Redressing the imbalance

Studies show a disparity in levels of financial confidence between genders. Gill Wadsworth explores what financial planners can do to address this


It will take 151 years for women to achieve financial parity with men, according to the World Economic Forum’s (WEF) Global gender gap report 2022, which includes survey findings from 146 countries.

The index it bases these findings on provides a benchmark across four dimensions:

  1. Economic participation and opportunity
  2. Educational attainment
  3. Health and survival
  4. Political empowerment

The ‘economic participation and opportunity gender gap’ stands at 60.3% which, while representing an improvement on 2021’s 58.7%, is slow progress, says the WEF.

There are many factors that cause and perpetuate financial disparity between the genders: pay gaps; disproportionate time out of work for family care; inequalities in education, healthcare, and legal rights, to name a few.

While research shows that all genders lack certainty in managing their finances – 45% of UK adults do not feel confident in overseeing their money day to day, according to the 2021 Money and Pensions Service’s Financial wellbeing survey – surveys outlined below show that women tend to be less confident than men in this area.

This article looks at factors impacting financial confidence and suggests what financial planners can do to redress the balance.

Generation gap

U.S. Bank’s Women and wealth survey from 2022, of over 3,000 people (50–50 split between men and women) finds 57% of women and 62% of men say they are confident in their ability to manage their finances.

The picture changes when comparing financial confidence across the generations, with 71% of women under the age of 35 expressing confidence compared to 53% of those aged between 35 and 54 and 46% of women aged over 55. This is in comparison to 75%, 63%, and 49% respectively for men.

While the figures are still lower than men, they have improved since the survey was first conducted in 2020, when 47% of women and 61% of men expressed confidence in their ability to manage their finances.

Elizabeth Shabaker CFP®, chief executive officer of Versant Capital Management in the US, says that while it is dangerous to “lump women into one standard category with one set of needs”, historically, women have not always been well-served by the wealth management industry.

However, this has changed and women are now asserting themselves “as decision-makers over money-related issues”, she says.

Growth figures

To illustrate the point, as of 2020, women controlled 32% of the world’s wealth and this was predicted to rise at a compound annual rate of 5.7% to reach US$97tn by 2024, according to research published that year by Boston Consulting Group. In-country data supports the global trend.

But there are still global wealth disparities between genders. In the US, for example, women working full time earn about 82 cents compared to every dollar earned by men, with the gap even larger for women of colour, according to 2021 research from the Federal Reserve Bank of St. Louis. While in the UK, in 2020, personal wealth was estimated to be £101,000 lower for women than men on average, according to the Office for National Statistics.  

Almost half (46%) of women surveyed say that financial autonomy is a key driver of self-esteem

And research from UBS published in 2022, Women on purpose, shows that while half of married women still defer investing and long-term financial decisions to their spouses, this figure has fallen from 56% in 2018. At the same time, the number of women who take the lead on financial decisions has increased to 26%, from 21% in 2018.

Antoinette Mullins CFP®, director at Steps Financial in Australia, says the level of deference varies among her clients, typically according to age. “My younger clients – certainly those in their forties, but especially their thirties and twenties – are surrounded by more sources and discussions about money than their parents ever were,” she says.

But female labour force participation over three decades has remained stagnant at just over 50% compared to 80% for men, according to data published by the World Bank in January 2022. That said, it does record a “sharp rise” in participation from 1960 to 2020 in five countries in particular: Chile, the Korean Republic, Panama, Portugal, and Spain. These countries, it says, have high income levels today but in 1960 were “comparable to low- and middle-income countries”.

Link between financial autonomy and self-esteem

The ongoing disparity in labour force participation between the genders limits female financial autonomy and can contribute to low self-esteem.

The report concludes that “across the globe, women face inferior income opportunities”, are “less likely to work for income or actively seek work … less likely to work in formal employment and have fewer opportunities for business expansion or career progression. When women do work, they earn less”. 

This lack of financial autonomy correlates with low financial confidence, according to research published in 2021 by WealthiHer, a female-focused think-tank which compiles research to help drive a more equitable future for the financial and professional services sectors.

