Why the gender retirement gap still won’t close

0:12Ima Jackson-Obot: Hello and welcome to this week's FT Advisor podcast. I'm Ima Jackson-Obot, Deputy Pre-Cent Editor at FT Advisor. And today we're discussing a topic that's been on the industry's radar for many years now, but which for some reason remains stubbornly unresolved, and that's women and retirement outcomes. Late last year, Scottish Widows published its latest Women and Retirement Report now in its 21st year. The headline statistics was quite striking that more than a third of women are at risk of poverty in retirement. At the same time, a more recent report, Women in Health, Building Better Advice Relationships, produced by Scottish Widows in partnership with Boring Money, looks more closely at how women engage with financial advice and why major life events, particularly bereavement, often act as the biggest trigger or as the first trigger, sorry, for seeking professional help.

1:01Ima Jackson-Obot: So today we're asking, why does the gender retirement gap persist? Are advice models truly designed with women in mind? And what should firms be doing differently, particularly in light of consumer duty and vulnerability expectations? I'm really pleased to say that I'm joined today by Jenny Davidson, Scottish Widows, new head of Intermediary Wealth, and Holly McKay, founder and CEO of Boring Money. Hi Jenny, hi Holly, thanks for joining me today. I think it'd be great to start with that headline figure, you know, over a third of women are at risk of poverty in retirement and when you look at that data, what's driving that risk today, if you could explain that to us a bit more Jenny.

1:43Jenny Davidson: Yeah certainly and it was quite stark isn't it when you actually hear that headline. So we've obviously done a lot of work in terms of that report and what it did was really shone a light on the effectively the medium total private pension pots for women versus men so women at retirement is£173 ,000 versus men which is£286 ,000 so that's quite a gap and so that's£113 ,000 and if you think about that that's an increase on last year so there's a there's a number of things that are driving that and really when you think about women and what it showed was that 30 36 percent of women were on track to have a below minimum retirement and that's really kind of poor when you think about expectations and that kind of when you're thinking forward to your financial future you know that is stark and compared to just 31 percent of men and we also think about the word comfortable so comfortable lifestyle came out as well and that was 20 24 percent of women were on track for a comfortable lifestyle so that's somewhere where they felt you know it was a good retirement effectively gave them a you know a level of comfort in terms of retirement but that was 36 percent of men so again what it did was just really highlight the the differentials between where women were and obviously where men are in that retirement perspective and really what's driving the risk today is I think what was really interesting was the the men and women who have when you think back to them the amount of women who have taken career breaks over their their um you know their life stage and also um you know taking time out through potential divorce and other areas where there's real financial requirements that one one-off requirement to really think about differently about their financial futures and really it's about the education they needed to really think about that at that point in time and then maybe make some allowances if they could have to really ensure that they understood the implications of their financial future at that point of retirement and that kind of education wasn't there essentially for them.

3:46Ima Jackson-Obot: I mean, it's fair to say that we've been sort of talking about gender pensions gap for decades now. Would you say, what do you think? Are we seeing genuine structural improvement or are we just measuring the same imbalance more accurately?

4:00Jenny Davidson: I think it's just more stark. I think what you're saying is in the research we've seen is, you know, women are 12 times more likely to take a break in their career to sort of raise their children. So that is a percentage measurement. And as a consequence of that, that has implications on their future financial well-being in retirement. Because there's lots of income and pension contributions. And it's really thinking about that and having the conversations early to understand that implication. I also think that women finish work earlier. So some reasons around menopausal or other changes in lifestyle create women to think about you know terminating their career at a younger age than men as well so there's all these kind of factors that are in play at the moment and that does have unfortunately impact in their future when it comes to retiring and if i can jump in here you know what we see

4:54Holly Mackay: at the other end of the age spectrum is the gender investment gap so i'm talking across investments and pensions is actually getting worse and that's quite staggering isn't it There's a lot of work going into this. There's a lot of acknowledgement of this. But how come it's getting worse? And what we see is there's actually growth in the number of investors out there. But that growth is coming from younger men in their 20s and their 30s. won't go into the reasons for that today, but women, younger women are being left behind. So there's a great disparity there. There's about twice as many younger male investors at the moment as there are younger female investors.

