Mind the women’s wealth gap

With the world currently on “pause”, now might be a great time to get proactive about your finances, and here we are calling on women specifically to take action. We believe the wealth gender gap is one of the most underappreciated issues in society, and recent research has confirmed our fears about the parlous state of many women’s pension plans.

New research* has found that 24% of High Net Worth women have no investment portfolio and that the same proportion have no pension. In stark contrast, men are making their wealth work far harder generally, with only 14% having no pension and 18% having no investment portfolio.

Women seem wedded to property as an asset class, with 91% of wealthy females owning property and 37% saying they aren’t investing because their money is tied up in bricks and mortar. Some 43% of women see property as likely to generate a decent return, against just 24% of men – who rate investment portfolios (37%) and pensions (29%) far more for performance. Property may feel “safe as houses”, but you can expect to earn net returns of around 6% a year with a wealth manager managing a portfolio for you. Moreover, you should always diversify your wealth across a range of assets as part of proper asset allocation.

Property may feel “safe as houses”, but you can expect to earn net returns of around 6% a year with a wealth manager managing a portfolio for you. Moreover, you should always diversify your wealth across a range of assets as part of proper asset allocation

Women have long been acknowledged to trail men in financial planning provision and investing (which is ironic since research suggests women are less inclined towards “churning” or frequently changing their holdings and so may be better investors long term). Things are improving, as in 2018 35% of wealthy women were found not to have an investment portfolio and 30% were without a pension. But the gender gap in savings and investments needs to close as a matter of urgency – particularly as regards retirement planning.

Paralysis prevails

Women are worrying appreciably more about their financial futures: a third of wealthy men have no particular concerns about retiring, but only a fifth of women; and women are worrying about care home funding far more than men (42% vs. 34%). But it seems like this concern has often been allowed to congeal into paralysis.

Alarmingly, 17% of wealthy pre-retirement women have no clue how long their pension pot will last, compared to just 6% of men. At the same time, less than half of HNW women are enthused about working past retirement to retain a high standard of living. It seems that many HNW women need to start putting themselves first pay some serious attention to their retirement planning as a matter of urgency if they are to have the retirement they have dreamt of.

It seems that many HNW women need to start putting themselves first pay some serious attention to their retirement planning as a matter of urgency if they are to have the retirement they have dreamt of

We as an industry also need to play our part. One of the most shocking findings of the research was that only a fifth of women feel confident about a pension’s ability to generate attractive returns, when in fact your pension is among the most important wealth-building tools at your disposal. Pensions offer numerous opportunities for tax-efficiencies. They are top of the list of savings strategies and should be central to your financial plan.

Light bulb

Top Tip

We have seen the proportion of our users who are women climb steadily over the years, but there is still a way to go before we see parity between the genders. Wealth managers are adept at helping women tackle their specific wealth challenges and taking professional advice is sure to help you significantly improve your financial prospects, so don’t delay getting your affairs in order. Compounding means the sooner you start investing, the better.

Lee Goggin - Co-Founder

Lee Goggin

Co-Founder

Longer lives, larger savings pots

The pension gender gap is made all the more of an issue by the reality that the average woman is likely to need to fund some years more in retirement than the average man due their greater longevity. It’s sad but true: women need to plan for in all likelihood outliving their spouse and take into account the effect of that on any assets. Longer lives call for larger savings pots.

The unfortunate, broader fact is that women tend to end up very much financially worse offcompared to men over a lifetime due to a range of factors such as the pay gap, taking careers breaks to raise children or care for elders, and the lack of pension planning just outlined. UBS Wealth Management has found that a woman who starts with an illustrative pay gap of 10% could see this gap widen after factoring in a short career break, to them having 43% less wealth than a man at age 85.

Improve your financial position

Also part of the picture is that women tend to be more risk-averse as investors and curtail their potential returns more than is necessary to achieve their financial goals. Helping you balance the risk/return payoff is a crucial element of the investment and financial planning services wealth managers offer.

It is never too early – or too late – to get proactive about your finances and there is sure to be a lot you can do to dramatically improve your position. Our service was designed to help busy people find and meet their best-matched wealth managers without the legwork – and guesswork – navigating the market solo entails, so why not see how much better off you could be?

Do not accept a financial future than is less than you deserve. Try our fast, free matching service now.

* Source: Canaccord Genuity Wealth Management, March 2020

Find Your Wealth's Paradise

We make the best advisors easy for you to access

Start Now

Find Your Wealth's Paradise

We make the best advisors easy for you to access

Start Now