Women — the untapped advice market
The financial advice profession has a significant role to play in helping women overcome the multiple financial gaps they face — in pay, pension savings and participation in the share market, according to a landmark report released recently.
Unlocking the Power of Advice, published by the Fidelity Funds Network, follows its 2018 report on The Financial Power of Women. While the earlier report explored entrenched gender-based financial disadvantage, this one looks at how to remove the barriers stopping women from accessing advice.
Based on interviews with a range of financial advisers as well as with women of different ages across Britain, the study identified systemic issues that may be contributing to the fact that women tend to be hundreds of thousands of pounds worse off at retirement.
For instance, half of all IFAs reported losing female clients once that client’s partner had passed away. Other advisers reported that some women after divorce struggled to manage the finances in their home, given that role tended to be monopolised in marriage by their partners.
While women in Britain now have significantly higher workplace pension participation rates than they had a few years ago, women in their 60s on average have £100,000 less saved in their pensions, according to the Pensions Policy Institute.
The good news is that women who have sought out financial advice are overwhelmingly positive about the difference it makes. However, they tend to do so much later in life, often in relation to a specific issue, than do the male cohort of the same age.
This report points out that this gender-based divergence in the preparedness to consult an adviser is intriguing given women show no such reluctance to consult medical experts, personal trainers or other professionals in other aspects of their lives.
A number of reasons are put forward for this, most notably the fact that women are far more likely to have disrupted careers due to the obligations of parenthood and when they do consider consulting an adviser feel their limited wealth disqualifies them from serious attention.
Another issue raised in the study was the question of cost, with women on lower incomes less confident the investment was worth it given their means. A lack of knowledge was another frequently cited barrier, as was a feeling the advice sector is too male-dominated.
Other differences between men and women when approaching the idea of advice is that women tend to see money more as a tool to other ends, while men focus on the size of the pot. Women also tend to be more interested in ethical and sustainable investment.
In terms of breaking down the barriers, the report makes a number of recommendations, including the industry changing how it talks about advice towards a more holistic and tangible style that focuses on increasing wealth for the whole family, not just individuals.
“There is a significant financial opportunity here for advisers to grow their client base and create lasting relationships that span generations,” the report concludes. “Now we need to encourage women that financial advice is an opportunity for them too.”
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