Honing equality, forging growth

Bridging the gender wealth gap isn’t just an issue of conscience. As Claudia Goldin’s work demonstrates, economic success sows the seeds of equality. Once in place, that hard-won equity also creates opportunity and propels growth on a corporate and national level. The subject of female inclusion is no longer a sub-category but part of a wider conversation. The International Monetary Fund (IMF) has stressed the “macro-criticality” of increasing equality in the economy calling it “an economic imperative”. “Over time, gender-sensitive macroeconomic and financial policies will result in higher growth, greater economic stability and resilience, and lower income inequality – a dividend not just for women, but for everyone,” wrote the IMF’s managing director, Kristalina Georgieva, in a joint letter with her colleagues Antoinette M Sayeh and Ratna Sahay.

These goals might seem elusive but the potential economic returns are vast. In 2022, UBS’s Women and Investing report found that if women invested at the same rate as men it could create more than $3trn (€2.7trn) of additional global capital for investment. Female Founders First, a UK-based community dedicated to empowering female entrepreneurs, estimated that there would be an additional zł‌1,500.00bn (€298bn) added to the UK economy if women-founded and women-led businesses had equal access to investment.

There is data to suggest that women invest the fruits of their success back into society differently from their male counterparts. This is what Ngozi Okonjo-Iweala, director general of the World Trade Organization, calls “smart economics”. “Studies have undoubtedly shown that empowering women is smart,” she said on The European Central Bank (ECB) Podcast in 2023. “Women plough so many of their resources back into their family and their community, educating their children better and faster. It’s smart for the family, the community and the country.”

Weaving networks of expertise

Setting women on a path to financial equality means narrowing the funding gap, a chasm that looms large when it comes to investment. In 2023, companies founded solely by women received just 2 per cent of the total capital invested in venture-backed start-ups in the US and Europe. For economists, changing this narrative is crucial. “We need women to take their rightful place in the jobs and applications that will define the future,” said ECB president Christine Lagarde on International Women’s Day earlier this year. “We know that we need more entrepreneurs in Europe because it is the key to job creation, competitiveness and prosperity, but we are not getting the most out of female talent to reach these goals. The share of female start-ups stands at 23 per cent in the US and 11 per cent in the EU. One reason is that female entrepreneurs find it significantly harder to attract capital. Confidence is a key ingredient that is often missing.”

For Marianna Mamou, head of Advice Beyond Investing, Chief Investment Office at UBS, changing the narrative requires threading together a web of confidence and contacts. “Research shows that having a strong network plays a critical role in deal sourcing and investors’ decision-making – men are much more likely to have such a strong network,” she says. “It is important that we raise awareness and showcase more female role models. We need to change the perception of what a successful founder looks or sounds like. Education around the financing process can help reduce biases.”

“All of us would benefit by eliminating this funding gap,” says Mamou, who adds that female founders are more likely to create new jobs, help local economies and reinvest their earnings into the health and education of their families. “Besides the obvious moral imperative, this is a great business opportunity. Boston Consulting Group found that, on average, women generate 78 cents of revenue per dollar invested, compared with 31 cents for men,” says Mamou. “If women and men were to participate equally as entrepreneurs, global GDP could rise by 3 to 6 per cent, boosting the world’s economy by up to $5trn (€4.56trn).”

Crafting a stronger future

Labour participation and long-term financial strategy are key strands in the quest to create a durable legacy. A recent report published by the UBS Chief Investment Office, Women and Investing: Achieving Lifetime Goals, sheds light on the wealth-accumulation challenges that women face and the impact that these have on future objectives – retirement, in particular. The report cited data from the Organisation for Economic Co-operation and Development (OECD), which showed that women over the age of 65 on average receive 26 per cent less income than men from the pension system in OECD countries.

Creating financial equality is about taking the long view, allowing women to build and manage their legacy and prospects on a par with men. Emma Wheeler, head of Women’s Wealth, UBS Global Wealth Management, outlines the complexity of challenges facing her female clients. “Some say the gender gap can start as early as the pocket-money stage,” she says. “Women have to contend with a pay gap, career breaks, maternity, and the propensity to work part-time. It’s not about fixing women. It’s about fixing the industry.” 

In Wheeler’s eyes, understanding financial health is as fundamental as understanding physical health. “The more engaged a woman is in her long-term financial planning, the happier and more confident she is,” says Wheeler. “Research proves this and yet we see a lot of women hesitate before even talking to a financial advisor.”

Understanding the deep-seated issues at stake is a craft as well as a science. UBS draws on data insights and expertise but also an intuitive approach to building profound trust with clients. It pairs a long view and sense of the bigger picture with attention to the smallest details. “We have been driving behaviour change with our client advisors globally to have the right conversations with our female clients,” says Wheeler. “This is what will drive growth for us: 45 per cent of our clients globally are women now, which has grown by 5 per cent in the past three years because of our approach. By 2025, 35 per cent of global private investible wealth will be in the hands of women. These facts, coupled with the Great Wealth Transfer, the demographic shift between Boomers and Gen Z, mean that women will control the lion’s share of private wealth over the next 20 to 25 years.”

Providing sound, intuitive and considered advice is crucial to growing any portfolio. And Wheeler is committed to making those opportunities accessible to all. “Ensuring that we continue to best serve our female clients is a priority for us,” she says.