to be more conservative financially than men in general. According to one survey, less than half of women invest in the stock market, while 66% of men do. This also comes through in workplace pension plans, where women tend to hold more cash. However, equities, in the long term, are the top-performing asset class, which means men’s investments outpace women’s.

The way that wealth advisors approach women is also different. Even the industry itself only has 24% women, which makes it more difficult to work with someone a woman trusts and understands their journey.

Furthermore, women may have a strong sense of loss aversion or regret aversion and so may feel less confident to challenge what their wealth advisor recommends. Ultimately, this makes a difference in portfolio performance over time.

Closing The Gap

Education plays a vital role in closing the gender wealth gap. By providing financial literacy programs and investment education tailored to women, we in the financial services sector can empower them with the knowledge and confidence to make informed investment decisions.

This means specific and contextual programs, such as in the workplace, starting as early as high school or university. A number of supportive communities, both virtual and local, have started popping up, such as women-focused investment clubs or mentorship programs, which foster collaboration, networking and shared learning.

Creating investment products that cater to women’s specific needs and values is also crucial. For example, offering environmental, social and governance (ESG) focused investment baskets aligns with many women’s preferences for values-aligned investing. Robo-advisory platforms can also incorporate personalized features that address women’s unique financial goals, risk tolerances and life circumstances.

Building home and business equity can also make a difference. For Americans, much of wealth is the form of the primary residence. More single women own homes than single men in the U.S. and have, on average, a better repayment history, but they are more likely to be denied a mortgage. Those offering these mortgages should re-evaluate their processes and practices with a mind toward supporting women.

The number of women-owned businesses has grown, but most produce less wealth for their owners. Furthermore, venture capitalists put only 2.1% of all invested capital in women-led startups, despite data that women-owned businesses generate 10% more in cumulative revenue over a five-year period. These practices must be reconsidered so that women can build more business equity by retaining more equity, focusing on high-growth industries and considering exit strategies.


Closing the gender wealth gap is an essential step toward achieving economic equality. Wealth is something that needs to be built over time and can be used in emergencies, such as the Covid-19 pandemic, or passed to future generations. Therefore, we need to start laying the foundations to change the current state in order to do the long-term work of gender equality.

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