By Ahmed Bawa, CEO of Rosemount Financial Solutions (IFA)
Recent years have rightly seen a greater emphasis on tackling the gender pay gap, with firms who have more than 250 employees required to publish a report each year breaking down the gap in average earnings between male and female staff.
But it’s not just pay where there is a significant financial gender gap, but pensions too.
A recent study by Scottish Widows makes clear the difficulties faced by women when it comes to pension saving. One in 10 women aged between 22 and 29 had opted out of their employer’s pension scheme, with common reasons being the contributions are unaffordable and that they need to be able to spend the money now rather than save for the future.
Notably, women are also less likely to be paying into a pension from an early age, with just 14% of women contributing to a pension by the age of 22 compared with 19% of men of the same age group.
These variances might seem small, but over a lifetime they turn into substantial differences in pension pots. Research from Now Pensions found that while women retire with a pension pot of £69,000 on average, men retire with a pot containing £205,000, and subsequently are in a far more comfortable position for their later years.
Putting it off for tomorrow
Getting clients comfortable with the idea of paying into a pension is not always easy.
There are always other financial pressures that may feel like a greater priority, such as saving for a deposit on a house or making greater use of an ISA allowance. Crucially, that money is within reach as and when they need it, should some unexpected expense arise.
By comparison, saving into a pension can seem rather remote, since it is money that they won’t have access to for decades to come.
It’s a similar issue that advisers can face with certain forms of protection. Just as clients may be reluctant to think about their mortality and the need for life insurance, so too they may be unwilling to consider the need to save for their later years.
Building trust
However, the fact that these concepts may be uncomfortable are not reasons to avoid them – they are really where good advisers make their mark.
And there is clearly a crucial role for advisers to play in combating the pension gender gap, in opening the eyes of female clients to the risks they face in later years if they are unable to put aside sufficient sums to cover their needs.
This doesn’t have to be a case of ‘project fear’, but simply highlighting the difference that even small sums can make when they are invested through a pension over the long term.
After all, for many clients a big hurdle in pension saving is simply understanding how they work, and what steps the client can take in order to get the best result from the sums they save each month.
Taking on this position as educator helps the adviser build trust with the client, establishing that the adviser’s priority is truly ensuring the long-term monetary health of their client, and in so doing boosting the chances that the client returns to the adviser for their various financial needs in the years to come.
This message may also be better received if coming from female advisers. While the advice market has made great strides in recent years in boosting the numbers of female advisers, it remains an industry dominated by men. By boosting efforts to attract more women into advice roles, we can help address particular financial challenges faced by our female clients.
You aren’t alone
The support structure around an adviser will have a significant impact on how effectively they are able to spread this message. It’s crucial for networks to deliver that support, for example in providing bespoke training for member firms so that they are fully on top of how to get the message across, or in producing marketing materials so that clients understand the full range of products on which they can tap into the adviser’s expertise.
A further measure which can make a real difference is by bringing different ARs together, so that they can learn from their peers about overcoming such obstacles, or dealing with particularly tricky individual cases.
It’s something we believe in strongly at Rosemount, making sure that our member advisers know they are not alone and can benefit from the experiences of their fellow ARs. We hold regular surgeries and masterclass sessions with our ARs for precisely this reason, helping them develop the skills they need to work more effectively with clients across a range of products.
Advisers are in many ways the front line in tackling the insufficient sums being saved into pensions, particularly by women, which is resulting in this painful gender gap. It’s vital that networks go further in making it as easy as possible for advisers to tackle the issues holding back pension saving, and ensure that greater numbers enjoy a more comfortable retirement.
