Young women have been starting to take more personal responsibility for their financial futures.
Studies suggest they have been saving a lot more than previous generations of women as a percentage of their earnings, which is a positive step.
However, there are still structural barriers that mean they tend to be savers rather than investors, and tend not to be as financially resilient as their male counterparts.
Talking to FTAdviser In Focus, Tania Allerton, head of UK advisory distribution for Vanguard, explains why these structural barriers still exist and how advisers and their female clients can overcome them to become both financially independent and financially resilient.
FTAdviser: Is it fair to say that women, in general, are saving less than men?
Tania Allerton: The evidence suggests that women actually save a similar amount to men - as a percentage of their earnings. However, in general women own fewer assets, and have smaller savings balances.
There are a number of long-standing social and economic reasons why this is the case, but I’m optimistic there are tangible steps that can be taken to make progress.
FTAdviser: What are the factors creating this savings gap?
TA: From my perspective, I’d say there are four main factors at work.
Firstly, in general, women earn less than men over the course of their careers. The gender pay gap for full time-workers aged 18-39 is almost zero, but then widens from age 40.
This ties into the second point – women are more likely to take a break from employment to care for children or elderly relatives.
Acting as the primary carer also ties into the kind of jobs women seek. There are more women than men working in lower paid, part-time jobs that have a degree of flexibility.
Finally, I do think women are often less confident than men in investing. This caution can actually serve women very well once they do invest, but it can be a barrier initially.
Some of these factors may have been exacerbated by Covid-19. Those able to continue working from home during the pandemic may have had less expenses to undertake.
On the other hand, a disproportionate number of women work in sectors that were affected, such as retail and hospitality. This may well have had a bigger adverse effect on their earnings. Whether this remains an enduring trend remains to be seen.
FTA: Are young women aware of the need to save - and how does this translate into practice?
TA: I do think women are aware of the need to save, and its importance, yet I don’t think it is always as simple as that. In practice, young people tend to save little due to high living costs or debts such as rental expenses or student loan repayments.