Longevity risks, cryptocurrency taxation and the potential for behavioural biases to hurt wealth are featuring strongly in our current conversations with clients.
We’ve seen the number of women seeking wealth management advice double in the past year as the pandemic has thrown planning and investment issues into stark relief. Read on to learn how taking professional advice is truly changing lives.
I’m delighted to be able to say that findaWEALTHMANAGER.com recently hit a really significant milestone in its development: a quarter of our users are now female.
Now, given that women make up half (if not slightly more) of the population, you’d be forgiven for thinking that is no big deal. Not so: despite the fact that women’s financial power has been growing at an incredible rate, research shows them to generally be very disempowered when it comes to the effective management of their wealth. That is something we’ve been working hard to change, along with the wealth managers on our panel.
It is one of the great paradoxes of our time that while women are pulling ahead on so many fronts financially, they still lag behind men quite dramatically on investments and financial planning
It is expected that by 2025 women will own 60% of the UK’s personal wealth1, fuelled by factors like greater educational attainment, single home ownership and longevity, alongside a boom in female entrepreneurship. Yet it is one of the great paradoxes of our time that while women are pulling ahead on so many fronts financially, they still lag behind men quite dramatically on investments and financial planning.
To put it another way, women might be working incredibly hard to attain wealth, but they are very much less likely to be making their wealth work hard for them. Even at the High Net Worth end of the spectrum, women are about half as likely to have an investment portfolio compared to men
Pension planning seems to be a particular area of weakness, with the average woman’s pension pot valued at around half that of the average man2, and females being 50% more likely to face retirement without any private pension savings3. And, even when women have built up an appreciable pot, three times as many women as men say they are unsure how long their savings will last4.
The broader fact is that women have tended to end up very much worse off than men over their lifetimes. Yes, this is due to a host of factors, like them tending to take career breaks for caring responsibilities with greater frequency and them needing to fund longer retirement periods because they simply live longer than men generally. Yet it is the lack of proactive investment and financial planning so much research has shown among women which is really the issue at stake.
To have a quarter of our users being female today marks a massive step in the right direction, albeit a proportion we of course want to improve on further still
With the right strategy in place, most obstacles to growing your wealth can be overcome – and it is never too late to get proactive. This is why we’re so delighted to have seen such an uptick in women coming to our site. When we launched back in 2012 women made up a tiny proportion of our users and even this time last year, they made up only 10-15%. To have a quarter of our users being female today marks a massive step in the right direction, albeit a proportion we of course want to improve on further still.
So, what kinds of women are seeking our help and how are the wealth managers on our panel aligning with their specific needs?
Because women are conscious of needing to fund longer retirement periods, they are seeking ways to build up bigger – and more resilient – pension potsThe market volatility stemming from the pandemic has made people realise just how vulnerable their savings could be generally, but because women are conscious of needing to fund longer retirement periods, they are seeking ways to build up bigger – and more resilient – pension pots. Discussing your situation with an expert, assisted by modelling tools, could be a very illuminating exercise indeed.
Entrepreneurs have actually represented a significant proportion of our female users for some time, but there has been a marked increase in business owners wanting advice on how to manage a sale and then invest the proceeds wisely – no doubt because the current crisis has made people rethink their life plans in many cases.
Handling liquidity events is very much core business for wealth managers, but there are some really interesting female slants being added to their offerings. For instance, women often lack the informal mentoring opportunities men enjoy through their business networks, and so firms are stepping up with forums and (for now) online events aimed specifically at female entrepreneurs.
Women’s wealth management needs are naturally pretty similar to men’s, but they do differ in significant ways. We find that our rigorous matching process lends itself well to the very high level of due diligence women typically like to deploy. Let us take the strain and do away with the need for hours (if not days) of research. You can find your best-matched wealth managers fast and free through our matching system, and then focus your energies on comparing institutions like for like.
The jury is still out on whether almost a year of lockdown will end in a spike in divorce rates. What is clear is that women are taking far greater control of the financial element of break-ups, no doubt fuelled by recent media attention on how women often end up worse off.
What is clear is that women are taking far greater control of the financial element of break-ups, no doubt fuelled by recent media attention on how women often end up worse off
Making sure that pensions are included in the overview of marital assets and leveraging their legal networks are just a few of the ways the wealth managers on our panel have been helping women get what they deserve. They are also laying on seminars to help women manage their assets effectively post-divorce, helping many who have perhaps not dealt with these issues hitherto.
The fact that women still tend to take on the lion’s share of caring responsibilities means that we are hearing a lot from female users who are dealing with issues like Lasting Power of Attorney and planning for relatives’ care fees. These issues are something that wealth managers are really cognisant of, as we illustrate in this piece on dealing with cognitive decline from a financial perspective.
The fact that women still tend to take on the lion’s share of caring responsibilities means that we are hearing a lot from female users who are dealing with issues like Lasting Power of Attorney and planning for relatives’ care fees
More broadly, our female users are keen to face up to the fact that the Inheritance Tax regime is likely to be shaken up (along with Capital Gains and a potential wealth tax coming in). As such, they are eager to explore wealth structuring options that will help them keep as much money as possible out of the taxman’s clutches, and to pass it efficiently down the generations, like trusts and Family Investment Companies. See our recent piece on IHT workarounds if these issues interest you.
One unexpected silver lining to the uncertainty of recent times is that it seems to be prompting people to get serious about managing their wealth far earlier than previously. Recent research6 has shown that a third of Britons aged 35–54-year-old now do not feel confident about their financial situation and this has prompted a surge in millennials and those in “Gen X” to seek financial advice for the first time.
We’ve been delighted to be hearing a lot more from younger women, particularly given the pension wealth gap that is so abundantly clear. The earlier that retirement savings are taken in hand, the more the magic of compounding can make build your wealth.
These are just a few of the big themes we encounter when talking to female users. Rest assured that whatever is on your mind, it will be a familiar one met with well-embedded solutions by wealth management experts.
We are on a real crusade to improve the health of women’s wealth, so please don’t hesitate to get in touch with any investment management, financial planning or even legal issues causing you concern. Our network is incredibly broad and deep, covering all bases related to wealth management. Users also see us as a friendly sounding board too.
There really is no better time than the present to take control and we look forward to welcoming more women to our community of proactive planners
Also take the opportunity to forward this piece to any friends, relatives or colleagues that might benefit from professional wealth management advice. There really is no better time than the present to take control and we look forward to welcoming more women to our community of proactive planners.
1 Centre for Economics and Business Research
2 Close Brothers
3 Pensions Policy Institute
4 Now Pensions
5 Canaccord Genuity Wealth Management
6 Quilter Cheviot