Our Women and Wealth webinar

Panel

Faye Farrant, Chief People Officer, Schroders Personal Wealth, (Host)

Marcelo Rodrigues, Personal Wealth Adviser, Schroders Personal Wealth

Gillian Hepburn, Head of UK Intermediary Solutions at Schroders

Katie Nutting, Financial Planning Director, Schroders Personal Wealth

Faye opened the webinar by setting the scene

At Schroders Personal Wealth we are committed to supporting women in their financial journeys. We believe that financial empowerment is a key step towards helping you achieve your goals and aspirations, whatever they may be.

I’m going to start by sharing quite a bold statistic – by 2025 60% of UK wealth will be in the hands of women [1] – that’s quite a statement and a big opportunity for women.

We appreciate that talking about your finances can often seem daunting and overwhelming but it doesn’t have to be. We are here to normalise the conversation and make you feel more confident about discussing money with friends and family.

To help us gain a better understanding of how women feel when it comes to their finances we undertook some research that highlighted the gap in confidence between women and men when it comes to financial matters.

When asked how confident women are when it comes to managing their finances, 77% of women said they felt confident; however, this is compared to 89% of males.

44% of females don’t feel confident that they are saving enough for their future compared to only 24% of males.

Lastly, 61% of females feel confident when it comes to knowing how to access their finances if something were to happen to their partner, compared to 71% of males.

Our research also focused on career breaks and the impact these have on people’s financial situation. Of those surveyed, 38% of females have taken some sort of career break compared to 22% of males and more women feel that taking a career break has had a huge impact on their long-term financial plans.

You can view our Women and Wealth report here.

Some interesting stats, so why do you think there are differences between women and men when it comes to financial confidence and what can we do to improve this?

Gillian: Differences often come simply from a lack of involvement and which can lead to lack of confidence. However, women usually manage the household budget effectively so why a lack of confidence about broader finances? Our own research indicated that some women felt embarrassed and indeed ashamed that they didn’t understand financial matters, but many felt they had simply been excluded from conversations and unable to discuss their views about money – particularly family money.

Katie: I think that historically financial planning has been aimed at the male population as men would typically make the financial decisions. We are in a very different world now, and as we have heard 60% of the UK wealth in 2025 will be held by women, but I still don’t think marketing and wording around financial planning has changed. I think this has led to a situation where women don’t always feel qualified to make these decisions. I also feel that women will often undervalue their knowledge, and I see that when I speak to a lot of female clients. Women are a lot more financially astute than they give themselves credit for.

To improve financial confidence I would agree with Gillian and encourage women to join the conversation. This might mean getting more involved in any financial decisions that their partner is making or it could mean reaching out to a financial professional to understand how they could improve their financial situation.

Marcelo: I completely agreed with Katie and Gillian. Financial services’ products and propositions have historically been built by men, for men. Combine that with the fact that women are more likely to suffer from imposter syndrome, and you can you begin to understand how much of a negative impact this can have. In terms of driving positive change, one of the best recommendations I can make is for people to not be afraid of outsourcing expertise in areas where they don’t have the necessary knowledge, interest or time to deal with it. There’s plenty of support available and people shouldn’t be ashamed to look for and accept professional help.

Faye: As a financial adviser Katie, what are some of the common things that your female clients approach you about?

Katie: There is a big difference between when you're talking to men and women. Women are very much planning for the next generation, so a lot of their thoughts are about how their wealth impacts their family. So when we're doing cash flow planning (the process of forecasting future income and expenditure) for clients, it tends to be focused on life stages such as helping to pay for children's education, helping them on the property ladder, and when they can retire to help bring up the grandchildren. A lot of planning for women is very much aspirational rather than a figure on a piece of paper that they're trying to achieve.

Also, when I speak to women that are maybe going through a divorce or a bereavement, they're looking for reassurance because they may never have dealt with the money before if they've delegated that responsibility to a partner. They want to feel informed because for them information is power.

Gillian: This may be because often financial conversations don't actually take place with both partners. Often women are faced with wealth they have inherited from their partner and they're very unclear about what's going to happen at a time when they’re most vulnerable. Having family conversations about finances is key so at the point when money transfers to a female, she feels really comfortable and confident about what is going to happen.