5:38Holly Mackay: So not only is the problem still really stark and acute today, but, you know, drum roll, it's getting worse. So there's a lot of work left to do to to fix this gap to fix this imbalance yes and holly i mean from the consumer research side

5:55Ima Jackson-Obot: does this risk feel visible to women themselves or does retirement still feel too distant um a concept for many to prioritize i mean is that or is that dependent on the age age age range

6:08Holly Mackay: let's say there's no women are under no illusions right there is an there is a real awareness that people kind of almost assume they're not saving enough for retirement. And I think one thing we do, which we could question is we put people off, right? Because you read the stats, you pick up the paper, you read something. And there's typically someone saying you need half a million quid or whatever to retire comfortably, which for someone, a younger person listening to that, it's almost laughable, like as a sum. And so it's so enormous that people don't start. So there's one thing we could do it it's much more about taking the first step and and sort of breaking it down into chunks that feel a bit more achievable to people but I'd say women are fully aware no one's under any illusions that the future is not looking bright but what we've got is a whole nation almost of ostriches because there's so many other sort of financial commitments around them and so little understanding and awareness of what they might do to fix the problem that we're not getting people to take that first step.

7:21Holly Mackay: So I'd say people are fully aware, but they just don't know what to do to fix it. And, you know, if we think more about then financial advice and the implications there, one thing the research found is that it is life events that are more likely to be a trigger for women to seek financial advice than it is men why is this it's generally because there's another professional involved somewhere along the line we might talk about bereavement for example or divorce it's because there's someone typically a lawyer who will say I think you could get some financial advice. And that bit's a really key point, I think, because women still have imposter syndrome more than men when it comes to thinking about, am I good enough for financial advice?

8:14Holly Mackay: Am I rich enough? Am I one of those sorts of people? Am I posh enough? Am I complicated enough? And women are more likely to say, oh, I'm not, I couldn't get financial advice. They wouldn't want someone like me, they'd laugh me out of town. So actually, the trigger of those life events is typically because another professional who they know they have to see, when I get divorced, I have to go and see a lawyer. There's not that same sort of societal awareness of when something like this happens, you should go and see a financial advisor, because guess what they're going to do for you? They'll help with A, B or C.

8:52Holly Mackay: So I think financial advice today, when we talk about it it's still really generic and actually we don't break it down for people I will help you with this and that and really specific examples rather than generically saying oh you should get financial advice.

9:09Jenny Davidson: And that's a really important point isn't it for advisors they really need to make it really simple and translate that into I've helped others in the same circumstance as you and I can do the following for you.

9:20Holly Mackay: I think so Jenny and also I know advisors typically many not all don't like talking about fees and charges specifically too soon in the relationship and also they don't like saying you know this is what I would do this is what to expect. We've got to break it down because otherwise people are afraid of the dark they're afraid of things they can't see and they don't know if they go into that room with their 200 000 pounds if at the end of that first half hour meeting someone's going to turn around and say i've had a lovely time now to my fees i'm going to charge you three squillion pounds a year and this person's going to sidle backwards out of the room feeling like a wally yeah really important point i mean can i

10:10Ima Jackson-Obot: ask you both do you obviously um holly you said women are fully aware of the situation do they feel financially left behind and if so who buy oh that's that's deep that question I don't I don't think I think when we do a lot of the qualitative research with women

10:33Holly Mackay: are they too busy to sort of sit around and think like that that possibly you think about sort of women in their 40s and 50s quite often sort of time poor quite often some people will shout at me the majority will have more child care commitments than men of that age the sandwich generation of course sort of dealing with and looking after sort of elderly but so I think time time poorness is a really important thing um I think it is just that sort of that sense we find this when we test communications at Boring Money, we have much more success with women if we send out things that are like, here's three things you can do, or five bullet points, or in 10 minutes, it's quite directional, sort of action-orientated content.

