OpinionApr 12 2023

'We can't be bored of discussing the gender divide in retirement'

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'We can't be bored of discussing the gender divide in retirement'
A 7IM survey revealed 14 per cent of women retired later than anticipated because they were anxious over their retirement income needs and savings. (FT Montage)
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I am bored with having to talk about the gender divide. The uncomfortable truth is that it has been around for centuries, if not for millennia, and it is still with us.

I do acknowledge that an encouraging amount of progress has been made and the divide is no longer as black and white as it once was, but nobody can deny that it does not still exist.

And perhaps nowhere is it more pronounced than in retirement, and critically in retirement planning.

Financial planners have to deal with this gender divide every day, even down to the nuance of considering the hard fact that women tend to live four years longer than their male counterparts. 

Broadening our approach

It seems obvious that there might be different considerations to the retirement plans of men and women.

But I would like to take this a step further and put it out there that this discussion should no longer be restricted to a discussion on financial planning for opposite-sex couples.

We need to expand this to planning for divorced, single and same-sex couples. 

Clearly as an industry we need to get it together and address the issues arising from a gender divide, but might it be more efficient to reconsider our overall approach?

Adapting to new environments has always been a challenge for the industry.

To consider the make-up of society we live in today demands flexibility, with a robust and coherent outcome.

This, I believe, is key to delivering the best possible outcomes for all.

The world is changing, fast. We only need to look at the past decade, or even just the past three years, to see how quickly the world is changing.

And in just those brief few years what was once relevant has become obsolete; iPods, DVDs and mobile phones with physical buttons have all disappeared into obscurity.

But we must ask ourselves the hard questions: are we changing fast enough as an industry?

Are we reacting not only to the challenges of a gender divide, but to the changing shape of society? And what does this mean for financial planning and us as an industry that supports financial planners?

We need to be an industry that shows our relevance to our clients.

If we do not show that we know them and that we change in tandem with them, we will simply face irrelevance.

Staying relevant 

Adapting to new environments has always been a challenge for the industry.

The world is changing faster than ever, driven by the choices and decisions we make every day.

In these times of constant change, those thinking of retirement, or entering it, have to believe that trusting their advisers is the right decision to make.

Many women are unsure if they can achieve the lifestyle they hope.

So as an industry, we need to ask ourselves what we are doing to ensure we look after all our clients and what we need to do to keep justifying our value – something that the regulator is more focussed on than ever before with the likes of consumer duty.

I would like to think we live in a more equitable place than we did, say, 30 years ago.

We have seen so much change in technology that has allowed for information to reach further to people in further corners, with economic growth allowing people to pursue their dreams more easily.

And most importantly, we have seen huge changes in society.

Mentalities have evolved (and still are), and we should celebrate that people are free to voice their convictions, their beliefs and their choices. 

I am certainly very glad that one of those changes has been the empowerment of women in all facets of society.

Female representation in all corners of the world grows by the day, and women are increasingly vocal in their opinions and decisions than they were a few decades ago.

The gender divide

It is a widely known fact that women live longer than men on average. According to the Office for National Statistics, life expectancy at birth in the UK in 2018 to 2020 was 79 years for males and 82.9 years for females.

That is a four-year difference that needs to be factored in and addressed by us as an industry.

We urgently need to talk about the huge difference these four years mean when it comes to financial advice and retirement outcomes.

We need to know these disparities exist so we can communicate to our clients about what we can offer as an industry.

Financial planners put their clients at the heart of what they do to provide the best possible service based on their specific circumstances.

The fact that women live longer than men on average should be at the forefront of financial planning so that women are reassured their income will last their lifetimes.

Unfortunately, many women are unsure if they can achieve the lifestyle they hope. We know this because 7IM commissioned a survey with the help of Cicero/amo of 505 fully or semi-retired UK adults aged 55 or over, to understand the issues facing retirees.

