Why I think more women need to get involved with their finances

Why I think more women need to get involved with their finances

To start this article, I think it would be prudent to lay out a few facts:

1. There are only 25 countries with an elected female leader

2. Only 24% of all politicians globally are women

3. Less than 6% of fortune 500 companies have female CEO’s

4. There are more CEOs in Australia called Andrew than there are female CEOs in Australia

The list of statistics like this goes on and on, but the reason for selecting these 4 is that they relate to roles that involve money management. Whether that’s running an economy, a department within one or a public or private company, to some capacity these stats highlight the lack of women in roles around high level money management.

Regardless of the reasons for these statistics, they remain true. The situation is much the same when you look at personal finance too. As a woman holding a senior position in the financial services industry, I find myself somewhat of a minority. In fact, only 23% of all financial advisers are women. However, my biggest concern here is actually with the statistics that come next:

1. Over 60% of women said they would rather talk about death than money

2. Only 27% of my clients are women

Why are so many women not getting financial advice and why is it so important that they do?

Retirement Planning: a Priority

By their 60s, women typically have £51,100 in their pension pot; while men have an average of £156,500. Given that women live on average 3.7 more years than men, for them to draw the same pension income throughout their retired lifetime, they need to have around 5-7% more saved than men, by retirement age.

Take a Step Forward from Saving, to Investing

Are women more risk averse than men?

In 2007 Dr. Paserman conducted a study of professional tennis players who participated in four Grand Slam tournaments between 2006 and 2007. Paserman applied a simple game theory model to analyse the point-to-point data. Unforced errors were used as natural measurement of performance. In the study, male players’ performances seemed more consistent than female players. Although the monetary reward differs from quarter-final to final, approximately 30% of all the points played by men, resulted in unforced errors, in each round. Compare to men, women’s performances are more fluctuating with the change of monetary rewards. As rewards increased, the probability of women’s points that ended in unforced errors, increased by 6%. It seemed that women are more sensitive to monetary pressures. In addition, the data on serve speed, first serve percentage and length of the rally indicated that women played more conservatively when the level of reward increased.

There are opposing studies of course and others that look at the cause for these differences, but the general consensus across most of them is that women are good savers, but less likely to invest their savings.

This is clearly a problem given the above statistic that woman need to save 5-7% more than men to achieve the same income in retirement. Cash savings will simply not suffice.

Become Part of your Family’s Financial Decisions

In my experience, one of the biggest issues can be that women don’t take their seat at the table when finances are being discussed. Often, they let their husbands deal with it alone, especially in the situation where the vast majority of a couple’s retirement assets are in the husband’s pension scheme. This is not an uncommon situation at all. Defined Benefit Pensions (final salary) are far more likely to be held by men. However, this asset is more often than not the sole retirement provision for both the husband and wife. So, why don’t women feel they have a right to know the details of these assets? If you are reading this as the wife of a man who has a pension that you will be relying on for your retirement, ask yourself these questions:

What happens if I out live him? (Which statistically you will do)

What happens if we end up divorced?

What goes to our children after we are both gone?

If you don’t know the answer to these questions, why not? The answers to these questions are not fixed. There are options available so that the outcome of all of these questions can be tailored. You have a right to have your say on what those outcomes are.

 Finance is Not Rocket Science

There are so many recourses now available that learning about finances has never been easier. For example, just on our website alone there are videos that explain UK pensions in great detail. In a capitalist society, not being interested in money just doesn’t make sense. It’s the fabric by which we trade goods, time, effort and what we use to quantify value. Don’t be put off by jargon either, most of that is just there so people can sound fancy when in reality what they are talking about is relatively simple. Of course, for more complex areas of planning it makes sense to speak to someone who is involved with finances day in and day out. But, for the basics, utilise the vast amount of online resources to get up to speed.

 Remember the pension when getting a divorce

Not a pleasant discussion, but managing finances is about being a realist. You may perceive something as an impossibility, but you should still have a plan just in case. This is an area where we see women lose out the most, often later on in life and it inevitably puts them in a position of great vulnerability.

Please, speak to me if you have any concerns regarding any of the above. I have over 12 years’ experience and will certainly be able to help.

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Michaela Boulton

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