As International Women’s Day approaches on 8 March, there is plenty for the world of financial advice to learn.
While diversity and inclusion has improved in several sectors in recent years, there is still far to go, even in the financial advice profession. The most recent FCA data, published by FTAdviser, reveals that just 16% of UK financial advisers are women.
When working in a male-dominated profession like financial advice, it is essential for IFAs to understand:
- How to tailor your services to each client, even those whose lived experiences do not match yours
- The gender-specific financial challenges that your female clients may face
- The ways in which you could improve your offering to better serve the women who trust you with their finances.
As such, just in time for International Women’s Day 2024, keep reading to learn three important tips for IFAs working with female clients.
1. Be aware of the financial inequalities women face today
You may already have some awareness of the financial inequalities women face in today’s world, but as an IFA, it’s important to be aware of the specifics.
Let’s take a look at a few of the key financial issues women experience today.
The gender pensions gap
We all know just how important pension contributions are for retirement stability.
Yet sadly, according to Legal & General:
- During key career years, women’s pensions usually measure up as 16% smaller than their male peers.
- As they get older, women’s pension pots continue to shrink when compared to men’s.
- At retirement, a woman’s pension pot is typically half the size of a male peer’s pot.
The research, published in January 2024, says that the average man over 50 holds a pension pot of £84,205, whereas the pensions of women over 50 average at £39,654.
The reasons behind the gender pensions gap include:
- Plenty of women give up employment in order to raise children – so even if their partner is able to fund the family’s lifestyle, the woman would not be making personal pension contributions in that time.
- The gender pay gap, which stood at 7.7% less median earnings for women as of April 2023, the House of Commons Library With lower salaries on average, many women will make fewer pension contributions throughout their careers.
- Divorce inequality, which will be explored in greater detail below.
It is fundamental to understand just how impactful the gender pensions gap could be on your female clients, and to review their pension circumstances rigorously throughout your working relationship.
Divorce inequality
After going through a divorce, women typically see their incomes fall further than men.
Legal & General research reveals that the average woman experiences a 33% reduction in income compared to men, whose earnings are reduced by 18%.
With this in mind, if your female clients are currently going through the divorce process, it could be worth paying special attention to how their income might change.
What’s more, women’s pensions can suffer tremendously after a divorce. While many women maintain custody of children and in turn keep the family home, their spouse may then offset the value of their home by taking both pensions.
As such, keeping the financial implications of divorce at the front of your mind could help you work with female clients who are experiencing this life event.
2. Understand the importance of family in women’s financial planning
Intergenerational financial planning is an essential part of your practice, no matter who you are working with.
However, when serving female clients, it may be even more crucial to look at the entire family’s finances in more detail.
According to Unbiased research, 85% of women control their family’s day-to-day finances. This might include tasks like weekly food shop budgeting, for instance.
Yet despite this figure, a large proportion of women are reluctant to seek financial advice. A 2022 study from Canada Life, published by MoneyAge, found that women are more likely to approach family for financial advice than a qualified professional.
So, it seems that while women may have a large amount of control over their family’s day-to-day finances, they may defer to their spouse or other family members for “big decision” planning.
That’s where you can truly add value as an IFA. If you take on a new female client, there may be additional aspects to her money mindset, as well as her wealth circumstances in general, that are not immediately clear.
Moreover, it could be helpful to discuss her wider family circumstances, and perhaps even invite other family members who are involved with her finances into the conversation.
Family financial planning may help you add context to any client’s situation, no matter their gender – but the research suggests that understanding the financial dynamic within a female client’s family may help you work with her more closely.
3. Treat female clients as individuals, not as a demographic
Learning the statistics that surround women’s financial disadvantages is likely to be helpful in your work with female clients.
However, assuming that every woman you work with is a victim of the financial system might come across as patronising. So, it could be better to remain entirely openminded when meeting a new female client.
Rather than presuming their circumstances, perhaps try the following actions instead:
- Listen carefully to what your new client has to say about her existing circumstances
- Look at the data she provides, such as pension statements, before jumping to conclusions
- Form an accurate picture of her overall wealth situation based on the information you are given
- Use your wider knowledge of women’s experiences within the financial system to inform how you proceed.
Although the research shows that women experience certain disadvantages when it comes to financial planning, it is important to treat new female clients equally – which means challenging your assumptions from the outset.
Get in touch
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Email hello@corbelpartners.co.uk or call 01925 637891 to learn more about joining Corbel Partners.
Please note
This article is for general information only and does not constitute advice.
