Why is it that women tend to lag behind men when it comes to making the most of their money?
A host of reasons are cited including childcare costs at one end of the spectrum and caring for elderly family members at the other.
Women tend to save less due to lower pay, the impact of career breaks and part-time working, and they also live longer.
So much so that Claer Barrett, Financial Times personal finance editor, believes the system is “rigged” against women.
And then there is the attitude to investment.
Guardian journalist Hilary Osborne commented: “An adage in the financial sector goes that women save and men invest – and this still rings true.”
It is argued that women like to keep more of their money in cash so there is an emergency fund available if they need it. Men are more than twice as likely to hold stocks and shares.
A 2017 report from Pinsent Masons and the Fawcett Society highlighted the gender pay gap as the biggest obstacle.
It notes: “The average gap widens significantly after motherhood, primarily due to women missing out on career progression and having time out of the labour market.
“It is exacerbated by a combination of processes and cultures that mean men are over-represented in more senior roles. It is also driven by occupational segregation. The proportion of women working in core STEM (science, technology, engineering and mathematics) occupations, which tend to be higher paid, was 21 per cent in 2016, while the adult social care workforce, which tends to be low-paid, is 82 per cent female.”
And low pay has an impact on pensions.
Fidelity International states: “Most will reach retirement with substantially less in pension savings than male counterparts.”
Financial literacy is a big issue.
Pinsent Mason/Fawcett Society goes on: “There is a gender gap in financial literacy in the UK, with 40 per cent of women compared with 67 per cent of men having high scores on knowledge of eight key financial concepts. This links to a confidence gap – women on average think that they are less knowledgeable when it comes to investing their money, and more likely to say that investment complexity puts them off. Hundreds of studies find that women are more risk-averse than men across a range of different areas. Risk aversion can have a negative impact if it results in women putting their money into less productive investments.”
Then there is all the jargon.
Fidelity International blames the way investment is communicated by the financial services industry and how, while this is also a barrier to men, it is more pronounced with women. More women (45 per cent) find this communication ‘complicated’, along with ‘incomprehensible’ (18 per cent) and intimidating (18 per cent).
Hymans Robertson states: “Many women manage the household budget. And with more women marrying later – or not at all – there is a greater need to take control of the wider financial budgeting position. But many women don’t have the confidence to talk about finances in the same way as men do. They would prefer to take to websites such as Mumsnet to ask the questions they wouldn’t ask of their employer or friends.”
Our experience with women that are widowed and divorced/separated often reveals very limited experience of financial issues.
But please don’t be afraid.
Nobody who is taking financial advice for the first time should ever be embarrassed about a lack of experience or knowledge. A good adviser will understand and not patronise. If a new client ever feels that they’re not being taken seriously – walk away and find another adviser.