Client webinar - Bridging the gender wealth gap

Financial inequality between men and women is not a new topic, but the persistent wealth gap between the genders remains a pressing issue. It is a disparity that goes beyond differences in income and extends to savings, investments, pensions and even inheritances.

Women often face distinct circumstances, such as career breaks, lower risk appetite and a longer life expectancy, all of which impact their ability to build and preserve wealth.

We recently hosted a webinar where we explored these issues. Our experts delved into our Women & Wealth Report 2024 and gave practical advice for women and their loved ones looking to close the gap between men and women.

The gender wealth gap, explained

As noted by Joanna Westwood, Director of Financial Planning at SPW, the gender wealth gap is more than a single statistic. While government data shows UK women earn, on average, 7.7% (1) less than men, the wealth gap goes beyond this figure. "It's a daily reality that affects many women's security and ability to make choices about their lives and futures,” Westwood said.

Some key findings from the report show that of those surveyed:

• Worryingly, 29% of women save less than £100 each month, versus 15% of men.

• Only 17% of women feel very confident about achieving their long-term financial goals, compared to 29% of men.

• Just 13% of women are very confident they’ll be able to leave an inheritance, compared to 22% of men.

Katie Nutting, Financial Planning Director at SPW, shed light on the factors behind these disparities.

“What we’re talking about is the difference in asset values between men and women,” she explained, including the value of pensions, savings and investments. Women, Nutting commented, are more likely to take career breaks for caregiving responsibilities, which leads to smaller pension pots and savings.

Compounding this is the fact that 79% of women surveyed opt for lower-risk investments, compared to 56% of men. While seemingly safer, these investments can result in less wealth accumulation over time. “Women tend to sit in cash more so than men, which means the gap widens because they’re in lower-risk assets,” Nutting added.

Gillian Hepburn, Commercial Director at Benchmark, noted that the gender wealth gap means “women are one demographic that ought to consider taking on more risk”.

“Risk is not black and white,” she said.

“There is a scale of risk, and a good financial planner will work with you to determine where you sit on that spectrum and how your finances might be impacted by different scenarios. Additionally, your level of risk might change over time with your circumstances.”

Breaking down barriers: The role of financial education

Considering these gender differences, education plays a key role in empowering women to make financial decisions. This is especially important as our report revealed that only 39% of women agree or strongly agree that they had a good financial education, compared to 53% of men.

Justin Blower, Regional Director at SPW, emphasised the importance of demystifying the stock market.

“Investing is a long-term commitment, and while the stock market might go up and down each day, the focus should be on its trajectory over the course of your investing timeline,” Blower said.

“It’s also important to seek information from reliable sources. Anyone can claim to be an expert, but it’s financial professionals who have the training to understand your circumstances and needs.”

Nutting agreed, adding that women may feel more comfortable making financial decisions once they’re better informed. “It’s easier to take a risk when you feel like it’s an informed decision,” she said.

The bigger picture: Life events and their financial impact

It’s particularly crucial that women feel confident making financial decisions because, as noted by Hepburn, 80% (2) of women will be solely responsible for their finances at some point in their lives – often due to the death of a spouse or divorce.

“Have an idea of what your marital assets are. You don’t need to know everything in detail, but understand in broad terms what you and your partner have and where it’s kept,” Nutting urged.

“Engage a professional, particularly if you’re facing a major life event. Every relationship is different and they can tailor a plan that works for yours. That can bring much-needed peace of mind amid the emotional strain of some of these events.”

While these tasks might seem daunting, the best step women can take is simply to act. As noted by Westwood: “The gender wealth gap is rooted in societal inequalities, but that doesn’t mean it’s impossible to close.”

For tips about financial planning for women and their loved ones, see our experts’ Top Tips. And for more insight into the current gender wealth gap, read our Women & Wealth Report 2024.

We believe that early planning and specialist support can help to build a better financial future. We have advisers across the country, ready to sit down face-to-face, to talk on the phone or meet virtually. We don’t charge for drawing up your own personal plan, and there’s no obligation to proceed. There are no hidden fees or charges, and you’ll only pay if you choose to go ahead with the recommendations in your personalised financial plan. Speak to our team today to see how we could help you.

Sources:

(1) ONS (2023) Gender pay gap in the UK: 2023. Available at: Gender pay gap in the UK - Office for National Statistics (ons.gov.uk) (SPW is not responsible for the content or accuracy of the information on external websites)

(2) Schroders (2021) Taking the Reins: Female Clients and the Transfer of Wealth. Available at: 602194_female-clients_taking-the-reins-brochure_final_updated_digital.pdf (schroders.com)(SPW is not responsible for the content or accuracy of the information on external websites)