I was talking to a neighbour of mine recently – some welcome social contact amidst a socially distant month – about the year we’ve all had. We discussed how at that moment many women are burnt out and running on empty after trying to meet the multiple and unprecedented demands of 2020.
Many of us have been working full time, while juggling the demands of our home and personal lives and it’s probably fair to say that activity in every one of these spheres has increased during the pandemic leaving many of us with little spare capacity to think of anything else.
In this environment, it’s not difficult to see how financial planning could get pushed down the list as there seem to be so many other competing priorities vying for our attention. The problem is that, even outside the pandemic, financial planning often gets deprioritised in the lives of women, who often tend to put everyone and everything else first. I’m passionate about helping women to build up financial resilience in their lives and finding ways that we as advisers can help them to do that.
Pandemic impacts women disproportionately
A recent report by Scottish Widows – Women and Retirement 2020 – warned that the effects of current economic climate could be disproportionately felt by women, who potentially face a more fragile recovery from the crisis than men:
“Women are more likely to work in sectors hardest hit by Covid-19. These sectors often pay below average and women are more likely to be part-time, amplifying pay differences with men. Similar issues emerge when looking at self-employed women or many ethnic minority women. These continuing differences reduce many women’s financial resilience…”
The report goes on to identify a number of structural inequalities and suggests reforms and rethinking are necessary in areas such as creating the best education and career opportunities for young women, as well as better and more affordable childcare options.
Alongside the structural and societal change necessary for women to achieve financial parity with men there’s a role that financial advisers can play at an individual level. It’s our responsibility to break down what financial resilience means to women and work out the best ways to help them achieve it. For me, this involves a focus on a number of key areas.
Creating space to articulate
One thing I have learnt over the years of advising both women and men on their financial plans is that they think about their finances differently and therefore usually require differing approaches from their adviser. Forgive me for generalising a little but I have found that while men will often approach their financial objectives in terms of targets, return percentages and investment budgets, women prefer an approach that considers their situation more holistically.
They prefer someone to create the space in which they can consider and articulate their goals and aspirations and how they fit within the broader context of their journey through life. This conversation will often take the form of open questions and will be based around the adviser listening and building a solid understanding of what their client is seeking. This is obviously a very different type of engagement from a focus on numbers and graphs and one which it would benefit advisers with women clients to be ready to adopt.
Emotional investment
The data in reports like the one I have quoted above are valuable in underscoring the inequalities that exist between men and women but reports like this regularly fail to take account of the emotions involved in finance. I have found that women have stronger emotional attachments to money – both positive and negative – which much financial advice does not make allowance for.
For example, if they have come through a divorce or been widowed, women may attach negative emotions to their money. It’s also true that many of us – men and women – have a relationship with money that was formed in our childhood, which brings with it whatever the prevailing attitudes and emotions were towards money at the time. This is where an adviser can really come into her own. Building a personal relationship with the client in which their emotional bond with money is understood should come before any goal-setting or problem-solving gets underway, and is particularly relevant for female clients.
I often talk to my clients about aiming to live a life without regrets. By this I mean I want to enable them to have a fulfilled life, and not to end up wishing they “shoulda, woulda, coulda” done more with it by the time they reach older age. Even people who could be considered wealthy and with the financial freedom to enjoy their money are often held back by long-held mindsets that make them fearful of spending. Helping them work through these feelings and behaviours can be an important part of an adviser’s role.
Raising education levels
The population as a whole could benefit from a better level of financial education and again this is something that goes hand in hand with increasing women’s financial resilience. For example, it is not uncommon for advisers to need to help educate widows about finance after they have lost their husband if he was the one who looked after the money in the relationship. There are also the regular calls from our industry for some degree of financial education at school level which would make a huge difference to both financial knowledge and confidence among women.
We recently conducted a survey that, amongst other things, showed that only 19% of women had a financial adviser, versus 29% of men. This means that we also need to do a better job of educating people of the benefits for everyone of taking professional advice, but particularly to women who are significantly underserved.
Addressing these key areas, I believe, would be a step in the right direction towards greater financial resilience for women. Meanwhile, the advice community will continue to listen to what women want, to create the communities and methods that suit their needs and to help them achieve what they want to achieve in their lives.
If you would like to discuss your financial plans and aspirations, please get in touch.
