How women-led fintechs are combating the gender wealth gap
Female-led fintechs use digital platforms to curate content and tools aimed at deconstructing systemic issues that have kept women from investing
An unprecedented amount of assets — approximately $30 trillion — will shift into the hands of women by the end of the decade. Yet, the industry faces an uphill battle as the statistics of women and their lack of financial engagement are staggering. Women comprise more than half of the population and workforce, and 46% of women say they value financial security. But research by U.S. Bank shows that nearly half of women (47%) associate negative words like “fear, anxiety, inadequacy and dread” with financial planning, according to the survey.
On top of that, women are less confident about managing money — just 23% of women say they feel very financially prepared (vs. 34% of men), 19% consider themselves financially savvy (vs. 33% of men), and 47% say they feel confident in their ability to manage their finances (vs. 61% of men).
These stats reflect decades of larger systemic issues that have enabled the financial services industry — alongside society — to build constructs that cater to the financial betterment of men and have historically kept women at a disadvantage.
For example, the gender pay gap — that 82 cents women earn to a man’s dollar — and the more important gender wealth gap, which shows women keep 32 cents compared to a white man’s dollar.
Different cultural expectations have contributed to this disengagement, too, as women typically enter the workforce later to take care of a family, putting them at an immediate disadvantage once retirement hits.
In fact, retirement savings provide a more striking contrast: Working men report median retirement savings of $120,000, which compares to $60,000 for working women, according to a study by Wells Fargo released Oct. 21.
Factor in the market volatility spurred by the pandemic, and women — especially women of color — are disproportionately impacted as they lose their jobs at higher rates than men.
Still, money is power and the sheer amount of wealth that is — and will be — in the hands of women means women today could have the power to use money to influence society, said Gunjan Kedia, vice chair of Wealth Management and Investment Services at U.S. Bank.
“By taking a few simple steps to engage more and earlier with money, we can get there,” she said.
POPULAR FINTECHS
Today, content is king and modern fintech’s are leveraging digital platforms to push out content and services in an effort to turn the conversation into more than just words.
Sallie Krawcheck, co-founder and CEO of digital investing platform Ellevest, the robo-adviser built by women, for women, has dedicated the firm to offer investment and banking products built with a gender-aware investing algorithm while understanding that “financial equality equals equality,” she said.
Ellevest was born because of the industry’s negligence to offer women a product service experience that will encourage them to invest, according to Krawcheck.
“In an industry where 98% of mutual fund dollars are managed by men, and 86% of financial advisers are men, and 99% of investment assets are managed by companies owned by white men — maybe the underlying product was built with men in mind,” she said.
Additionally, Ellevest pushes out financial literacy content to its 90,000 customers through a weekly newsletter — oftentimes written by Krawcheck herself — and curates educational content through regular posts on its Instagram account, which boasts nearly 200,000 followers.
“We’re moving from being a digital-first investing platform to a true financial wellness platform where she can access the services, the products, the knowledge, the insights, the coaching for her to know all things money,” Krawcheck said.
Clearly, Ellevest is on to something, as the startup’s growth has catapulted the robo-adviser to a seat at the table with Betterment and has ranked in the top 10-performing robo-advisers, leapfrogging Wells Fargo, Wealthsimple, SoFi, Wealthfront, Merrill Edge and Schwab, according to Backend Benchmarking’s second-quarter Robo Report.
Not to be outdone, Robinhood, the heavyweight champion of free trades and one of the most popular financial-services apps among young adults, has taken steps to use its platform and technology to fill the gap, according to an Oct. 22 blog post.
Robinhood, which polled 2,200 adults in September, found that 43% of women haven’t invested because they think they don’t understand the stock market, only 28% of women feel empowered to invest and 33% of women are confident in their ability to invest their money.
“While many women are interested in investing and view it favorably, fewer are getting direct experience investing,” according to the blog post. “3 out 5 of women we surveyed (60%) have never invested in individual stocks, mutual funds, options, bonds, crypto, or ETFs.”
Throughout the blog post, the fintech touts its financial education resources including a learning hub, podcast, newsletter and video series, saying that “this gender gap can be solved in part through a foundation of financial education and hands-on investing experience,” the company wrote. Moreover, Robinhood says its fractional shares and recurring investments can help increase female investing habits over time.
APPS TACKLE RETIREMENT
Wells Fargo’s study found that women are less sure if they will be able to save enough for retirement, and appear to be in a more precarious financial situation than men. Barely half of working women (51%) say they are saving enough for retirement, or that they are confident they will have enough savings to live comfortably in retirement (51%).
In addition, women affected by COVID-19 are less likely to have access to an employer-sponsored retirement savings plan (59%), and are less likely to participate (77%).
Female-led fintech IncomeConductor is looking to transform the retirement savings industry for women in the age of COVID-19 with its integrated retirement planning software.
The startup designed IncomeConductor to allow financial advisers to illustrate their retirement savings plans to their clients during Zoom meetings, according to founder and CEO Sheryl O’Connor. The software is a proprietary, cloud-based tool that lets advisers, firms and individuals create customized, time-segmented income plans that can be efficiently and compliantly tracked and managed throughout retirement.
The fintech also trains its advisers to understand that when working with a hetereosexual couple approaching retirement, there’s a much higher probability of the man dying before the woman. “We train our advisers to make sure they’re engaging with the wife so when the husband passes on, the wife will be comfortable sticking with the adviser,” O’Connor said.
IncomeConductor produces content, too, sending weekly five-minute videos called “Tuning Tips” to advisers that explain how to deal with different client situations. For example, it will show them a situation where there’s an unexpected death of a spouse and the adviser has to make decisions with the wife.
“What’s the social security situation going to be? How does the budget change? This is a situation where you’ll make a decision about pension or spousal benefits,” O’Connor said. “These are decisions that will need to be made up front and you’ve got to always keep that in mind — she’s got to be taken care of right out the gate.”
Fledging retirement app, Silvur, aims to use its baby boomer friendly technology and interface to power women in retirement to take ownership of their finances, according to CEO Rhian Horgan. “What we build out is basically a simulation of how long their money will last in retirement,” she said.
“When I say we’re designed for baby boomers, it’s not only helping them navigate financial decisions, but it’s the technology — the user experience of the tech has been designed for baby boomers,” she said. “Baby boomers are not on TikTok, but they’re on Facebook — so they’re online, just in different places.”
The app, launched in April, already has 55,000 users and has created more than $12 billion in retirement-plan assets, according to Horgan. Silvur is currently available for download on iOS in the Apple App Store.
Silvur’s technology has quickly gained the attention of media luminary Katie Couric, as her media brand announced a content partnership with Silvur in September. Through the partnership, Silvur produces content featured by Katie Couric Media through its daily newsletter, Wake-Up Call, which Couric pushes out to her 1 million Instagram followers and 1.7 million Twitter followers.
“Running out of money during retirement is one of the biggest psychological drains on people today,” Couric said in Wake-Up Call. “People who are nearing that period need tools to make sure that won’t happen.”
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