Viewpoints

Women, Investing and the Pursuit of Wealth‑Life Balance

Japanese Women Are Empowered and Wish to Invest.

It has been seven years since the Japanese government launched its “Womenomics” initiative, hoping to revive the country’s struggling economy by tapping into the potential of women. While Japanese women have responded with increased participation in the workforce, success has been hindered by employment status and pay inequality. These women are also bearing the brunt of the COVID-19 led recession, accounting for a significant number of jobs lost during the pandemic. When women earn less, they save less and invest less, reducing their overall wealth and their ability to impact Japan’s economy.

Nonetheless, Japanese women are having an increasing impact on the economy and have the potential to become an even more powerful economic force. Understanding their attitudes toward money, wealth and investing will be critical for financial institutions hoping to better serve the needs of these women.

PIMCO sought to understand this further by commissioning a large-scale market survey of Japanese women. The survey collected data from close to 1,500 Japanese adults on their motivations, preferences and concerns related to wealth. Each of the respondents has either sole or joint responsibility for financial decision-making and has investible household assets over ¥10 million.

While this investible asset level is above the national mean (4 million JPY1), it represents the portion of the population most likely to require services from the financial industry. All results quoted in this report attributed to “Japanese women” will be referencing this market segment.

Our findings show that Japanese women are leading demanding, time-starved lives, but they are driven to be financially successful – and they believe that investing can help them get there. And yet, they remain heavily allocated to cash.

The primary reason women are sitting on cash is their skepticism of the Japanese economy, which will likely increase due to the economic impact of COVID-19, but it is not the only reason. Women investors are being held back by a lack of accessible, straight-forward financial education and by the industry’s slow response to their unique goals and performance standards.

In this report, we provide details on the wealth goals of Japanese women and the obstacles they face, knowing that these insights can help PIMCO and the financial industry overall better support women investors.

How Japanese Women View Wealth

WOMEN ARE DRIVEN TO SUCCEED

As of December 2019, 71% of Japanese women aged 15-642 worked outside the home, an increase of more than 1.6 million women over the course of four years2. At the same time, these women remain largely in charge of household responsibilities. Specifically, women report seeing themselves as taking the lead across primary duties (financial, operational, executive and childcare), while men tend to characterize themselves as solely either CFO or CEO of their household.

The combined responsibilities of work and home have created a challenging, time-starved reality for Japanese women, leading three out of every five women aged 18-44 to say that lack of time is often the biggest challenge of their day. Doing less or doing some jobs poorly isn’t an option. 50% of women aged under 45 consider themselves perfectionists. While more than a third of women feel under constant pressure to perform across their roles, they don’t let the competing demands overwhelm them. Instead, these women are driven by their perfectionist nature, with close to 70% saying their multi-faceted role actually motivates them to perform across all areas of their lives.

WOMEN ARE FINANCIALLY AMBITIOUS

Women’s drive to succeed extends to matters of money. Nearly 80% of women say they “want to be rich and are not apologizing for it,” and an even higher percentage say they consider financial success important. These numbers that are consistent across generations and represent a stronger zeal than comparable women investors in the U.S. Japanese women are also confident in their ability to achieve their financial goals. More than half of women expect their overall wealth to increase over the next five years. Younger women are even more convinced, with 68% of those aged 18-44 forecasting increased wealth.

Despite their hectic lives, three out of four women consider money management one of their responsibilities. That means that achieving greater wealth is going to be more than a pipe dream for Japanese women, it will come with a plan and execution. Without counting on an economic recovery, 72% of women aged 18- 44 expect to increase their wealth in part by increasing their savings over the next five years and 63% by increasing investing.

Q: When considering your role in your household, how would you best classify yourself?; 5-year wealth expectations

A Profile of Women as Investors

WOMEN ARE GOAL-ORIENTED AND RISK AWARE

For Japanese women, financial success isn’t simply about accumulating funds, it’s about having the ability to achieve lifestyle goals, and they believe investing is a tool to do that. In fact, 69% say they see investing as an important tool for creating life choices – a number that climbs to 77% among women aged 35-44.

Women approach investing with a strong commitment to purpose. When asked to choose their top financial goals, 42% of women included creating a financial plan that meets short-term and long-term life goals. High on the list of long-term goals is securing the financial future of their children, with nearly 60% reporting that they often think about how to accumulate and pass down wealth to their children.

While women are goal-oriented, they are not focused on beating the market. 76% say they would forgo better returns and assume less risk, even if it takes more time to meet their goals. Overall, they are more interested in improving the quality of their lives than beating the market.

WOMEN INVESTORS VALUE “RETURN ON LIFESTYLE”, RO-L

Women are redefining performance. Rather than focus on target returns, women are goal-oriented and more interested in a “Return on Lifestyle.” 62% prioritize moving toward their personal and financial goals in the long-term over beating the previous year’s performance or the market. Women are also not competitive about investing performance, with less than 10% saying they judge their performance relative to the portfolio performance of a spouse, family or friends.