11:21Holly Mackay: I think, again, bringing it back to advice, when we look at what does good advice look like, what do men think they're looking for when they see a financial advisor. Men are much more likely to cite technical things. 30 % of men say they're prompted to get financial advice because they're seeking tax efficiency. That's just 21 % of women. 29 % of men say they want just a sense check, they've got the right investments. That's 22 % of women. So men are more likely to seek financial advice because of a technical reason or something they want to achieve that is related to tax or investments or performance.

12:06Holly Mackay: Whereas for women, it's much more likely to be a goal, a life event or an outcome. And so the framing of the conversation, I think, is important. And it does differ from the work we've done that does differ by gender thanks for that um i'm jenny i'd

12:27Ima Jackson-Obot: be keen to get your thoughts um do you feel that do you think women do feel left behind and who by also i mean from an intermediary wealth perspective do advisors sometimes misinterpret lower engagement

12:39Jenny Davidson: as lack of interest i think that's interesting isn't it so i think to the point that's probably been made already some women um do leave it to their partner really to sort of have the interaction with the advisor it doesn't mean they're not interested it's probably because it's a bit more technical and therefore they're more sitting back and reflecting on the conversation i think it's really up to advisors to bring them in though so i think you need to understand that the point around technical versus actually simplifying the message but also asking some more questions to bring them into the conversation and understand if their understanding is aligned to that because some of the stats are really clear that on bereavement, widowers tend to reflect on the relationship.

13:22Jenny Davidson: And if they're not actively engaged in it, they do tend to then sack the advisor. I think the stats are around 70 % of relationships leave at that point. So there's a real clear distinction between there's maybe a lead in the relationship, but equally they have a really clear tangible requirement to really build that relationship with them. And softer skills are really important. You know, when you're involved in the conversation with the advisor, they need to understand the goal aspects of it. They need to understand whether they're willing to, for instance, is a joint relationship around giving money to their, you know, for their children as well to help them, you know, purchase of property.

14:01Jenny Davidson: And just to make sure that everybody's fully on board with some of the financial planning outcomes that need to be achieved. So to me, I think it's important that they're actively engaging and bringing them in. but I do agree you know men are more inclined to think about technical they think about risk and reward completely different to to predominantly women as well and I think what we also saw with some of the research as well is they like advisors to really think about and ask questions to really engage them around the bigger picture they want to be more involved in that discussion and the so what's and make them really think about it so that they're engaged actively and feel empowered in the conversation and taking more of an active role in it.

14:44Jenny Davidson: I think what we hear as well from

14:46Holly Mackay: women is there's a there's a kind of acknowledgement right that they've like many many people they find investing and pensions and all this sort of stuff boring and particularly with older advised customers there's an acknowledgement from women that they choose to sit back because they're going oh god it's boring and he can do it you know and the data backs this up nearly 50 percent of women say my all advised women whether married or or not or in a partnership or not nearly half of all advised women say i have a partner who takes the lead on this sort of stuff compared to just 24 percent of men who say that so you can see the disparity there what i would send to pick up and echo to some degree what Jenny has said is we also hear from women I think who maybe at the outset right sort of sat back and went oh god there's a million things I'd rather be doing than be sitting in this room and I can't be bothered and I'm gonna let him sort of do it that doesn't stay the same necessarily so I do think it's incumbent on advisors to kind of keep checking back in you might have been seeing these clients for 10 years and you've got into a pattern of always engaging one partner or the other, you know, check back in.

16:04Holly Mackay: I also think it's incumbent on all of us to think about the communications we're sending people out. Now, for regulatory reasons, for compliance reasons, there's quite a lot of really, really long, quite boring reports that we have to send out. There's nothing to say you can't create a one-page summary that is completely devoid of jargon and waffle and kind of cuts to the chase and has a few really sort of salient pieces of info on reminds the sort of and that can be shared with both parties but it's something it's a sort of one pager that that keeps that contact going as Jenny said earlier you know more men die earlier than women so it is you know not in problem we're going to continue to see more women being bereaved who will need to get in touch with an advisor who hasn't been their main point of call and if they've got something from that last meeting that reminds them of the contact deals it reminds them of the key salient points they need to know it's a little bridge isn't it that's built before they're staring into the sort of sea of bereavement and all the chaos and the emotional fog that goes with that.