The survey, covering 2,239 women and men in the UK, Hong Kong, Singapore, and China during 2020, finds that men are roughly twice as likely to have high self-esteem than women and that those women who do describe themselves as having high self-esteem have earned wealth through their career. Almost half (46%) say that financial autonomy is a key driver of self-esteem.

Financial planners have a role to play here in helping clients to gain more financial control over their lives, says Antoinette.
Covid-19 impact

According to research from Oxfam International, women were almost twice as likely to have lost their jobs during the pandemic, which resulted in US$800bn in lost income for women in 2020. However, the research finds that 51% of women say they want to take a more active role in looking after their money post-Covid.

And a financial wellness barometer from SmartPurse, which surveyed over 2,500 women worldwide in the three years from April 2019 to April 2022, finds that women’s rating of their financial confidence increased from 4.8/10 pre-Covid to 5.2/10 post-Covid.

Antoinette says the statistics can be “quite sobering” and she uses them to encourage women to become more actively involved in improving their relationship with money. “And it is a relationship,” she says. “There are certain views and values that one holds about money, and quite often financial planners must help clients to get past that. I’ve heard ‘I’m a spender’, or ‘I’m not good with money’ too many times to count.”

Minding the gap

In particular, women need support in saving for retirement. WEF’s Global gender gap report 2022 finds that women globally are expected to accumulate only 74% of the wealth achieved by men when they reach retirement, with women residing in Asia Pacific and the Middle East and Africa suffering the biggest disparities.

Meanwhile, data from the OECD published in 2020 shows that on average women aged 65+ receive 25% less income than men from the pension system globally. Japan has the OECD’s largest gap at almost 50%, while the UK, Netherlands, and the US all have larger discrepancies than the OECD average.

December 2022 research from Phoenix Insights and the UK-based Institute for Employment Studies reveals only one third (34%) of working women consider the impact of reducing their hours on workplace pension contributions, compared to nearly two thirds of men (62%).

Yet research from consultant Barnett Waddingham reveals more than half (55%) of women plan on taking some action to help close the gap, including increasing pension contributions (20%) and talking to a financial planner (14%) about their retirement.

This is especially important given women’s greater life expectancy – they live on average five years longer than men, according to the World Health Organisation

Elizabeth Shabaker says: “Baby boomers control about 70% of affluent-household investable assets, and most women of this generation have let their husbands run the financial part of the household. As men pass away, many will leave control of these assets to their spouses, who are often younger and live longer. Women are positioned to have a monumental wealth transfer over the next decade.”

Taking control

The 2020 Oliver Wyman Women in financial services report says the financial industry stands to lose US$700bn every year by ignoring women.

Financial planners have a significant role to play in helping women gain financial confidence, take control of their money, and ensure they can participate in savings and investments. Antoinette says that role starts with education. Working with her clients, she says they have to “get it” and understand exactly why insurance is needed, for example, or why certain investments are chosen above others, or why increasing pension contributions are required.

She says extra meetings might be necessary along with “some handholding” to make sure everyone – regardless of gender – is involved with the process. “We work to the pace of the ‘slowest’ partner when working with couples. The person who needs to ask more questions or take a bit of time to read things through,” Antoinette adds.

Elizabeth recommends helping clients to research and interview wealth managers and their firms to find the right people to help address unique personal goals and interests. “A customised plan that identifies and addresses all facets of your financial life is vital to overall wellbeing for both the short- and long term,” she says.

Lisette Spork CFP®, a financial planner at LS Personal Finance in the Netherlands, says that having an open conversation that leads to a well-crafted financial plan, which is reviewed annually, is the key not just for women but all clients’ financial wellbeing. She concludes: “After a short while most of my clients are starting to like the process, the insights they get, the peace of mind, but also they see the possibilities.”

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Published: 02 Mar 2023
  • Wealth Management
  • Training, Competence and Culture
  • Financial Planning
  • Career Development
  • women in finance
  • wealth management
  • retirement
  • gender pay gap
  • gender imbalance
  • financial planning
  • Covid-19
  • confidence

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