Financial planning for women – what’s stopping women from managing their own finances?

When it comes to financial planning, there’s a gender gap in the market.

Despite many women controlling their families’ day-to-day finances, many are reluctant to seek financial advice. 

Yet, by 2025, 60% of the UK’s wealth is expected to be in the hands of women.

So why aren’t more women taking control? 

Women are at risk of having no financial safety net and a cash-strapped retirement 

Not taking control of financial matters is a real issue for women.

Not only are they missing out on opportunities to make their money work harder for them, but they also risk losing a financial safety net if life doesn’t go according to plan and face a cash-strapped retirement.   

With women living longer than men and the age at which women can claim the state pension now the same as men – it’s a double whammy for women.

Many are at serious risk of struggling financially when they reach their sixties if, for whatever reason, they’re no longer able to work and have no other form of income. 

Across the board, women are more financially vulnerable  

Due to many factors – from having a longer life span to gender pay inequality and taking career breaks to raise a family – women are much more likely than men to find themselves financially vulnerable. 

According to Now Pensions, women retire with average pension savings of £69,000 compared to £205,000 for men.

Now, Pensions suggests that career gaps and other factors result in an average 10-year career gap for women and £39,000 in lost pension savings. 

Worryingly, according to a study by UBS Wealth Management, more than half of women globally (58%) defer to their spouses to manage critical, long-term decisions.

Reasons range from “my spouse never encouraged me” to “my spouse knows more” about the topic. 

While some challenges women face – such as having a greater life expectancy – are out of their hands, taking control of their finances is a proactive approach that women can and should adopt.  

Clare Stinton, a financial wellbeing specialist, advises that three-quarters of women aged 60 and over are either single, widowed or divorced when they die, which means that relying too heavily on a partner can leave them at a disadvantage. 

Lack of confidence is stopping women from taking an active role in managing money 

So, what are the reasons behind this?

Results from FCA’s Financial Lives survey show the levels of men and women who say they have low satisfaction with their financial circumstances are similar.

However, there are some clear differences in their confidence in relation to financial matters and their levels of risk aversion, including: 

• Men feel more comfortable dealing with financial services than women 
• A higher proportion of women say they have low confidence in managing money or knowledge of financial matters 
• Women appear to be more risk-averse in the way they manage their finances 

The FCA suggests having low confidence in managing money, low knowledge about financial matters, or not seeing themselves as a savvy consumer is stopping women from taking an active role in managing their money. 

This lack of confidence means that women tend to prioritise cash savings.

Statistics show that women make good investors 

The reluctance of women to invest in anything other than cash savings means they’re missing out on making some serious money, as statistics reveal. 

Warwick Business School conducted a study of 2,800 UK men and women investing with Barclays’ Smart Investor, tracking their performance over three years.

Not only did the women that were examined outperform the FTSE 100 over the time period, but they also achieved better returns than their male counterparts.

The men in Warwick’s study managed an average annual return 0.14% higher than the FTSE 100, but women outperformed the benchmark by 1.94%, beating men by 1.8%.  

This is more than just a lucky break. A separate study by Hargreaves Lansdown also found that women investors had the edge, returning on average 0.81% more than men over a three-year period.

Astonishingly, if this pattern continued for 30 years, the average woman would end up with a portfolio worth 25% more than the average man. 

It’s time for women to harness their financial power 

It seems that women should have faith in their financial nous and shake off any preconceptions about investing being just for bankers and brokers and ‘not for them’.  

The first step is to find a reputable financial adviser who has the expertise to help you make your financial plans.

"Don’t be afraid to seek professional advice," says Davinia Tomlinson, CEO and co-founder of Rainchq, which seeks to empower women to achieve their financial goals.

"I always say getting a financial adviser to help you secure your financial future is equivalent to getting a PT to help you achieve your fitness goals." 

A financial adviser can help you secure your financial future 

“We did some research with a group of 60-70-year-old ladies who talked about their retirement experiences, and not one of them had gone to a financial adviser because they didn’t feel it was relevant to them," says Karen Barrett, founder and CEO of Unbiased

"If I could wave a magic wand to change one thing, it would be to persuade more women to start managing their own finances.”  

By 2025,  60% of the UK’s wealth is expected to be in the hands of women, giving them more financial power than ever before.

So, the message is clear – there’s never been a better time for women to harness that power by taking control of their finances and planning their own financially secure future.

Unbiased has 27,000 independent financial professionals across the country. Let us match you to your perfect financial adviser. 

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