Women Investors are a Force to Be Reckoned With

Something strange is happening.

It may be received wisdom that women tend to invest less than men, and that when they do they are more risk averse, but something is up. Something is changing and it’s changing in a pretty fundamental way that might mean we’re on the brink of a massive shift in the world of finance.

As a relatively new peer-to-peer business lending platform we are extremely keen on data because it helps us understand our market, and ensures we aren’t making any unfounded assumptions. This is why we commissioned some research into British people’s investment habits last month. And it turned out to be quite an eye opener revealing that a few surprising changes are afoot.

Alternative finance – no gender divide

Women Climbing RiskWomen investors are becoming a force to be reckoned with as the number of women taking charge of theirs or their household’s finances grows.  The number of single women has nearly doubled in the UK in recent years (ONS 2015 statistics) and one in four young women are out-earning their partners (LV= survey 2015).  So perhaps the most interesting figures in our data were those showing the stark contrast between men and women in terms of alternative investment and more traditional investment.
Whilst men are nearly twice as likely to hold stocks and shares as women (33% versus 18%) men and women are equally as likely to have participated in a crowdfunding or a peer-to-peer lending opportunity. In fact, nearly one in ten of us have done so regardless of whether we’re male or female.

So this begs the question, of course, what is it about P2P lending and crowdfunding that appeals to women in a way that the stock market doesn’t?

I guess we, along with our competitors, would like to argue it’s everything to do with the transparency of information offered by investing via P2P and crowdfunding. Plus, of course, the quality of the business lending opportunities we offer with decent rates of return – maybe women are just very attuned to spotting a good deal?

But a quick poll round the women in our office (highly unscientific but interesting nonetheless) suggests it may be something else as well. It probably also has a lot to do with the lack of intimidation.

10£ Queen Elizabeth British PoundsThe City has always been largely the preserve of men. Certainly in all the years that my business partner, Mark Bristow, and I have worked there, we’ve never worked in a female dominated environment. Not even come close to it, in fact. Although this is now changing, the process of change is slow, and there are probably still too many hangovers from the past, including public perception, which means the City and everything it does are still seen as male dominated.

But maybe not so in crowdfunding or P2P. Maybe the innovation taking place in this sector has been enough to ensure it is more progressive and less likely to assume any of the bad habits which are perhaps so ingrained, and therefore harder to shift, in the more traditional investment world. So it could be as simple as our industry doesn’t have to overcome any assumed barriers to entry. It’s just simply a more democratic system that neither favours, nor discriminates.

Deciding where and how to invest

Dig ShovelIf we dig a little deeper into our findings we can see that men and women do share a lot of investment habits. For example, there is very little difference between the genders in terms of looking at whether an investment is ethical. Although this is often a low priority, it is equally low regardless of gender. And indeed there is not a huge amount of variation about this in terms of other ways of viewing the data, such as by geography. In fact it’s only really age which plays a role in defining different groups when it comes to ethical investing – 18-24 year olds are twice as likely to be concerned by this as the over 55s.

Similarly the genders show very little difference in attitudes towards making investment choices based on whether they are good for British business in general.
One area where women do differ from men is in how they approach the investment decision making process.

There have been plenty of studies in the past showing that women are more risk averse, although recent work has also sought to disprove this. Our research doesn’t delve into this aspect in the same way, but instead we looked at how we all approach investments. What questions do we ask, and in what order?

Entry Enter GoOverwhelmingly we can see women are much more likely to ask as their first question: ‘What risks are involved with this investment’?  That’s not to say women don’t go on to take up the opportunity, but they primarily want to be making an informed choice.

Men on the other hand think more about the potential upside. Whilst they do, of course, think about things like risk and security, this bit comes a little further into the process with the most likely question a man asks about an investment being: ‘Exactly how much money am I going to make’?

Maybe this difference in approach doesn’t always work in men’s favour.  Often when women do invest they are more successful than men.  Terrance Odean, a US academic working at the Hass School of Business (Berkeley University), conducted an in-depth study of male and female investing differences throughout the 1990’s. His data corroborates ours by showing women are far less likely to hold stocks and shares than men. But he also went on to show that where women did trade in stocks and shares they outperformed men by a full percentage point.

The different approaches by men and women may be subtle. And perhaps in the end it doesn’t matter in what order you ask yourself the key investment questions. As long as you do ask them and that you take the answers into full consideration before investing.

What does this mean for the industry?

I love Peer to Peer Lending P2PAs an industry we are well positioned to appeal to a female audience. As long as platforms provide the kind of information needed to empower investors, then we are doing what we can to suit both the male and female approach to investing.
Couple this with the FCA regulation process, which seeks to ensure retail investors really do have access to fairly presented and accurate information, and the P2P/Crowdfunding proposition gets even stronger. This will only get more stringent for platforms as the UK regulation of the industry really kicks off later in 2015, when direct authorisation becomes obligatory over the interim permissions that most platforms are operating under at the moment.

I don’t want to come across as too evangelical about the whole thing, but it seems there is a real opportunity here. An opportunity for investors, men and women alike, if they choose the platform they invest through wisely, to access really good quality investments offering bank-beating rates of return. And an opportunity for the P2P and Crowdfunding industry to spearhead equality between the sexes, at least in terms of looking after and growing our money.


Karteek PatelKarteek Patel is CEO and co-founder of Crowdstacker, a P2P business lending platform specialising in raising money for large, established businesses.   He has spent his career in London’s Square Mile working in finance, including building a futures and options business, launching hedge funds, developing new financial products, managing a independent UCITS platform and acting as fund manager for a global resources focused fund.


The Crowdstacker research:

  • When investing, men are most likely to prioritise the rate of return, or in other words the amount of money they could make (30%), while most women prioritise how risky it is (31%)
  • Nearly a quarter of women (22%) won’t look any further at an investment unless some form of security is offered, versus less than a fifth of men (18%)
  • Women’s risk aversion may explain why stocks and shares are far less popular with women than men – 33% of men hold these compared to just 18% of wome
  • The research, which quizzed over 2,000 Brits about their approach to investing, found that women also become more concerned about risk as they get older – with one in five (20%) making it their top concern in the 18-34 age bracket, around a third (29%) in the 35-54 age bracket, and around two in five (38%) in the over-55s.

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