Guest Blog: Gender diversity in financial services, the why and the how?
Guest blog by Gillian Hepburn, Commercial Director, Benchmark Capital
If we believe that 60% of wealth in the UK could be in female hands as early as 2025 and that 80% of women will be solely responsible for their finances at some point in their life, the question is, has our industry adapted to become ‘female friendly’?
The oft-cited gender wealth split prediction from the Centre for Economic and Business Research (CEBR) that 60% of wealth in the UK would be in female hands by 2025 was made a number of years ago and may not be entirely on the mark, but the direction of travel is clear. In 2020-2021, HMRC stats indicated that £15.7 billion of assets was transferred to surviving spouses when 72.6% of the widowed population were women. Transfer of wealth in the baby-boomer generation is in full flow!
Providing advice and information to women is a key opportunity for growth, yet it’s clear that many advice businesses and the financial services industry more generally could be doing more to engage with women, understand their needs and develop solutions to meet their specific requirements.
A standout statistic that suggests that our industry has not yet adapted sufficiently to reflect the needs of women is that only 34% of women will remain with the family adviser after the death of their spouse or divorce[1]. It’s also worth noting that currently 8 out of 10 asset managers think of their default customer as a man[2]; that only 16% of advisers are female[3]; and that only 10% of advisers have a proposition for retaining and attracting women[4].
Addressing the specific challenges that women face
By adapting our approach, the industry can do much to address the specific challenges that women face.
Providing for later life can be a particular issue with data from Scottish Widows showing women retire with an average of £123,000 less than men. Much has been done to address the gender pay gap but, in many cases, this won’t be enough to level the playing field at retirement, with many women taking career breaks to care for family and returning to work on a part-time basis. 40% of women aged 55-70 still rely on their partner for an income in retirement and with many marriages still ending sadly in divorce, this may not prove to be a great plan.
Encouraging women to invest more is one area where we can make a real difference. Investing trumps cash savings when it comes to building wealth over the long term, but data shows that women invest less of their spare money than men, accounting for 56% of cash ISAs.[5] A recent survey by BNY Mellon indicated that if women invested at the same rate as men, an additional $3.2 trillion of capital would be invested. This would have significant benefits for everyone – particularly as women are more likely to invest in sustainable investment solutions.
Among the other areas where women’s needs can differ from men’s are in planning for long-term care and inheritance planning. Women are more likely to require long-term care, outnumbering men in care homes by 3 to 1 and typically remaining there for 4 times as long. They are also more likely to pass on wealth to help wider family within their lifetime than men[6].
Signs of progress!
Increasing female representation in the industry has to be a key way to address some of the challenges. This should improve awareness of female specific financial planning requirements and may encourage more women to invest.
There are now some excellent networks supporting women in their career in financial services and as an example, the Women in Asset Servicing network has now reached 1,000 members and has members joining globally. The network aims to empower women to achieve success by facilitating relationships and discussing topics that improve career opportunities for its members with an aim to optimise the gender balance across the industry.
So, there are definitely some positives to take away. However, while there is plenty of female representation at entry level, perhaps the current challenge is retaining women particularly post career break. A recent report by Allbright highlighted that 73% of women were unhappy at the rate of their career progression and that stress and burnout were key challenges, which provides feed for thought.
However, by acknowledging and addressing these challenges, perhaps we will start to see more female leaders emerging. More visible role models and mentors should encourage a more female focused industry which in turn may encourage more women to engage with their finances!
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[1] Schroders research, October 2023
[2] McKinsey 2022
[3] FCA , July 2022
[4] Schroders Adviser Survey 2023
[5] AJ Bell, August 2023
[6]Taking the reins: female clients and the transfer of wealth report, Dr Eliza Filby, 2021
Useful links
TISA’s Inclusive Investing homepage: https://www.tisa.uk.com/inclusiveinvesting/