Wealth Planning: How is it changing the course of financial affairs for women?
Not only do women trail men in their pay, but they also lag behind them in confidence in their financial knowledge.
The overwhelming majority of men (90 per cent) rate their knowledge of personal finances as good. That compares with 76 per cent of women, according to a survey commissioned by Kleinwort Hambros.
A similar trend is shown in how much pleasure women derive from managing their finances, with 89 per cent of men indicating they enjoy looking after their pensions and investments, compared to 78 per cent of women.
These findings are supported by a number of other studies. For example, a research paper published by the Global Financial Literacy Excellence Center shows two-thirds of women’s lower financial literacy stems from weaker financial knowledge. Interestingly, one-third is down to self-doubt around that knowledge.
Do women approach money management differently to men?
Women often manage their money differently to men. One-third of women believe their financial decisions are guided by emotions, compared with 19 per cent of men, our survey shows. But men are also more likely to take risks: 57 per cent of males regarded themselves as risk seekers, compared with 44 per cent of women.
The lack of confidence among females in their money management skills is disheartening, especially at a time when reports indicate the pandemic has set back the battle for gender equality by worsening existing disparities. For example, women carried out a greater share of the increased unpaid care and household work during the pandemic.
So what can women do to build their financial knowledge, and in doing so, increase their confidence in looking after their money?
A wealth planner could help, arming clients with the understanding of why financial decisions are made. Frequent meetings with a planner will also help boost confidence that you are on top of your financial affairs and ensure your decisions are driven by logic rather than emotions.
Women do seem to recognise the advantages of seeking expert advice. Nearly four-fifths of women have a financial adviser compared with just over half of men, our survey shows. But more needs to be done if women are to catch up with their male equivalents when it comes to confidence in money management.
This is where wealth planning can come in. We at Kleinwort Hambros, along with the rest of the financial services industry, can play a part by ensuring the information we provide to clients and the public is engaging, informative and jargon-free.
Build a stronger relationship with your money with wealth planning
(1) The impact of emotions on financial planning decision-making was commissioned by Kleinwort Hambros and conducted by Research in Finance