17:20Ima Jackson-Obot: Absolutely and talking about that report and you know the the Women and Wealth report and the striking context and they're around bereavement what does that first meeting typically look like for an advisor you have women arriving at advice firms perhaps for the first time of and in shock grieving and you know facing complex financial decisions.

17:40Holly Mackay: We don't have it it's hard when you're doing qualitative work to find sort of large sample sizes of this but if I sort of dig into the data and I think about the conversations we have um I think a really nice thing for us to think about trust is so vital you know no one's going to go in at a time of bereavement and sit there with a technical head on their shoulders and advisors know this advisors are good strong people people right that's why they they do that but something I found really interesting is someone once broke down for me the kind of axes of what is trust. And if you imagine it like a chart, on one side, you've got benevolence, and then on the other axis, you have competence.

18:27Holly Mackay: And you have to believe that someone you're seeing is competent, knows what they're on about. But on the other axis is benevolent, i.e. has your best interests at heart. And I do think across our entire industry, we're so busy shoving our competence down people's throats that we don't take enough time to think about the benevolence so that first meeting do you know what as well it's about listening and it's about letting your client speak and it's about letting your rather than sort of rushing in with all the technical details because you can do that with a piece of paper afterwards you know you can follow up but that first meeting is I would say over indexing on the benevolence and and relaxing a little bit

19:14Jenny Davidson: on the competence yeah I totally agree it's all about building that relationship isn't it that trust element and really just taking the burden away from them so it's really about engaging and listening to their their client did you feel Jenny that advisors are more equipped to handle

19:34Ima Jackson-Obot: this situation? I mean there's a lot of talk in the industry and there has been and I think it's growing loud in terms of soft skills and empathy. Do you feel that advisors are particularly even maybe there are some who sort of a bit dyed in the wool sort of who just are just getting their head around that that's such so important?

19:50Jenny Davidson: It's hugely important but really I mean an advisor's job is all about relationships and it's understanding the different cohorts and the different gender and the different age groups and and actually you know tailoring their their communication styles to really meet the needs of their clients going back to that you know the trust and providing them with confidence so yeah I completely agree with that it's it's really an important skill and I think a lot of advisors do a great job in terms of this and you know those that seek financial advice do have a better outcome.

20:23Ima Jackson-Obot: How much training is there in the industry is it wide now in terms of you know for the advisor saying oh I'm I struggle with you know the soft skills I really feel like I need to improve is there there's enough training out there right just to help advisors understand how to trigger points how to have that conversation because I mean not everybody's a natural necessarily right?

20:43Jenny Davidson: I think it depends on the experience level I think that will be um so some are are absolutely equipped to have those conversations and they do it you know on a regular basis I think others will need training and help um I don't know Cully if you've got any knowledge and experience in terms of your advisor interaction around this point we don't work with advisors when it comes to offer training

21:09Holly Mackay: but but one thing I've learned and just sort of looking at the blogs I write or the stats and or the engagement. I think it's very hard to teach empathy, isn't it? And I think the most important thing we can do is just be aware and ask ourselves the questions. And I think if advisors, this is where data is held, you know, will reinforce the need. So for example, we find that vulnerability, reported vulnerability, spikes upwards in advised women who are 65 and above. Now, this is really unusual because normally reported vulnerability declines with age because older people are more likely to say, stuff and nonsense, I don't need any help, I'll be fine.

21:58Holly Mackay: But there's this spike with older women. So why is that, you know, 20 % of advice So they've got someone who's got their back. But even so, and it's largely because of low financial confidence, 20 % of older advised women say that they feel they're vulnerable and that they need additional help. That's one in five. so I think even having things like that in your mind as you're sort of going in and that listening point is is really key as well giving someone the space and and just reminding yourself the whole time that probably that person you're sitting in front of feels like an imposter is sitting there beating themselves up going I'm not good enough at maths I won't look like all of their other clients do I probably haven't got I talked to someone six months ago this lady who was not sure if she would be a good candidate for financial advice she'd been she'd lost her husband who did all of this stuff in the past she had 800 000 pounds is that enough is that enough financial advisor so i think just that awareness that you're probably sitting in front of someone who at that point in time has got all the sort of little voices going through their hair telling them why they're not x y or z enough and sometimes i think it's just going into meetings remembering that is more powerful than than than hours sitting in some sort of training sessions it's just remembering how bad people feel about money and how they assume that everyone else is doing a

