'There is no reason now why women cannot know about money'

Siobhan Barrow, head of intermediary distribution for Scottish Widows, talks to FTAdviser in Focus about how advisers can use people's specific needs to start them thinking about longer-term financial planning.

She also discusses the financial impact the pandemic has had on women in particular, and speaks about what advisers can do to help younger women become more financially resilient.

FTAdviser: Throughout life men and women have specific financial needs, such as saving for a deposit at the younger end or later-life care funding at the other. How can advisers help their clients think intergenerationally when it comes to financial planning?

Siobhan Barrow: We know that over the next 30 years, £5.5trn of wealth is estimated to be passed between generations in the UK, but we also know wealth is not evenly distributed, with the older generations being the wealthiest. 

The key to managing wealth distribution is for advisers to start having client intergenerational planning conversations earlier. This helps normalise the conversation on finance, which can often be a tricky one to approach, especially when it comes to discussing with family.

Women are more likely to face life events that will negatively affect how they can save for retirement.

The earlier the younger generations are involved with intergenerational planning conversations, the better (for the whole family). Advisers can ask clients to bring younger family members along to planning meetings or ask for contact details from their clients.  

They can then consider additional family needs such as a protection need, for example, adult children who are no longer covered under their parents’ protection policies and provide case studies and examples of where your advice is relevant to their family and how it would work for them.    

FTA: We have seen from the pandemic that the financial impact has been harder on women, especially younger ones, as many worked in roles that resulted in furlough or redundancy. What is needed to help make younger women more financially resilient?

SB: Younger 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. These continuing differences reduce many women’s financial resilience.

At the same time, the deep-rooted inequalities that make young women more vulnerable to the crisis also contribute to longer-term retirement inequalities. Government and society at large must continue to work to close these gaps and to pull the wide array of policy levers that are essential to achieve this. 

This includes ensuring the best education and career opportunities for young women, as well as providing better maternity and paternity support, affordable childcare and flexible working policies that are fair.

Lowering the auto-enrolment threshold and reducing gender pay gaps will go a long way in helping younger woman build up a financial resilience.

These and other reforms are likely to be vital to continue to reduce the gaps we see in earnings and career progression. These are long-running issues that will not be resolved overnight. 

FTA: Are long-term financial planning needs different for women than men? What sort of nuances should advisers consider when it comes to advising female clients?

SB: All of us want financial stability and security but women often face challenges that affect their ability to achieve this. The positive news is women have never been in a better position to achieve this as their impact on the traditional workplace grows.   

I still believe that financial advice is client specific and should be tailored to the needs of the individual, and their specific financial needs.

However, in the financial world woman often find themselves in a very different situation than their male counterparts, so there are some things an adviser needs to be conscious of when advising a female client.

These issues are:

• Women have a longer life expectancy. This increased longevity means that their retirement savings need to last longer too, so having a financial plan in place is crucial so their pension fund needs to last longer.
• Women are more likely to take career breaks which can mean loss of income and a break in their pension savings.
• Women are more likely to care for others and balance work and family by working part time and flexile working, which can impact any career progression and result in earning less income, which can impact their savings for retirement. This is a critical driver for lower levels of participation in the workforce for women, and much higher rates of part-time working, especially for women in their 30s and 40s. 
• Financial planning can also be the last on the to-do list for a lot of women, who often shoulder the higher proportion of caring responsibilities. 

FTA: Why do we talk about the gender pension and the gender protection gaps? What can financial services do to help close these gaps?

SB: Starting with the gender pension gap, the difference in savings is estimated to be £100,000 between a man and a woman, according to our 2020 Scottish Widows Women & Retirement Report, with average savings rates on the median wage over a 44-year career.

There are many reasons that women are on course to have £100,000 less in their pension than a man. The amount people save into their pensions is generally a percentage of their salary or income, so anything that reduces your income, will reduce your pension.  

Women are more likely to face life events that will negatively affect how they can save for retirement such as taking time out to raise a family, manage caring responsibilities, be in lower paid work, or part time roles (75 per cent of part time workers are women, according to research).

There is no reason now why women cannot be knowledgeable about money

The gender pay gap also plays its part so it’s important to raise awareness around how these challenges can impact retirement planning.     

Moving on to protection, research shows 8.2m UK mortgage holders have no protection in place.

This equates to roughly 50 per cent of all UK mortgages which leaves the mortgage holder and their family financially exposed should they suffer a financial shock such as unemployment, ill-health that prevents them working, or worse case scenario, the death of a loved one.

Protection exists as an important benefit to help individuals build financial resilience. 

As a provider, we are already highlighting the issue to raise awareness on protection and pensions.

We are working with workplace schemes to understand retirement savings by gender, and lobbying government on changes to reduce the gap, for example, lowering the auto-enrolment age from 22 to 18; Increasing the higher default contribution rates to help reduce the gap.

FTA: Are women less likely to talk money or to take advice? If so, what can we do to help shift the conversations and encourage more women to take professional financial advice? 

SB: In the past, traditional gender roles might be responsible for an assumption that men should handle finances. There is no reason now why women cannot be knowledgeable about money, confident in seeking financial advice, and able to make great financial decisions.

Going back to the intergenerational planning conversation, including the whole family and normalising conversations on finance could help educate and encourage an interest in personal finance from an early age for both genders.

Some woman may feel uncomfortable talking through health questions to a male adviser, for example on a protection application, prompting the need for a greater female representation of advisers. Education, awareness and family financial planning conversations are key here.

FTA: What sort of life stages might be good entry points for a woman to consider financial advice? 

SB: All throughout life! Some occasions are more significant than others in terms of financial advice – such as getting married/starting a family or making a career change, but the Chartered Insurance Institute has identified six 'moments that matter', which impacts a woman’s financial resilience: 

• Growing up, studying and re-qualifying; – social influences can have significant impacts on perceived roles in society and lead to differences in career choices, as well as historic gender stereotypes regarding attitudes to money. 
• Entering and re-entering the workplace – temporary or low-pay and impact on auto-enrolment eligibility, lack of understanding of different pensions to determine correct choice for circumstance, impact of reduced pay (maternity, part-time etc) on future financial wellbeing (pensions, savings)
• Relationships: making and breaking up; getting married; joint account; income protection insurance; divorce – separation of finances (negative emotions – advisers can provide unbiased advice – pensions not usually considered in divorce settlements), impact of co-habitation vs marriage decision.
• Motherhood and becoming a carer; increased responsibilities push finances further down to-do list, opting to take on reduced hours/flexible working at work or part-time work to facilitate parental responsibilities (men less likely to do this societally).
• Later life, planning and entering retirement; lack of understanding around pensions, gender pensions gap, women unlikely to save as much as male counterparts, not seen as something women need to worry about if they have a husband/partner? 
• Ill-health, infirmity and dying; lack of understanding surrounding inheritance circumstances or impact after death of household provider,  

Financial advice can develop financial literacy and ultimately a greater understanding of one’s financial wellbeing, which are all things that will support in the closing of the gender pensions gap and protection gaps.