Are women approaching long-term financial planning with the same intensity as their careers?
With lots in the news about the economy, money management and the pension gender gap, chartered financial adviser, Louise Woollard – principal of Louise Woollard Financial – explores how female business professionals can adopt a mindset and approach that help them to thrive both in the workplace and in their personal lives.
Climbing up the corporate ladder
It was recently announced that for the first time ever, women make up more than a third of all board members across the FTSE 350. However, while the number of ladies shattering the glass ceiling in their careers – or taking the self-employment and entrepreneurial route – is rising, this also comes with an elevated wage packet, which needs due care and attention.
This ‘asset’ requires the right level of consideration and planning to manage it effectively for the long-term.
In fact, given the Centre for Economics and Business Research has predicted that women will own 60% of the wealth in the UK by 2025, this only cements the need for you to have a sensible and well-organised investment strategy in place.
Keeping in the loop with finances
In reality, when it comes to financial stability, it doesn’t matter how much you earn, it’s all about how you manage it, which determines – and preserves – its value well into the future.
That’s why it’s never been more important for females to have a hand in not only the decision-making regarding their personal in and outgoings, but oversight on those within the household too. While some women may be heavily involved in this process, there are still many which tend to take a back seat and allow their partner to manage the family money alone.
As a result, this can lead to feeling uninformed about what’s happening with capital – which could, in turn, trigger further stress and confusion, especially in the event of divorce or death of their spouse.
No matter the circumstances though, if money has been previously handled ineffectively, it may be too late to recover poorly performing investments or top up lower-than-expected pension pots.
Harnessing financial planning advice
When it comes to seeking money advice from a financial planner, a survey uncovered that 6% of women would engage with their representative every month, compared to 12% of men.
The same research also unearthed that ladies were three times as likely as males to have their finances dealt with by their partner.
These worrying statistics are in stark contrast to the earlier figures about the elevated number of women in high-earning, board-level positions, and begs the question — why aren’t more ladies taking the reins with their wage packets?
Appointing a financial adviser isn’t only useful for receiving impartial guidance on how best to invest money in the present, but also for having a keener and more informed eye on the ‘long game’.
Planning for the future, such as retirement, isn’t easy either. ‘When can I retire?’ and ‘How much money will I need?’ are all questions which need careful consideration, to make sure you’re able to achieve your longer-term financial objectives. Getting into this mindset is pivotal for making sure you have all bases covered when the time comes.
Talking about money, retirement and divorce
Often regarded as one of the most taboo subjects to discuss, keeping quiet about money queries or worries is one of the worst things you can do when it comes to wealth management.
To look ahead to the future with peace of mind, mutual openness and honesty around your short, medium and long-term goals needs to exist. By discussing, as a couple, how your objectives can be reached, can not only foster a greater sense of ‘togetherness’ in the marriage, but it can also help females to feel better informed and in control of their funds, if the worst were to happen and the relationship broke down.
In truth, research has found that 40% of UK women have stated their retirement prospects worsened because of a divorce – and this really shouldn’t be the case, if they are progressing in their careers and earning more.
That’s why talking about divorce and contingency planning well in advance can actually help you to feel more empowered in your finances.
Also, for those who are married, when it comes to the divorce settlement process, it’s important to be aware that it’s not compulsory to split pensions. And if this is left completely out of the agreement, you can be faced with further challenges if you haven’t accumulated your own pension entitlement over the years.
That’s why, as difficult as it may seem at first, sitting down together and coming up with a list of all individual and joint assets – including any property, pensions and savings – is crucial in ensuring a fair deal for both parties.
For women who aren’t married, while conversations around divorce won’t be necessary, it’s still crucial to take time to reflect on goals and the steps to get there – as well as the kind of pension investments you want to pursue.
It’s worth remembering that when you have a pension, you’re an investor. And what’s the point in investing if it’s not a world worth living in?
This train of thought makes way for thinking about the sustainability of pension investments and using them as a force for good – to make positive changes in the world, not only for the investor but for their children and future generations.
Gender disparity still exists
Despite more women being appointed on boards and becoming more affluent, it must not be forgotten that the gender pay gap is still a prevalent issue – meaning females often earn less than males for occupying the same or similar positions.
Therefore, it’s vital to have conversations, and consider options – not only with a financial expert, but also your spouse – about whether it’s economically feasible for your partner to top up your pension, and then speak to employers about matching contributions.
If so, this can considerably help to improve pension wealth. Financial awareness and wellbeing come both from feeling in control and confident with money and investments. But, in order to help mitigate any feelings of uncertainty about the future, women should try to ensure their first encounter with a financial adviser isn’t upon divorce or death of their spouse.
It’s always better to get ahead of the game as soon as possible.
There’s also room to argue that this financial preparation will also make the time spent working feel more enjoyable and fulfilling, as it forms part a clear roadmap to retirement – ensuring there are no nasty surprises in store and all that’s left is to enjoy the much-needed downtime.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less that you invested.
Louise Woollard Financial is an Appointed Representative of and represents only St. James’s Place Wealth Management Plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services.
Louise Woollard Financial is a trading name of Louise Woollard LLP.