So, we have known for some time that men (on average) get paid more than women and much is being done to try to bridge the gender pay gap. But there is a much bigger problem than unequal pay, which is just one contributory factor of this increasingly significant issue – the “gender wealth gap”.

Research undertaken by Prospect, trade union, reported that the “gender pension gap” was around 40% in 2018-19, whereas the “gender pay gap” (amongst the full time employed) was around 18% - it is now around 15.5%. The “pensions gap” is a very large part of “the wealth gap”, but again just a part of it. The wealth gap includes all assets including property, cash, investment and pensions.

There are many contributory factors to the wealth gap.  Women, generally, take more time out of work to have and look after children, their requirement for part time/flexible work means they are lesser paid and promoted, much reliance is placed on building their husband’s pension provision but should divorce occur, women are more likely to retain the family home rather than take a share of the family pension – despite the latter sometimes being more valuable.

There is further factor though, and probably the more impactful one, but it is also solvable. I believe that the financial education of women will be a real game changer.  Perhaps because the financial services industry is accustomed to marketing to men, and perhaps because traditionally girls are not taught about business and investing, women generally do not participate in investment in the same way as men. Given the choice women like to play it safe.

As a Financial Planner embarking on a new client relationship, amongst all the “getting to know you” questions is the Investment Risk Profile questionnaire – a psychometric test of multiple choice questions that will reveal how much risk you are comfortable taking. More often than not, in any meeting with a couple, the male partner will have the higher risk profile. There are exceptions, though in my experience this is rare. It natural to be scared of things that we know little about and do not understand.

If someone asked you to jump off a cliff, I am willing to bet that you would say “no”. Now, what if I told you to jump off a cliff but first we would give you a medical examination, train you the right way to jump, that we would attach a parachute to you, and there would be a safety net to break your fall? I am sure then, that you would not find my suggestion quite so ridiculous. The change of opinion is due to you having more information about what the challenge entails.

The role of a Financial Planner is not just to tell you where to invest your money. It is our job to explain how the markets work, to tell you about volatility, to explain the different types of assets you can invest in, to make sure you understand why diversification of a portfolio is important and to explain all the risks relating to any recommended investment strategy. A good Financial Planner will tell you all this in language you understand and make you feel like you can ask any question without looking foolish. There is no such thing as a stupid question. The aim is to make you to feel in control and be confident in the decisions you are taking.

As women I believe we unknowingly self-sabotage. We tell ourselves to keep our money safe – even when safe (i.e. cash) means an almost certain devaluation of 2% per year (of whatever the annual inflation rate happens to be). We cling to the stories of loss, rather than focus on the more optimistic outcome of long term growth.

It is our regulatory and moral duty as Financial Planners that we give you the risk warnings – that past performance is no guarantee of future performance and that capital is at risk. Life carries risk, but if we remain risk averse with our savings and pensions we will struggle to close the gender wealth gap. Risk is related to reward.

I have a new female client who came to me and said “I want to invest, I know I should invest, I want to be more “risky” but I need an adviser to come on that journey with me. I need to know that someone has my back.”

As a female Financial Planner, experienced in helping women at all stages of life,  I know you may have many questions and concerns, but rest assured whilst I can make no guarantees, I do have your back.