Regrettably the data suggest that we are not currently doing enough.

When asked how confident respondents were that their savings would enable them to maintain a lifestyle they would consider comfortable through retirement, 52 per cent of men said they were extremely comfortable and only 36 per cent of their female counterparts said the same. 

It is clear that the social norms of yesteryear are no longer the social norms of today.

Knowing that women live longer than men on average, combined with the fact that few women at or nearing retirement are very comfortable with their savings, is alarming to say the least.

The same number of women – 36 per cent – felt like there was not enough choice or felt unsure about their retirement solutions, compared with 21 per cent of men.

But how does this affect the industry? First of all, we all must be aware of this. This is, among other things, a reflection on the image our industry has in the eyes of society.

We need to know these disparities exist so we can communicate to our clients – especially our female clients, who feel less confident than men – about what we can offer as an industry, and show them we are addressing this imbalance.

Industry must be flexible

So how can we support women in achieving their retirement goals?

The answer is simple: flexibility.

The industry has to be agile and have the necessary products and services in place to deploy the most optimal solution for every client.

We need to support those who, regardless of their gender, are married or remarried or divorced, those who choose to remain single and those who do not have a choice, those who have and do not have children, and those who have same-sex partners or opposite-sex partners.

Coming up with the right products and services to close gaps like this is essential, and the industry needs to do that now.

After all, according to the ONS divorce rates are on the rise and marriage rates are down. In fact, the latest figures from the ONS suggest marriage rates for opposite-sex couples have fallen to their lowest on record since 1862, while divorce rates increased by 9.6 per cent in 2021 compared to 2020.

It is clear then that the social norms of yesteryear are no longer the social norms of today, and failing to meet the needs of this diverse clientele means also failing to help people at and in retirement as an industry. 

Our survey also revealed that, from the population that retired later than expected, 61 per cent of women said they stayed longer in employment because they enjoyed working and their working lives, compared with 48 per cent of men.

I love my job, and it warms my heart to know that other women feel the same.

But on the other hand, 14 per cent of women retired later than anticipated because they were anxious over their retirement income needs and savings, compared with only 10 per cent of men.

An agile, client-focused industry must be able to have the flexibility to offer its clients the confidence and support regardless of their gender.

Coming up with the right products and services to close gaps like this is essential, and the industry needs to do that now. The only way to do that is to have the answers to the difficult questions. 

Having the right solutions and services in place to support those who live longer – like women on average – is a basic yet fundamental obligation the industry has towards its clients.

When asked how respondents felt about their choices available at retirement, our research showed 76 per cent of men felt there was a good balance, compared with 61 per cent of women. This is a steep difference and yet another indication that there is still progress to be made in closing the gender divide in retirement.

This is to reiterate that the industry needs flexibility: to service its clients, to underscore its relevance, to strengthen its reputation as adaptable and discerning, so it can service its clients in the best possible ways.

I do not like to generalise, but if I were to make a general observation about our industry, it is that in the past retirement advice was heavily geared towards the male retiree.

But we do not live in a world where it is useful to make generalisations. Every client is unique, and that is why traditional advice concepts and practices have become less relevant as we observe an increase in diversity.

This is where the challenge for the industry begins: we as an industry need to prove that we are relevant by offering the products and services to financial planners to enable them with the best answers to all these difficult questions.

We do not live in a world where it is useful to make generalisations. 

An agile, client-focused industry must be able to have the flexibility to offer its clients the confidence and support regardless of their gender, sexual orientation, marital status, or any other factors, as ultimately this offers the best outcomes.

In the end, if our industry does this, it will ultimately close the gender divide in retirement. But we will also achieve a lot more; we will prove as an industry that regardless of who you are, we can offer you the flexibility, confidence and support to pursue your financial goals. 

Diversity requires flexibility, and the industry must get it together to provide the best retirement income advice to all its clients.

Verona Kenny is the managing director of intermediary at 7IM