23:35Ima Jackson-Obot: better job than they are i was going to say i mean looking you know if we widen the widen the scope of it you know there's also sort of I feel like the broader advice gap to consider if many women only are really seeking advice at these real moments of crisis which is really important obviously bereavement divorce inheritance does that also suggest to a degree that kind of the industry is failing to engage earlier in the life cycle I mean is is that something that we also need

24:03Holly Mackay: to consider it definitely I mean we can evidence a gender investment gap you know throughout the the piece so it definitely um is an ongoing problem i think a lot of it comes down and i'll sort of say you you can't be what you can't see and it it still is if you think about the advertising for example we know this sort of choosing that boring money where to deploy our limited sort of advertising budgets it's cheaper for us to get a male reader or to than it is to get a female reader It's easier for DIY firms. It's cheaper for them to mine and to acquire that sort of 20, 30 something male investor than it is, say, a woman who might have sat in the Halifax sort of with her cash or her lady who's in her 50s.

24:53Holly Mackay: So, you know, this is something that is pervasive across the whole system. But I think a really key common denominator is you cannot be what you cannot see. And more women are likely to have that imposter syndrome and think I'm not suitable, good enough, whatever. I'm not one of them. I don't look like one of their gang. and so I think whether it's advised clients or DIY customers doing more to say we help people who look like this if you've got this you have got enough money to unsee us if you're struggling with something like this but we need to stop pussyfooting around and dancing around handbags you know and go out and be much clearer and say if you've got this problem or you've got this much or you need help with this, come and talk to us because we help people like you.

25:45Holly Mackay: And don't sit there beating yourself up going, my God, look at what all the posh, clever, good at maths people are doing.

25:52Jenny Davidson: I suppose that's linked to some of the research, didn't they? They said that the amount of people who had 10 ,000 saved for emergencies, it was predominantly more men. So I think it was 24 % of men compared to 16 % of women. And it goes back, I think, you know, we need to start the conversations earlier. we need to make sure us females who are you know can actively participate in these conversations and actually have you know the discussions in the pub with your friends and at the kitchen table um you know i certainly have done it with my daughter um because you want them to understand the impact it can have in your later life as a consequence not starting early enough um so for me absolutely agree with the comments that have gone before but i think it's we need to stop thinking that it's not right for us as females we do have you know we do have the right to participate we do have the right to invest and we need to make sure that we're actively taking all the opportunities that are ahead of us as well there are lots of good material out there from an education perspective lots of great articles that are written and I think it's just

26:59Ima Jackson-Obot: about building confidence ultimately an earlier age I know and I mean look we've got targeted targeted support coming into force in April. Is that a good springboard to really kick that off? You know, what we've talked about in terms of closing and helping to close that gap, would you say?

27:21Holly Mackay: I'm quite positive about targeted support across the board. Our research indicates there's more than 12 million people in the advice gap. And when we've tested preferences with people and given them different outcomes, we think targeted support could could if deployed world um help over five million people out of the advice gap so it is i think going to be hugely positive but and there is a big kind of caveat here i think firms have to work out how to deploy that kind of hybrid model it can't just be an online journey it can't just be a digital journey and you need a human being involved now that's not the same as me saying you need a qualified financial advisor involved in the process but I think a hybrid model will have more success with women who aren't confident than a purely digital model which will just be yet another example of engaging kind of 20, 30 something men who like to be at the vanguard of kind of new technologies.

