IWD 2025: Shepherds Friendly’s Ann-Marie O’Dea explains why the investment gap matters as much as the pay gap

March 8, 2025

With today being International Women’s Day, Ann-Marie O’Dea, CEO at Shepherds Friendly and Chair of the Association of Financial Mutuals Board, says the industry needs to consider not just what women are paid, but also how they invest.

We talk a lot about the gender pay gap, especially around high-profile initiatives such as International Women’s Day. What’s less discussed – but equally important – is the gender investment gap. An individual’s financial future is not determined solely by how much they are paid, but also by how their wealth is invested; both aspects are important in creating financial resilience.

Research we carried out at Shepherds Friendly last year found that women were significantly less likely than men to invest, and they were investing lower sums. Our survey of 2,000 people found that of the 39% of Brits who chose not to invest, 61% were women. On average, the women who were investing were putting away 44% less per month than men.

There are clearly some structural factors at play here. In the UK, women still earn, on average, 7% less than men, according to the Office for National Statistics. And women continue to do the bulk of the heavy lifting when it comes to childcare – in fact, Centre for Progressive Policy research found they provide twice as much unpaid childcare as men.

It stands to reason that if women earn less than men and spend more of their time on unpaid work, they are likely to have less money to invest than men. However, there are also other, non-structural factors at play here. Our research found that women were more likely to have a lower tolerance to risk than men.

ISA statistics published by HM Revenue and Customs last year correlate with our survey findings. Its data showed that in the 2021 to 2022 tax year, only 43% of stocks and shares ISA holders were women. Furthermore, the average market value of an ISA held by women was over £3,000 less than men.

These insights highlight the need for targeted financial education aimed at women. However, we need to do more than just educate; we need to properly cater for them.

Change starts from within

For a start, we need to make sure the structure of our organisations is appropriately balanced so that when women turn to us, they feel we reflect our diverse customer bases.

The financial services industry has historically been one of the least balanced on the gender front, with a long-established lack of women in both the industry and particularly in leadership. In addition, an analysis of mandatory pay gap reporting figures by PwC last year found that financial services had the largest gender pay gap of all the sectors scrutinised.

As both the PwC analysis and last year’s Treasury Select Committee report ‘Sexism in the City’ note, the industry is making progress, but there’s still some way to go.

As a female CEO in the financial services space, I’ve long been committed to increasing female representation in my own organisation.

We’ve been part of the Women in Finance Charter since 2019. This initiative was launched by HM Treasury and New Financial “to build a more balanced and fair industry”. As part of our pledge, we’re committed to creating an environment where all our people feel valued and motivated to achieve the best possible outcomes for our members.

We’ve made sure we offer equal pay for people in similar roles at the same level, and we also have a flexible working policy to support all working parents.

Our recruitment processes involve advertising on gender-specific job sites, and we actively try to encourage female applications for all roles, but particularly those where there is still a significant gender imbalance, for example, IT and development.

Understanding different types of investors

But part of bridging the gender investment gap entails ensuring we understand how women differ from men and making sure that we don’t simply try to convince women to invest in the same way as men.

To some extent, industry-wide initiatives are ensuring products are becoming more accessible. Consumer duty, for example, reinforces the importance of providing information that is more targeted to the various groups of consumers.

Initiatives such as the Fairer Finance Clear & Simple Mark – which we were awarded towards the end of last year for a range of our ISA documents – are helping remove unnecessary complexity and provide clearer communication.

But we can go further and there is evidence to suggest we should. For example, research from Hargreaves Lansdown found that many women were deterred from investing due to the language used in documentation. It is now sponsoring a project that is trialling new wording aimed at more cautious investors.

So far, the results are encouraging – early data shows that changing risk warnings can increase the amount invested instead of left in cash by 10%, but that this increases to 21% for women. We are closely watching such developments to see if there are learnings we can take into our own organisation.

Picking your products

We are also working on our product range and developing options aimed at more cautious investors, partly as a means to appeal to women. Both our research and HM Revenue and Customs’ statistics suggested that women were drawn to lower-risk means of building their wealth.

However, simply educating women on why the cash ISAs both datasets found women were drawn to are not the only way to secure their financial future is not the answer; we also need to design replacement products that cater to women’s more risk-averse approach.

There is, in fact, evidence to suggest that over the long term this approach may pay the biggest dividends. In 2018, the University of Warwick’s Business School carried out a deep dive on 2,800 active investors and concluded that women’s investment style often outperformed men’s.

It measured investors’ performances against the FTSE 100 over a three-year period and found that women outperformed the index by an average of 1.94%, much higher than the average for men of 0.14%.

The researchers connected this to the fact women took a longer-term view, whereas men were more likely to engage in speculative investment behaviour.

If women have the innate ability to invest wisely and all that’s missing is for the financial services industry to nudge them in the right direction, imagine what could be achieved in future? We may be able to improve women’s financial prospects immeasurably if we can close that gap.

Ann-Marie O’Dea