As a woman working in financial services, it was interesting to read a new report which examines the factors leading to women facing a ‘gender financial security gap’.
The report by international law firm Pinsent Masons and leading gender charity the Fawcett Society looked at the combination of socio-economic factors and the impact of gender stereotypes which lead to this issue.
It goes on to outline ideas around marketing and product development which seek to address the gap.
The report, ‘Closing the Gender Gap: Female consumer engagement in Financial Products’ explores how gender impacts on women’s engagement with pensions, investment and insurance products.
This is important because women typically experience financial services differently to men, often with negative consequences.
The report highlights that women are increasingly taking household financial decisions, with 2020 cited as the ‘tipping point’ when women will make the majority of financial decisions in the home.
In our experience, in recent years the incidents of the male household decision maker have become less common. To hear that 2020 could present a tipping point for women to be in the majority making these decisions is positive, albeit with implications for how financial services best serves these decision makers.
Further, the report shows that the reality of women’s lives means that the financial risks they face are both more numerous and complex.
Women face factors such as a lower starting salary when they enter work; a wider pay gap; having to take time out to care for children or relatives; unequal split of assets and loss of income after divorce; childcare costs; and higher prospects of living with severe health conditions.
Despite these risks, the report finds that women are underinvesting in pensions and investment products and underinsuring themselves relative to men, creating a ‘gender financial security gap’.
This gap often means that the inequalities women experience during their working years are perpetuated and exacerbated in later life, and can put women’s financial independence on the line.
Being aware of this gender financial security gap is an important first step; it allows us to recognise the factors which cause it to exist and then we can consider how to best tackle these factors.
The report calls upon the UK’s financial services industry and policy makers to seize the opportunity to better engage female consumers.
It proposes potentially fruitful ideas, such as developing new products and changing marketing, which could begin to tackle the gender financial security gap. Doing so will not only benefit women’s financial independence but bring financial returns in the UK market.
Carolyn Saunders, Head of Pensions and Long-Term Savings at Pinsent Masons comments:
“Women’s wealth is on an upwards trajectory and more financial decisions are being taken by women than ever before. Some organisations are already recognising and engaging with this change but on the whole financial products continue to be developed and marketed in much the same way as they always have been.”
“Pensions and investment products need to work harder for women. Financial service providers and policy makers need to help change the perception that finance is a man’s world, boost women’s confidence in their financial capabilities and develop products and advertising that speak to women.”
“For the financial institutions that recognise and engage with this change there is significant opportunity to make a positive impact on society while opening up a market which is arguably underserved.”
Sam Smethers, Fawcett Society Chief Executive, said:
“Women are both carrying more risk throughout their lives and also less able to take action to address those risks. This is partly because women earn less and also tend to prioritise other things over their own financial security.”
“But even when women are earning enough to save or invest, the financial information available to them and the choices they are presented with don’t appear to work for them. The financial services industry has a huge opportunity here to both put that right and help women to achieve financial independence at the same time.”
One way in which we can help tackle this gender financial security gap is by engaging more women in the Financial Planning process.
Where we work with clients to construct and manage their Financial Plans, we always engage both partners in a relationship and ensure women have an equal voice; both in the construction of the plan and the goals it is designed to support.
