Women don’t invest in the market at the same rate as men, and the reasons for this are more nuanced than lower earnings power.

Experts point to factors like how women are perceived and treated by the investment community, among other hurdles for this gender investment gap.

The investing disparity is stark: If women invested at the same rate as men, there would be at least an additional $3.22 trillion in assets under management from private individuals, a report from BNY Mellon Investment Management found. The firm’s global survey, fielded in 2021, included 8,000 men and women across 16 markets. BNY Mellon also interviewed 100 global asset managers with $60 trillion in assets under management.

When it comes to saving for retirement, American women are less likely to invest in an employer-sponsored plan or a brokerage account, according to the Transamerica Center for Retirement Studies. The 22nd annual survey of workers, released in November 2022, was conducted within the U.S. by the Harris Poll between Oct. 28 and Dec. 10, 2021, among a nationally representative sample of 5,493 workers.

The result is women, who on average live longer than men, are less likely to be prepared to retire when they want. Some 53% of women feel financially comfortable about retiring at their target date, compared with 66% of men, a survey from BMO found. The survey, conducted by Iposos from Jan. 16 to Feb. 12, polled a sample of 3,401 U.S. adults.

Women face a number of barriers when it comes to investing. One is that the investment industry isn’t engaging women to the same degree as men, BNY Mellon’s research found.

According to the global survey, one in ten women feel they don’t fully understand investing and only about 28% feel confident about investing some of their money. In the U.S., some 41% of women feel confident.

Yet 86% of asset managers surveyed said they are targeting a male customer, the survey found.

In fact, most U.S. financial advisors are male — just 35% were women in 2022, according to the Bureau of Labor Statistics.

Then there is the high hurdle of the disposable income women think they need to have before they invest. On average, women around the world believe they need $4,092 a month before they would consider investing any of it, BNY Mellon found. In the U.S., women, on average, think they need over $6,000 a month — or just over $72,000 per year.

On top of that, more than a quarter of the women surveyed described their financial health as poor or very poor, said Stephanie Pierce, CEO of Dreyfus, Mellon & Exchange-Traded Funds at BNY Mellon Investment Management.

“If women don’t think they have great financial health and they have this very high [disposable income] hurdle, that’s a barrier that is really going to stop people from entering the financial markets,” she said.

Lastly, 45% of the women surveyed by BNY Mellon said that investing money in the stock market, through an individual security or a fund, is too risky.

However, a Morningstar survey found the gender investing gap simply comes down to the fact that women statistically earn less money than men. The firm surveyed 907 U.S. residents, including 437 females, last year.

“Once you control for income, many of those differences between men and women and investing behaviors kind of disappear. So they either become no longer statistically significant, or they’re not practically significant,” explained Samantha Lamas, a behavioral researcher at Morningstar.

In other words, when researchers compared the investment behaviors of men and women by income bracket, they found they saved and invested similarly.

“The problem was that men just made up a lot of that higher income level bracket,” Lamas said.

In fact, the gender pay gap hasn’t moved much in the past 20 years. Women, on average, earned 82 cents for every dollar earned by men in 2022, according to a Pew Research Center analysis of median hourly earnings of both full- and part-time workers. In 2002, women made 80% of what men earned.

Yet, financial advisors still perceive women differently than men, Lamas said.

“Female investors have in the past reported that advisors assume that they have a low-risk tolerance and are interested in sustainable funds, as soon as they walk in the door,” she said. “That’s a generalization that I think oversimplifies the situation. The truth is, it’s much more nuanced.”

For instance, Morningstar has found that interest in ESG investing was pretty widespread, with gender and age not really a factor.

However, BNY Mellon’s global survey found more than half of women would invest, or invest more, if the impact of their investment aligned with their personal values. They would also invest if the investment fund had a clear goal or purpose for good.

The firm calculated that of the $3.22 trillion that would enter the market if women invested at the same rate as men, $1.87 trillion would flow into impact investments benefiting people and the environment.

To get more women investing, a more inclusive financial community needs to be built, experts said.

“We need more women financial advisors. That is one of the easiest ways to close the gap,” said Beata Kirr, co-head of investment strategies at Bernstein Private Wealth Management and host of the firm’s “Women & Wealth” podcast.

In fact, nearly three-quarters of the asset managers in BNY Mellon’s global survey said they believe the investment industry would be able to attract more women investors if the industry had more female fund managers.

Male advisors also need to understand that their own income and economic success can be hurt if they effectively ignore women, Kirr said. More women are coming into wealth, whether it is through founding businesses, climbing the corporate ladder or an inheritance, she noted.

“One fact is very clear. Women outlive men,” Kirr said. The average life expectancy for women is 79 years, compared with 72 years for men, according to the Centers for Disease Control.

In fact, by 2030, women are expected to control much of the $30 trillion in financial assets that baby boomers possess, according to McKinsey & Company. The firm’s 2020 report said it is “a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States.”

Then there is the financial jargon that professionals tend to use. Some 31% of female consumers in the BNY Mellon survey said that overly complicated language, which can be unclear or confusing, dissuades them from investing or investing more than they currently do.

“You see language like asymmetrical risk/reward, risk-adjusted returns, alpha generation, right? Relative outperformance, tracking error, dispersion, downside protection. We use these words to describe really simple things in very complex ways,” Pierce said. “It’s not helpful and it can put off people that don’t understand it, women included.”

The investment community should also be providing more opportunities that interest women, she added, pointing to BNY survey’s findings that more than half of the women around the globe are interested in impact investing.

“We do believe that a part of the call to action is to deliver solutions that meet the need for women who want to have a financial return and social impact with our money, or a socially responsible investment,” Pierce said.

To that end, BNY Mellon recently filed to launch the BNY Mellon Women’s Empowerment ETF, which will invest in companies that demonstrate gender equitable practices and/or offer products that support women’s day-to-day needs.

For Morningstar’s Lamas, the solution to eliminating the gender investing disparity is to close the gender pay gap.

“That means that we need these structural changes. To make an impact here, we need to get women to get paid more,” she said.