Mind the gender gap in finance
And this persistent gap is just one of several financial barriers faced by women, with others including inadequate maternity cover, childcare costs and, depending on the generation, a tendency for men to be regarded as the main decision makers on investment matters.
In terms of women and wealth management, Rhian Morgan, director at Acumen Financial Planning, says: “The biggest challenge is the gender pay gap. It has been estimated that it will take 257 years for global pay equality between men and women and the gap is actually increasing.”*
A ‘Women and Retirement Report’ from Scottish Widows confirmed that gender gaps
in pay and pensions between men and women across the UK are worsening. It said that in pay alone the average man earns £33,000 a year, compared to £22,800 for the average woman.**
Morgan explains that the situation is exacerbated by the fact that many women pause their pension contributions when they are on maternity leave. “Statutory maternity cover is a very small amount. So mothers will often stop paying into their pensions if they are allowed to,” explains Morgan. “Some women will then decide to go back to work part time so their salary and pension contributions will be lower. We are seeing a bit of a shift with more men taking parental leave and working part time, which is fantastic, but the majority of times it is still the women who do this.”
The ‘Women’s Wealth 2030’ report by UBS said that the 2020s are set to be transformational for women’s wealth, with the caveat that “major challenges must be overcome”. It identified gaps in pay and funding, caused by limited access to networks, conscious and unconscious biases, care responsibilities and disparities in education, healthcare, politics and legal rights as stifling for women.***
Morgan says there are changes that can be made to address this situation, including women being more involved in financial conversations “I think women, and everyone, should feel more comfortable talking about money. Women should be having conversations about wealth,” explains Morgan. “Linking wealth to purpose, such as their passions and goals, allows conversations around finance to flow, because everything costs money. When we’re speaking about investing to anyone, we need to be clear and concise and avoid jargon. It’s ensuring relatability, including everyone in the room, making eye contact and ensuring women feel comfortable.”
Morgan adds that if women change their working habits, they should be informed about such topics as what to pay into their pension, how to fill any gaps and using all the allowances available to them, such as tax relief. With couples, advisers should be talking to the woman as well as the man about all relating factors to their wealth, including speaking to solicitors about cohabitation or premarital agreements, so that both of them have all the facts about protecting their wealth.
Another factor to consider is differing attitudes to money between men and women. This can also help explain why women may be more reluctant to launch their own businesses and female entrepreneurs can find it harder to raise funding.
“In my own experience, I have often found females to be more cautious in nature, where men tend to be more optimistic about investment volatility.,” says Morgan. “
She also believes that the government has a key role to play in continuing to promote the likes of child benefit and credits towards state pensions, with resources such as their moneyhelper website.
Morgan adds: “There’s more information out there than ever before, but it’s also about making information accessible to women and their lives. It is about ensuring busy women, who are often also the administrators in family life, know where to find out about things like how to additional funding to pensions.”
The information provided is the opinion of Rhian Morgan, Certified Financial Planner and Director of Acumen Financial Planning and should not be regarded as advice.
Acumen Financial Planning is authorised and regulated by the Financial Conduct Authority. FCA number 218745.