Faye - We opened with some statistics on career breaks so what are the potential implications of career breaks or caregiving responsibilities on financial futures, and how can people plan for these situations?

Gillian: Planning ahead is key, and although career breaks such as maternity leave can be prepared for, it’s more difficult if it involves support or caring for elderly parents or relatives. This is a significant challenge for women. When they return to work following a career break, often they change jobs, step back, go part-time or indeed stop altogether. This makes it difficult to navigate what the future is going to look like.

Katie: Women are more likely to take time out to either start a family or care for a relative, which can sometimes result in them coming back into the workforce working less hours or in a less senior position. This can have a huge impact, not just on take home income, but also other areas such as pension savings and protection policies.

Three things I talk to clients about who are in this position are:

1. Continue to utilise both parties tax allowances, where possible.

2. Utilise state benefits such as careers allowance or child benefit for National Insurance credits. Even you are not eligible for benefits, it’s still important to register.

3. Look at how your employer can support you and the rest of your family. We are seeing a huge increase in paternity leave for partners, so maybe you could consider sharing that time off.

Marcelo: I believe most people would agree that career breaks are a good thing in society. So if reduced income and/or savings is the issue, then there are ways that we can mitigate some of the negative impact. For example, you could shift some of your wealth into passive income generating assets, such as purchasing a property that can provide you with rental income. Equally, you could look at generating income around your caring duties, not necessarily in your main profession, but something that would allow you to fit around your new ‘routine’.

Viewer questions and answers

How can I understand the key steps to becoming financially independent and self-reliant?

It’s important to have assets in your own name, because not only do you then have money at your disposal, but you also gain experience. And with experience comes confidence which will help if you are in a position where you have to be independent with your finances through divorce or bereavement. Understanding your income and expenditure could put you more in control during a vulnerable period.

Financial independence also means different things to different people. Making as much money as possible isn’t always people’s main objective. Women particularly tend to want to retire early or help their children and grandchildren. It’s important to plan in the modern way which is objective based. This is then translated into a financial plan which is personalised to help you achieve your goals.

How can I balance saving for my child’s education without impacting my retirement plans?

You should always be the main priority, but if you want to fund your child’s education and you're happy to amend your lifestyle to reflect this, then you can prioritise that goal. One point to make is that Junior ISAs are a great way to save for the next generation but you cannot stipulate how the money gets spent. When the child reaches the age of 16 they can make their own investment choices, and at 18 they can take the money out and spend it any way they choose. So if you are thinking about education, saving in your own name could be the way to go.

How can I mitigate imposter syndrome and become involved in financial conversations?

Not being fixated on figures doesn’t make conversations less valid. Women tend to like to have knowledge to feel in control which can alleviate the feeling of imposter syndrome. But sometimes imposter syndrome is a sign that you’re aware that you’re out of comfort zone which isn’t a bad thing. Men don’t necessarily know more than women so don’t be ashamed of asking for help. Choose an adviser who makes you feel comfortable to talk about important issues and remember that there is no such thing as a silly question.

I don’t like to take risks, especially with my money. Should I invest?

Sometimes there is risk in standing still. Its about taking the right risks for your individual circumstances. But there is always going to be a risk, no matter what decision you make or the decisions that you don't make. It's about taking the right level of risk that you're comfortable with. You've got to match the emotional side as well as the capacity for you to take risk. You don't want to invest in something that keeps you up at night worrying about fluctuations, but there is a point where taking risk is the right thing for you to do providing that you've got emergency funds saved and you've got the capital available.

Women are not normally risk adverse, but rather risk aware. People often need to take a bit more risk to get to where they need to be. But that's got to be a really strong conversation with a financial planner about what that looks like for your specific needs to understand the relationship between risk and reward.

If you would like to pick up the conversation with someone from the Schroders Personal Wealth team please visit www.spw.com or speak to your adviser.

Source:

[1] Centre for Economics and Business Research, ‘Understanding the diversity of women’s wealth’ report, 2019