28:27Holly Mackay: So I think targeted sport I'm hugely optimistic about it it will largely be in april it will the vast majority of people deploying it will be the larger banks some life pose will take tentative steps um but i think the sort of true power of targeted support will not be seen for it for another year or so because we've got to work out it's targeted support not targeted sales so we've really got to work out that service part of that journey and what questions we're helping people with but I think it it's a hugely exciting development but it's all about how you take people on that journey

29:12Jenny Davidson: and support them along the way yeah and I completely agree um for me it's it's a huge opportunity for this industry um you know the average literacy in the uk is age nine so for me anything that helps people become a bit more financially aware is really important um as an i think with the industry target support is going to be used initially to really test and learn to the point i think you know what you see and then it'll evolve from there in the next year or two but I think human loop is fundamental particularly for females you know they want to effectively speak to somebody it's that trust it's that relationship so how much will be digital how much will actually require human intervention or involvement will be interesting to see how that's deployed but also the question is that so what are the most likely things that people want answered will potentially be different you know from for females and males and how will it evolve the use of AI as well has to be considered within that so I think it's a hugely exciting time for the industry and I think we're going to see lots of evolution in the next sort of 12 to 18 months as this starts to really take off and embed.

30:28Ima Jackson-Obot: Thank you so much Jenny and Holly, such a great conversation so coming to the end of that I mean I thought it'd be great to maybe end on some practical steps Jenny so if I come to you first Jenny I mean if there's an advisor listening to this call this podcast today what's one immediate change do you think they should make

30:46Jenny Davidson: to better serve female clients I think it's just listen remember that um remember that every female client that comes to them probably comes with some baggage they've got you know lived experiences and they're coming to you probably a moment that really matters for them so really having that empathy and unpacking that and asking those open questions and building the confidence is really fundamental.

31:15Ima Jackson-Obot: Polly I can ask you that question as well but I'll tack on another question until the end of that. Should advisors, do you think advisors should practically be engaging with both partners more equally at the outset? I feel like you're probably going to say yes anyway but I just if I could pack those two questions together.

31:32Holly Mackay: I think perhaps to give a slightly different spin on it then I'd say the challenge maybe for advisors is maybe not think about it at the outset so much but maybe if you've been seeing a couple for two or three years just ask yourself the question at the next have you sort of given up in a way with the less interested sort of partner and what might you do to bring them back into the conversation rather than because at the outset they sort of sat back and went oh I'm not really interested in all this stuff and you know executive summaries short sort of like one pages because people people do have questions and they do want to know they're probably just afraid about asking the questions because they don't want to look thick so I'd say maybe the challenge for everybody is to think about that couple where one person's disengaged you all know the roles that you play in that relationship and maybe sort of question those and sort of try something different um and and see because people aren't dumb and they do have questions they might not want the sort of 30 page kind of full pack that goes out but they probably would quite like a one pager

32:50Ima Jackson-Obot: and i mean to conclude holly i mean what would you say sort of genuinely inclusive advice looks like in practice, you know, beyond marketing brochures? Are we talking about closing a gap within the existing advice model? Or does the model itself need rethinking to reflect, you know, different life patterns, career paths, the longevity realities?

33:09Holly Mackay: I think Jenny's sort of point earlier is just we're getting better at listening. So I'd say we could all question the ratio of talking to listening. I know that's ironic. I include myself in that. I talk quite a lot. um you know at least everyone's different aren't they when men or women why is someone there what is it that they really want from us what has brought them to our door um and also i think being really really aware we've talked about imposter syndrome reminding ourselves in every sort of conversational meeting that we're talking to someone who will feel on the back foot because money makes people feel like that money makes people feel inadequate and thick and i think just always having that in our minds as we're approaching those meetings and those conversations is just a really really valuable sense check I try and do and I write my blog every Friday I've been writing it for flipping years now occasionally I need to check in with myself and just remind myself that people who are reading my stuff are probably on the back foot feeling a bit defensive

34:15Jenny Davidson: and I have to remember that yeah just to add I always think about my mum so when I think about from an outcome perspective I always think my mum understand this and then I so challenge myself on that point and I think you know that's that's a good it's always been a good mechanism for me to really simplify the message on that basis.

34:38Ima Jackson-Obot: Thank you so much Jenny thank you so much Holly for taking time out today to join us and to you listening that's all we have time for today so I'd say that data is quite sobering. If over a third of women are at risk of poverty in retirement, I think the question for the profession is not whether this matters, but what it is prepared to do differently. You've been listening to me, Ima Jackson-Obot, for this week's FT Advisor podcast. Thank you so much for listening. Goodbye.

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