Financial wellbeing for women
When making your New Year's resolutions this January, make sure you give your financial wellbeing the priority it deserves! Carmen Gabriel from Brewin Dolphin explains the first steps to take...
By Carmen Gabriel
My name is Carmen Gabriel and I am an investment manager at Brewin Dolphin’s Newcastle office. I help people get a financial plan in place and advise them about how to make their money work harder to achieve their goals.
Having spent 12 years in the industry, I have seen a great deal of change in my business but also in the economy and the world. One thing I am keen to change a bit faster is the imbalance in financial wellbeing between women and men. Women are increasingly becoming key financial decision-makers and an industry that has typically catered for men by men needs to pull its socks up. Neither women nor men are getting enough financial advice. In addition, there are hurdles to women seeking advice.
Yes, women get paid less than men, but women’s financial concerns are not limited to making ends meet. Women’s longer-term financial planning is also a worry regardless of how much they earn.
Women are more independent, more educated, higher earners and hold more property and business wealth than ever before. Nevertheless, statistically, the average man has saved 41%1more than the average woman. Women are also less confident about the future. Only 26%1of women think they will have a good lifestyle in retirement, significantly less than men.
Whilst it is important to keep up the pressure and momentum with regards to the gender pay gap, it isn’t the only factor at play. Much as fixing the pay gap is not about writing a cheque, fixing the wellbeing disparity is a complex matter. We need to recognise that women face different challenges, which is a big ask from a male-dominated finance industry.
When it comes to addressing your finances, one of the biggest hurdles is time. This is a problem for women and men. Doesn’t it feel like we are busier than ever? We are juggling careers, families, friends, fitness, hobbies, travel… Women spend 36 hours per week on caring and housework, twice as much as men4. Squeezing something else in is never easy.
The solution? Unfortunately, I can’t clear your to-do list but the first thing to bear in mind is that finances are important. We are more in tune with our wellbeing than ever before. All the while we are more likely to feel stressed, anxious and lose sleep over money worries than men. 66%1of women have been affected by money worries. 1 in 5 people have felt depressed due to money1. Finances are a major factor in your wellbeing. Worrying is a huge drain on your productivity.
Just like ‘Marie Kondo-ing’ your house can help you be more focused and productive, getting on top of your finances will have the same effect. Freeing up that headspace will give you back more than the time spent. These days you can access advice on the go. You can call, text, email, use an app. Whatever fits in with your life, there is an option for you.
Another sticking point for both women and men is interpreting the jargon surrounding finances. Unlike men, women are more likely to turn to their friends and family about financial decisions, which is no substitute for expert insight and advice. I can understand why women may feel intimidated given the combination of a male-dominated industry and the complexity of finances. 36%2of women have felt patronised during an interaction with the industry. A conversation with a good advisor should leave you informed, empowered and confident in the choices you have made together. Jargon should be left at the door. I feel my role is to inform as well as advise.
Despite this, I think that we are less intimidated by finances than we may once have been, and an increase in women working in the industry has really helped that stigma. But more importantly, there are more women in leadership positions. I am fortunate to work for a company that is ranked 6thout of all FTSE 250 companies for having 50%3women on our board and you really feel the positive impact of that diverse and inclusive culture
Women have different financial priorities and this needs to be recognised and we need to make sure that we cater for these differences. I don’t want to explain “yes, I would like to contribute to my pension, but I also want a new bathroom, even though my current bathroom is technically okay,” and see a blank face. I want to explain that to someone who gets it and probably has similar priorities and responds “yes, I totally understand, let’s see what we can do to make that happen.”
Another challenge is that people’s needs are constantly changing over time. At the start of your career, you are concerned about budgeting, paying back loans etc. Then you need to think about mortgage payments; ensuring you have protection in place for you and your family; making retirement provisions. Then you are looking to secure an income in later life, perhaps dealing with ill-health or the death of a partner. All of this against a backdrop of changing legislation, taxation and economic conditions.
For women, you can throw into the mix lower incomes, maternity leave, career breaks, part-time working and so on. Women’s financial journeys can be far more complex. Again, I think I would like to talk to someone who is experiencing that themselves.
We are having families later and more and more women in their fifties are still caring for children. In addition, 1 in 3 women in their fifties is caring for an adult4. All when we should be in our highest-earning years.
Oh, and let’s not forget that we live longer than men. At the moment interest rates are so low that the likelihood is, any cash savings are most likely being eroded by inflation at a faster rate than they can grow. This is more of an issue for women who need to plan for a longer time period.
This leads on to another issue. The Bank of England is purposely keeping interest rates low to encourage people to invest their money in order to achieve a higher return. It means that if you want to make a return on your money you need to look at higher risk investments. Women typically view themselves as being more risk-averse than men, so this makes things even more difficult for us. However, studies have found that women are better described as being more “risk-aware” than men4. Women just need more information.