INCOME IS A PRIORITY

Japanese women across ages and income levels are interested in generating a reliable stream of income, with 60% saying steady income is a top indicator of portfolio success. A desire for income is not related to retirement, either, with 62% saying they agree or somewhat agree that investing can be used to create a source of steady income before retirement.

RETIREMENT IS LESS SO

Retirement is a much-discussed topic within the financial industry but it is not a high priority among women in Japan, where only a third say when they think about investing they primarily think about retirement. Concentrating on long-term goals is always challenging, especially when faced with more immediate financial demands. In addition, Japanese retirees have been able to rely on company-sponsored pension plans to finance their retirements in the past. But, life expectancy is increasing and companies are cutting back on pension plans, prompting the Japanese government to introduce a retirement plan system for the private sector in 2001. There is still a need for more education on this topic, as evidenced by the fact that only 7% of women listed retirement among their top investment goals – a concerning state given that the median age for Japanese women to start saving for retirement is 40, leaving them little time to accumulate the necessary funds.

OVERALLOCATED TO CASH

Japanese women have a positive view of investing and many of the attributes of an ideal investor and yet they are not living up to their potential as investors. Japanese households in general hold over 50% their assets in cash accounts and the level of cash assets has increased further during the pandemic. Women fall in line with this trend, but they recognize they are missing out on opportunities to grow their money. 71% say they feel the need to invest (rather than put funds in savings) because of low / negative interest rates. That number jumps to 80% among women ages 45-54.

Q: When you think about investing, which of the following indicates strong performance?; Assets held by household

Obstacles Holding Women Back

ECONOMIC UNCERTAINY

The primary reason women are sitting in cash is skepticism of the Japanese economy, which has been struggling for nearly three decades, weighed down by little-to-no growth and deflation, and now the COVID-19 led recession. These conditions have discouraged women from investing and may continue to do so, but the cash they hold is not earning them anything either with interest rates below zero.

Even before pandemic, when Japan’s economy had begun to show tentative signs of life, three out of four women predicted the economy will stay the same or decrease over the next five years.

EDUCATION GAP

Beyond the state of the economy, women cite a lack of education about investing as a reason to keep their money in cash. The majority believe that “the financial system feels like it is set up to be confusing,” with 87% saying it’s their perception they need to become an expert to invest in the markets.

Unfortunately, women don’t have a trusted source for the information they need. When asked about their opinions of financial institutions, 56% of women say they feel like they are being sold to rather than counseled and 69% say that there are few options for “fair” financial advice.

In the absence of unbiased assistance, 75% of Japanese women who are committed to investing have turned to their family for financial guidance or taken matters into their own hands, with 85% saying that even if someone recommends an investment to them, they will always do research on their own.

INDUSTRY FRAMEWORK

Japanese women do not believe the financial industry is structured to meet their needs. This attitude is tied to many issues, including logistics, accessibility and approachability, with 60% of women agreeing that the current system doesn’t reflect their lifestyle realities. Japanese women also have difficulties trusting industry representatives, leading nearly a third of women to say that financial institutions could improve by providing greater transparency about where their money is going and why.

Q: Which of the following should financial institutions (e.g., banks, securities firms, etc.) improve to better meet your needs?

Industry Changes to Better Serve Women Investors

How can the financial industry address the investment needs of Japanese women? Structural changes can be slow, but there are steps that asset managers and financial institutions can take now to gain the trust of women.

RECOGNIZE WOMEN’S DEMANDING REALITY

Japanese women are juggling demanding schedules at work and at home, leaving them little time and mind space for managing investments. As a result, nearly four in 10 women say they are comfortable paying someone to manage their investments – if it would save them time. Industry representatives who can give women more opportunities to engage on their own time and terms will garner favor. This could include offering flexible hours and scheduling, as well as online meetings. The flexibility of online meetings are convenient for working women racing between the job and home, and, in a COVID-19 world, they are now widely accepted as an alternative to in-person meetings.

ADOPT A GOALS-BASED APPROACH

The majority of women are looking for the industry to adjust to their purposeful versus cumulative investment goal. Especially in this challenging environment, sales representatives who can shift from a sales-based approach to a goals-based approach, share investment tips and help women investors navigate the uncertainty will have a greater chance of building a relationship based on understanding and shared objectives.

OFFER CASH ALTERNATIVES

Women are eager to move out of cash to increase their return potential but they worry about the economy. Present cash alternatives that focus on what women want: stability and steady income. These options may include financial products and services that offer stability and steady income may better serve women’s needs.

