We all know that women on average earn less than men, but it’s not just their paychecks that are affected. A lack of financial advice throughout a woman’s peak earning years has a compounding effect that can significantly impact their financial future. It’s a problem felt right around the world.
Why Women Aren’t Seeking Financial Advice
According to new research from Finder, just 13% of women in Australia use a financial adviser compared to 18% of men. And it’s not just down under – survey data from Canada Life shows that only 27% of women in Canada seek professional financial advice while 30% of men do.
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So, why is this happening? As with anything related to money, the answer isn’t a straightforward one.
First, many women believe they simply don't have enough money to seek out professional advice. Finder’s research showed that 31% of women say they don’t have enough money to warrant seeking advice while just 26% of men say the same.
And to be fair, the idea of sitting down with a financial professional and discussing your finances can be intimidating, especially if you don't feel like you have a lot of money to work with.
Getting financial advice in itself can also be expensive, averaging at around $3,256 each year, according to Adviser Ratings figures.
But here's the thing – financial advice doesn’t just help the very wealthy. In fact, seeking professional financial advice can help you build wealth and achieve your financial goals, even if it’s just one appointment early in your career. The earlier you start, the better off you'll be in the long run.
Another issue is accessibility. According to Finder, 11% of women said they don't know how to find a financial adviser compared to just 5% of men. And for many people, the only way they're seeking financial advice is through their family and friends. While it's great to have a support system, relying solely on them for financial advice can be problematic. What happens if you lose that support or if you go through a divorce?
Speaking of divorce, a recent survey found that only 5% of women knew about using a financial adviser as part of their divorce team. And that's a shame, because the financial implications of divorce can be huge. Seeking professional financial advice during a divorce helps ensure that you're getting a fair settlement and that your financial future is secure.
But perhaps the most concerning part of all of this is the compounding effect that the lack of financial advice during a woman's peak earning years can have. Women are more likely to take career breaks to care for children.
According to a study by Financial Finesse Inc., a 10-year career break could cost a staggering $1.3 million in retirement savings. That's a mind-blowing amount of money to lose out on simply because you took time off to care for your family.
Break Down The Stigma
So what can we do about this? Well, the first step is to start talking about it. We need to break down the stigma surrounding money and financial advice and start having open and honest conversations about our finances. We also need to make financial advice more accessible and affordable, particularly for women who may not feel like they have a lot of money to work with.
Thankfully, there are a number of options out there. Robo-advisors and online financial planning tools are becoming increasingly popular and they're a great way to get started if you're new to the world of financial planning.
Platforms such as Stockspot, Raiz and Six Park offer a selection of investment portfolios that you can deposit small amounts of funds into on an ongoing basis. Many of these “robo-advice” type of platforms will ask a series of questions to pair you to a portfolio that matches your investment goals.
Plus, many financial advisers offer free initial consultations, so you can get a feel for their services before committing to anything.
Another solution is for more women to enter the financial advice industry. Currently, women make up just 22% of financial advisers in Australia, a number that has gone backwards over the last few years. Meanwhile, there are more investment funds run by “Daves” than by women in the UK.
By increasing the representation of women in the industry, women may feel more comfortable seeking advice, receive more tailored support and benefit from a more diverse range of perspectives and experiences.
Ultimately, the gender gap in financial advice is a problem that affects us all. But by breaking down the barriers and encouraging more women to seek professional financial advice, we can start to close that gap and build a brighter financial future for everyone.