For a first-time investor without access to the right advice, the options might seem baffling. Investments must carry a multitude of warnings, quite rightly, but seeing these warnings plastered across a website is off-putting without more context. Not all investments carry the same level of risk and whatever your view or circumstances there will be an appropriate investment product for you. The information is out there but in our busy lives, it is hard to find the time to educate ourselves on a subject which is complex and frankly a bit boring. Here the right advice and guiding hand can be really valuable.
A big issue at the moment is making sure that pensions are split fairly during a divorce settlement. Pension splitting is really complicated and as a result it has not been done correctly, most often to the detriment of women. A married woman’s pension is £10,000 on average while a man’s is £53,000 and 71% of divorcing couple’s do not discuss pension sharing4. Brewin Dolphin has created a qualification for our advisors, who are trained to support people going through divorce as a result of this issue. I am incredibly proud of this.
More and more couples are co-habiting rather than marrying but lots of people are unaware of what this means in terms of your rights after a split.
Divorce, ill-health and death won’t feature in your life plan but once they happen it is often too late to do much about them. It is no bad thing to start a dialogue with a partner about what each party is bringing to the table in terms of monetary and non-monetary contribution. If one partner’s efforts in the home are allowing the other the freedom to prioritise their career, succeed, pay off a mortgage, accumulate savings and contribute to a pension then that should be recognised and taken into account whether you are married or not.
There are lots of benefits to viewing your finances as a family. Married couples can take advantage of various benefits. Even if you are not married, if your financial goals are joint, then your plan should consider the full picture. It is also usually a good idea to think about how your parents and children fit into your financial plan. Make sure someone is looking after your interests. Don’t wait for your partner to take your finances in hand, do it yourself. If your partner has an advisor, don’t assume they have your interests in mind, your partner is the client, not you. If you have a joint advisor but they deal mainly with your partner, change that. Familiarise yourself with your family finances.
There are also more sinister issues that affect women. A quarter of women have experienced domestic abuse and two-thirds of those cases will involve financial abuse4. Coercion can range from preventing someone from earning by limiting their educational opportunities to stopping them getting a job. In some cases, it can escalate to losing control of your own money, a partner taking out debt in your name or gambling family money away.
Men and women are different. And not all women are the same. Women’s financial needs can be more challenging and complex, and for various reasons, women are not seeking sufficient help or getting the right advice. Times are changing, and you can find advice on the go that suits your busy lifestyle from people who are facing the same challenges as you.
So, if I had two pieces of advice what would they be? One, realise the importance of finances to your overall wellbeing. When you are making New Year’s resolutions make sure you give it the priority it deserves. Make a promise to yourself to get a financial plan in place or review your finances this year. Two, if required, get some objective, impartial, expert advice. First meetings are often free of charge (but do check) and you will be amazed at how much you can cover. You will walk away feeling like you have taken a really important step.
Accessing financial advice
The right plan for you will depend on where you are in your journey. It is never too early to start budgeting and saving. If your situation is straightforward, websites like The Money Advice Service can set you off down the right track. You can find the link below.
If you have debt, make a plan to pay it off. Again, the Money Advice Service has some guidelines. If you have a problem with debt, contact a free, impartial charity. Beware of expensive loan consolidation companies posing as these organisations by using the link below.
When you might need financial advice
Once things get more complex a financial advisor can help you. When might you need financial advice:
- I have a long-term savings pot
- I have taken out a mortgage
- I am starting a family
- I have received an inheritance
- I am thinking about my retirement
- I am getting divorced
- I am selling my business
A few years ago, it became apparent that there was an advice gap in the industry for those who had got the hang of budgeting and saving but hadn’t yet saved enough to be “wealthy”. Actually, those middle years are formative. Brewin Dolphin looked at what we could do to help, and we now offer solutions for savings of £2,000 or more. We offer low-cost financial planning advice over the phone for those whose finances are getting a bit more complex. At the end of the day, I would rather speak to someone now and start the conversation, even if they are not ready for advice yet. I am more than happy to point people in the right direction, stay in touch and be ready for when they really need me. If you are at this stage, I would be happy to chat with you, so please pick up the phone or drop me an email.
If you are further into your journey, then make sure you are getting enough advice from the right people. Perhaps you started managing things yourself when things were less complicated and you had more time, or perhaps you want a second opinion on a plan you made with your current advisor.
+44 (0)191 279 7541
Useful links and sources
Beginners guide to managing your money
Where to get free debt advice
More about financial abuse
Brewin Dolphin online investment (low cost, high-value savings solutions you choose yourself)
Brewin Dolphin wealth management (advice and solutions for more complex finances)
The DNA of Financial Wellbeing 2019 – Neyber https://cloud.e.neyber.co.uk/DNA-2019
The WealthiHer Report 2019 https://www.wealthihernetwork.com/reportall
Hampton Alexander review – FTSE Women Leaders 2019 https://ftsewomenleaders.com/wp-content/uploads/2019/11/HA-Review-Report-2019.pdf
The Financial Lives of British Women by Jane Portas https://vimeo.com/352683872