The Financial Power Of Women

• Description of the programme:
• The study:
• Key findings:
• Points to consider:

Description of the programme:

Women have different investment behaviour to men due to some historical barriers to investing. These barriers include persistent disparity in investable incomes, time, confidence and access to information compared to men. The Previous research from the World Economic Forum has suggested that based on current trends it will take many decades to close the gender pay gap. Indeed the Office for National Statistics (ONS) has suggested that the average gender pay gap in the United Kingdom is 18.4%. The average full-time weekly wage for men is £718, compared to £578 for full-time women. The knock-on impact is a significant disparity in investable incomes and savings, leaving women with an average pension pot of £5,600 less than the average man’s.

On the whole women are under-represented in the workplace, generally having greater familial roles. These two factors play a significant role in maintaining the gender pay gap and adverse investment outcomes for women. The report presents three examples of ‘penalties’ that adversely affect women’s financial wellbeing throughout their working lives :

• The Motherhood Penalty: Many women take time out from their careers to have children.
• The Childcare Penalty: With British childcare costs among the highest in the world, many mothers opt to stay at home to care for their children.
• The Good Daughter Penalty: In 2017 the Department for Work and Pensions estimated that eight% of the private-household population acted as an informal carer for someone. Almost three-in-five of these carers (59%) were female.

The study:

This 2019 insight report from Fidelity International (a privately-owned investment company) explores the financial issues that women may face on a day-to-day basis, as well as taking a longer-term holistic view of the impact of the gender disparity on their working lives and into retirement.

Fidelity International commissioned interviews of over 1,000 men and 1,000 women on their views on money and investing, including how they engage with investment, and the barriers that they face when investing. Four-in-five respondents (80%) had over £10,000 of ‘investable income’. This research was conducted by Opinium Research.

The study also uses information gathered from a variety of sources, including data from the Office for National Statistics, The World Economic Forum, the Department for Work and Pensions, and Fidelity International’s own management information.

Key findings:

• The survey results showed that of those couples that live together, just 15% of men and women reported that their income is similar or equal to their partner’s.
• Half (48%) of 18-34 year old women report earning less than their partner, compared to 57% of 35-54 year olds and 65% aged 55 and over.
• Two-thirds (64%) of women say they understand that having investments would improve their financial power.
• Men are twice as likely as women to invest in a ‘stocks and shares’ ISA.
• Three-in-five men (61%) said they would talk to their partners about financial decision-making, compared to 53% of women.
• Four-in-five women (81%) say lack of trust in investment providers stops them from investing.
• Almost three-in-five women believe risk can lead to potential or even certain loss, which in turn affects where they feel confident saving money.
• Among 18-34 year old women, over double the amount (26%) thought that they would invest if the language were easier to understand, compared to 10% of men in that age group.
• Over two-thirds of women (67%) feel that property offers equal or greater security than investment products.
• Women saving an extra one % of their average salary into their pension scheme could have hugely positive effects for their future, as well as accelerating the end of the gender pay gap.
• Finally, the onus is not just on the individual. A lack of trust in providers and the way investment products are talked about, combined with a greater transparency concerning the risks and costs associated with investment, are issues that the investment industry needs to focus on.

Points to consider:

Methodological strengths and limitations:

• The calculations for future earnings and pension savings are hypothetical and based on a number of assumptions. Therefore, the estimated returns on pension savings must be viewed with caution.
• The report is written using first-person pronouns (e.g. ‘our’ ‘us’ ‘we’ etc) to represent women, which can lead to ambiguity when interpreting the statistics that are presented.

Relevance:

• This report is relevant to all stakeholders and policymakers who are interested in how women experience their working lives, investment behaviour, pension provision and financial decision-making. It is particularly pertinent to those looking to influence the policy environment regarding the gender pay gap and pension equality for women.

Generalisability/ transferability:

• This report is based on an adequate number of survey responses, but there are very few details given on the sampling methodology. We are therefore unsure whether this study can be seen as representative of the wider UK population. However, many of the findings will apply to large segments of the female population, while some insights are likely to be transferrable to other countries with similar regulatory environments.