Financial products ‘need to work for women’
FINANCIAL PRODUCTS need to “work harder” for women as they are increasingly taking household financial decisions and face more complex risks.
Socio-economic factors and the impact of gender stereotypes means that women are facing a ‘gender financial security gap’, according to a new report from law firm Pinsent Masons and gender charity the Fawcett Society.
The report found that women are increasingly taking household financial decisions, with 2020 cited as the tipping point when women will make the majority of financial decisions in the home.
It also said that women face more complex financial risks such as a lower starting salary when they enter work, a wider pay gap and having to take time out to care for children or relatives.
They are also faced with the potential challenges of unequal split of assets and loss of income after divorce, childcare costs and a higher prospect of living with severe health conditions.
Despite these risks, the report found that women are underinvesting in pensions and investment products and underinsuring themselves relative to men, creating a ‘gender financial security gap’.
The report, titled Closing the Gender Gap: Female consumer engagement in Financial Products, called on UK’s financial services industry and policy makers to better engage female consumers.
Carolyn Saunders, head of pensions and long-term savings at Pinsent Masons, said: “Women’s wealth is on an upwards trajectory and more financial decisions are being taken by women than ever before.
“Some organisations are already recognising and engaging with this change but on the whole financial products continue to be developed and marketed in much the same way as they always have been.
“Pensions and investment products need to work harder for women.
“Financial service providers and policy-makers need to help change the perception that finance is a man’s world, boost women’s confidence in their financial capabilities and develop products and advertising that speak to women.
“For the financial institutions that recognise and engage with this change there is significant opportunity to make a positive impact on society while opening up a market which is arguably under-served.”
The gender financial security gap often means that the inequalities women experience during their working years are perpetuated and exacerbated in later life and can put women’s financial independence on the line, says the report.
Women are as likely to save as men but they save less, and in ways that may mean they are not maximising their wealth.
The Pinsent Mason report says 53 per cent of UK women do not have a financial adviser; of those who do, 73 per cent feel misunderstood by them.
Sam Smethers, chief executive of Fawcett Society, said: “Women are both carrying more risk throughout their lives and also less able to take action to address those risks.
“This is partly because women earn less and also tend to prioritise other things over their own financial security.
“But even when women are earning enough to save or invest, the financial information available to them and the choices they are presented with don’t appear to work for them.
“The financial services industry has a huge opportunity here to both put that right and help women to achieve financial independence at the same time.”
The report concludes that there is a “strong moral case” for encouraging the financial services industry to invest time and effort into better serving women.
It adds that there is a strong “business case” for bridging the gap.