Empowering the Freelance Economy

Battle of the sexes: divorce spurs demand for female IFAs

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A growing number of women in their 50s and 60s who are going through a divorce or managing a sudden inheritance are having initial encounters with male financial advisers leaving them “underwhelmed” and “patronised”, according to correspondence received by financial advice and comparison site, Boring Money.

Boring Money CEO Holly Mackay who has been working in investment markets since 1998, and founded Boring Money in 2015, said in a recent blog that women are requesting introductions to female advisers to avoid feeling patronised.

With divorce cases on the rise in the UK in recent years and exacerbated by the personal and financial shocks of the pandemic, it is important for more women, especially those that took a career break to raise a family, to know to include pensions in their divorce settlements so that they don’t have to struggle financially when they reach retirement.

Policies aimed at increasing awareness of pension rights during divorce could be particularly effective at increasing divorced women’s retirement incomes, according to NOW: Pensions, a workplace pension provider for 1.8 million people.

Financial advisers and wealth planners regardless if male or female should bring such matters up to all clients so that they can better prepare for their financial futures and those of future generations.

Why do women have smaller pensions than men?

Research commissioned by NOW: Pensions uncovered the struggles divorced women face in retirement as a result of an inadequate pension income. In 2018, for example, divorced women had a private pension income 42% smaller than the UK average – £3,880 compared with £6,650.

  • The median pension wealth of divorced men and women by retirement is £103,500 and £26,100, respectively
  • A divorced woman has a private pension pot 42% smaller than the UK average
  • 7 in 10 divorces do not consider pension settlements, leaving women under-funded when they reach retirement

Now: Pensions case study (2020)

Danielle Burke, 40 from London, lives with her 6-year-old daughter. Since her split from her partner in 2015, Danielle has been working part-time. During the divorce, her pension wasn’t taken into consideration when separating the couple’s finances as, at the time, she had stopped working to look after their new baby. Throughout the settlement, Danielle’s main focus was getting back to normality by getting her daughter into nursery and getting back to work as soon as possible.

Now, 5 years on from the divorce, Danielle is realising the financial cost of not recognising pensions as an asset during divorce proceedings. She’s currently on an auto-enrolment people’s pension and also has various pensions from previous employers, but given all the outgoings of being a single parent and the fact she’s working part-time in order to take care of her daughter, Danielle can’t contribute anything more to her pension scheme other than what her employer is already adding to the pot.

“I wish I’d known the importance of recognising pensions as an asset at the time of my divorce. I am aware I need to be investing in my future but my priority is ensuring I have enough savings to support us at the moment.

It’s so important that we raise awareness of this problem so that more women know to include pensions in their divorce settlements so that they don’t have to struggle financially when they reach retirement.”

Danielle Burke, London

Pension compensation claims for women on the up

Tens of thousands of women in the UK could be missing out on £1,000s of state pension, according to Money Saving Expert. Married women who hit state pension age before April 2016, plus widows, divorcees and the over-80s – whether married or not – should check if they are owed money both in the form of a top-up and if their payments will be backdated. While some women owed will now get an automatic payment, some women will not.

Tens of thousands of women are likely to have been underpaid the state pension, and many could be due £1,000s – some even £10,000s, according to Money Saving Expert.

Are there enough female advisers to meet demand?

Female financial advisers and wealth planners only account for 14 per cent of the UK’s entire IFA and wealth planner population. That was the same figure twenty years ago, notes Anna Sofat, Associate Director Wealth at Progeny in one of her blog pieces, Having more female advisers is good for everyone”.

Sofat has worked as an IFA for almost 30 years, 20 of those in women-focused businesses. She feels that the increase in demand for female advisers can only be met if more female talent enters and remains in the sector. Sofat is also one of the female advisers listed in Boring Money’s Female Adviser section.

“Having more female advisers is good for everyone” – Anna Sofat of Progeny

Firstly, we need to attract women into financial advice. It’s up to all of us to build a profession that is respected and coveted so we continue to attract bright, young female talent. Then we need to foster a culture and implement business practices which will nurture and promote that talent from day one and right the way through a long and fulfilling career, showing what a rewarding profession it can be,” writes Sofat.

What is the “sticky middle”?

She also addresses the ‘sticky middle’ of retaining female talent, which is also an issue in the technology sector, The Freelance Informer previously reported.

“This is what I call the “sticky middle”: Despite well-meaning policies and good numbers of high-calibre female advisers at entry-level, many of them just do not survive in the industry past this mid-stage – not because they are not capable but because they opt out of a culture that does not suit them or meet their needs,” says Sofat.

“We need to get better at not only attracting more talented female advisers into the industry but – more crucially in many ways – retaining them. There is plenty of evidence showing that at entry level there are healthy numbers of women coming into the profession but, by middle-tier management, they begin to fall away or simply stop progressing,” says the financial adviser.

On the take-up of financial advice from female clients, a Fidelity report called ‘Unlocking the Power of Advice’ which was part of their Financial Power of Women series, found that almost twice as many men aged between 18-34 years old would seek out financial advice than women of the same age.

“Seeing more people like them in the profession will help bring more female clients round to the advantages of seeking good financial advice early in their lives which is not only beneficial to them but the future of our industry too, ” Sofat responds to the findings.

Boring Money launches Money Advice Service

Boring Money recently launched its “Boring Money Advice” service, which will run alongside its ISA and pension comparison site, which includes customer product reviews, a pricing calculator and its independent opinion on certain products. Mackay said that 75,000 people had checked out the site over the last month, just in time to park pension and ISA contributions before the next financial year (6 April).

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