PROPOSE OPTIONS LESS DEPENDENT ON THE ECONOMY

Only time will tell where the Japanese economy, which has been further weakened by recession, will go and how long it will take investors to feel confident in a recovery. However, industry representatives can help investors find strategies that are not dependent on the Japanese economy.

DISCUSS FIXED INCOME STRATEGIES

When asked which securities come to mind when you think of investing only 28% of Japanese women say fixed income. This is in contrast to the fact that 60% say steady income generation is a priority for them. Educate women on how fixed income strategies can offer growth opportunities with typically less risk than equity strategies. Fixed income strategies can also be an attractive option for women investors looking for a reliable stream of income.

CONSIDER MULTIPLE INCOME GENERATING OPTIONS

As 60% of the women we spoke with say generating a steady income is a top priority for them when judging a portfolio’s success. They see investment income as a catalyst for choice and flexibility, so it will be important to address these investment objectives when building a portfolio.

EDUCATE ON THE ROLE OF DIFFERENT ASSET CLASSES IN GENERATING INCOME

It is important to share with your clients the challenges of generating income in a low yield environment and the potential advantages of selecting an actively managed investment with a broad universe.

Start the process by ensuring these clients understand the role that different asset classes can play in generating income, as well as the relationship between yield and risk. It is too easy, especially in current environments, to be drawn into higher yielding options that expose investors to more risk than they are comfortable with.

EDUCATE ON BEHAVIORAL BIASES

There are a host of cognitive and emotional biases that influence our behavior. And, particularly during challenging times, we tend to lean more on these biases to make decisions, which can lead to less-than-ideal outcomes, especially when it comes to investing.

OFFER EASILY ACCESSIBLE EDUCATION

Avoid jargon and high-level concepts to provide information women can easily embrace. Professionals will create lasting bonds with women investors by making this education accessible in a variety of formats (i.e., small group discussion groups, online platforms), and keeping the content brief and digestible.

PROVIDE COUNSEL ON RETIREMENT PLANNING

Japanese women have a life expectancy of 87.32 years3. Covering expenses during these extended post-retirement years is going to take a substantial nest egg and significant planning. Financial professionals should introduce this important topic and offer counsel on when and how to get started.

Learn more about Women & Investing here.



1 The Central Council for Financial Services Information, “Public Opinion Survey on Household Financial Assets and Liabilities.” (2019)
2 Source : Japan Ministry of Internal Affairs and Communications, Labour Force Survey 2019
3 Source: Japan Ministry of Health, Labour and Welfare 2018
Methodology
The survey results contain the opinions of the respondents and not necessarily those of PIMCO. The data contained within the report may not be related to any PIMCO product or strategy and should not be relied upon for any investment decision
Focus groups
In October 2019, three salon discussions were conducted in Tokyo among women investors across varying age ranges and life stages.
Financial decision-maker survey
This survey was conducted within Japan by The Harris Poll on behalf of PIMCO in December 2019 among 1,506 Japanese adults ages 18 and older, including 682 women and 824 men. All respondents had at least 10 million JPY in assets and at least some financial decision-making responsibility within the household. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
The investable asset level is above the national mean (4 million JPY*) but represents the portion of the population most likely to require services from the financial industry. All references to “Japanese women” in this report refer to this segment.
*The Central Council for Financial Services Information, “Public Opinion Survey on Household Financial Assets and Liabilities.” (2019)

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Disclosures

Past performance is not a guarantee or a reliable indicator of future results. All investments contain risk and may lose value.

This report is provided for informational purposes and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product, nor construed as a solicitation or offer to buy or sell any securities or related financial instruments in any jurisdiction.

The survey results contain the opinions of the respondents and not necessarily those of PIMCO. The data contained within the report may not be related to any PIMCO product or strategy and should not be relied upon for any investment decision.

PIMCO does not provide legal or tax advice. Please consult your tax and/or legal counsel for specific tax or legal questions and concerns. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Any tax statements contained herein are not intended or written to be used, and cannot be relied upon or used for the purpose of avoiding penalties imposed by the Internal Revenue Service or state and local tax authorities. Individuals should consult their own legal and tax counsel as to matters discussed herein and before entering into any estate planning, trust, investment, retirement, or insurance arrangement.

This information is summary in nature and not intended to be all inclusive. This material does not take into account the objectives, financial situation or needs of any specific investor or class of investors. There is no guarantee that these investment strategies will work under all market conditions or are appropriate for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. No representation is being made that any account, product, or strategy will or is likely to achieve its objectives, generate profits, or avoid losses. Investors should consider the investment objectives, risks charges and expenses of any investment product before they invest or send money and consult an investment professional prior to making an investment decision.

This material contains the current opinions of the author but not necessarily those of PIMCO and such opinions are subject to change without notice.  This material is distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

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Women, Investing & the Pursuit of Wealth-Life Balance
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