OPINION | If I had a daughter, I would imagine I’d want to raise her just like I did my two sons – to believe that achieving your definition of financial security is completely within your control.
I’d want her to know that gender doesn’t matter and give her the confidence, and skills, to take control of her financial wellbeing. However, I’ve worked in wealth management for 20 years now, and I know there isn’t absolute parity. There remains a distinct gender gap when it comes to financial security, evidenced by well-known statistics: On average, women retire with half as much super as men and full-time female employees take home nearly $27,000 less than their male colleagues.
Yes, women face structural economic obstacles. But there is an opportunity to close the gap by kick-starting the conversation earlier, by engaging young females on all financial topics and by improving access to information that’s relevant and helpful.
Improving the future financial security of all women lies in how we talk to women and what we talk about. Moving the dial requires disciplined action in three areas.
Financial literacy
The first is financial literacy – the building blocks of knowledge and confidence.
Financial literacy helps individuals make important life decisions. It has a strong link to affluence and starts with understanding money and budgeting, but also needs to encompass understanding super, creating opportunities for retirement and investing for long-term wealth creation.
Improving Australia’s financial literacy baseline would make an enormous impact. We would create 15,000 more jobs and boost our economy, measured by GDP, by as much as $6.2 billion a year.
Access to technical information
The second area for action is providing access to more technical information. This would create the link between education and improved financial outcomes by providing data about long-term wealth creation – both unpaid general advice and tailored, personal advice.
We know women are less likely to achieve financial security in retirement because of the structural challenges of superannuation, coupled with the demographic trend of living longer.
While 31 per cent of men aged 25-64 are on track for a comfortable retirement, only 22 per cent of women are on track for the same. Remove the age pension and this falls to 17 per cent and just 9 per cent, respectively.
We can change this by helping parents and educators have better conversations about long-term finances and by addressing the gap among those already working.
Our industry also has a key role. More investment from all players, in initiatives similar to CBA’s Women and Advice program, which aims to lift the number of female financial planners and deliver specific training to all our planners, is critical.
Cultural barriers
Finally, we need to address the cultural barriers by giving women every opportunity to achieve financial security, without bias. This type of societal barrier can be harder to observe but we can see the consequences of inaction in behaviours and attitudes. An example is a historical bias – I suspect unconscious – towards teaching our daughters to budget, but not necessarily invest.
Our research shows women tend to place a greater emphasis on everyday money management, as opposed to long-term asset accumulation. While 29 per cent of women say they were taught about investing at an early age, that pales in comparison to the 41 per cent of men who say the same.
This can play out in many ways. We see it in our equity preference index that shows the asset allocation to equities for Gen X women (ages 33-52) is about 40 per cent, compared with 65 per cent for men. Conventional investment wisdom tells us this type of asset allocation is more conservative than necessary at that stage of life.
We do need to unpack this more and find ways to ensure equity in informal conversations at home and in the formal conversations educators, employers and super funds have as our daughters mature.
Changing how we talk to women and what we talk about is a simple change we can make. As an industry that tends to bemoan our “complexity”, we should embrace this opportunity for simplicity to make real change.
Linda Elkins is executive general manager at Colonial First State. She will be speaking at the Women, Super and Wealth Summit in Sydney on April 27, 2017. The Summit is jointly presented by the SMSF Association, the Financial Services Council and Commonwealth Bank of Australia.
