It was as always a pleasure to read and learn from Ellie’s blog last week, the first in our Build Back Better Letter format. I never fail to find it refreshing and satisfying that Ellie is getting to make good use of the skills she developed as a History student at University during her financial services day job. Thanks for that to the lockdown gods and a company that has sought to make the best of these testing times.
But that was last week and the point of our Build Back Letters is to think about our Responsible Futures, to learn lessons from lockdown and take steps to make life after lockdown better than it was before. For this letter, I have chosen the topic of gender equality and more specifically how this impacts women when it comes to financial matters. This is where all the gaps come in – the gender pay gap, the gender pension gap and the gender fin cap gap. The latter refers to financial capability – women’s tendency to be less informed about and confident with their finances than men. While we can’t directly impact the gender pay gap at Cornerstone (outwith our own workforce), we can help with pension planning and financial awareness. To explore this further, I am delighted to welcome guest contributor Lesley Irvine-Rae to the fold, who has added some very personal and meaningful words of wisdom from her experience as a female financial advisor.
Before we home in on the world of finance, however, let’s start with the United Nation view. UN Sustainable Development Goal (SDG) five is Gender Equality, described as follows:
“Gender equality is not only a fundamental human right, but a necessary foundation for a peaceful, prosperous and sustainable world. Empower women and girls and ensure their equal rights.”
The Impact of COVID-19
The global pandemic and stalling of our normal lives has forced change upon all of us, but certain aspects of the crisis have typically affected the female of the species to a greater extent. The UN Secretary-General has urged governments to put women and girls at the centre of their recovery efforts, saying:
“Limited gains in gender equality and women’s rights made over the decades are in danger of being rolled back due to the COVID-19 pandemic.”
In the workplace, women are more likely to be on front line of the health crisis, as nurses and care home staff, roles that must be especially exhausting both physically and emotionally at present.
Without the usual support network of nurseries, schools and grandparents, this generation of “women who have it all” must find juggling motherhood and work particularly stressful. With my children all grown up now, I often look back in amazement at how I got three children aged 5 and under off to school and nursery and myself to work before 9 am back in the day. I was once informed by a rather amused and childless colleague that I was wearing odd shoes that morning. Left flat and right with a heel and I hadn’t even noticed!
A study by the Institute of Fiscal Studies also found that women were about one third more likely to work in sectors (such as retail, leisure and travel) that have been shut down by lockdown than men. More women than men have been furloughed due to childcare responsibilities and there is a worry, if companies decide to make redundancies of some of their workforce, that this might influence who retains their job.
Juggling Work, Family and your Pension
I’m a perfect example of a female who has let life get in the way of pension planning. Between them, the arrival of my three children has led to a couple of changes of career path, several overhauls of my working hours over the years, a significant reduction in earnings potential and job changes to find an employer who offered greater working flexibility. All of this has also had an impact on how much I have accrued in various pension plans and that’s something I’m trying to catch up with now.
Every career break, decrease in hours or salary will affect how much is in the pension pot, reducing what you contribute, how much your employer contributes and also how much tax relief you receive from the government. Career breaks can also mean a woman doesn’t pay enough National Insurance Contributions to qualify for a full State pension. Find out how much you can expect to receive and see if you can make up the difference here.
According to the Chartered Institute of Insurance, before Covid-19 women already faced a pension deficit that means they retire on roughly a fifth of the amount a man has accrued.
Cornerstone’s new snapshot pensions service
It is against this backdrop that our new snapshot pension service seems to stand out as long overdue. Snapshot is an online pension review service designed to be accessible to those who would not normally have access to financial advice or who needed encouragement to engage with their pension planning. It is free of charge (removing one key barrier to professional help) and has been built with simplicity in mind – from the “two clicks and you’re in” website to the clear, jargon free language employed. Of the responses received in the first two weeks, 40% were from women, who will be able to request further help from a female Cornerstone employee, should they require it.
Our Responsible Futures investment portfolios also look to support UN SDG 5 – Gender Equality in various ways and may be suitable as a long-term pension investment strategy.
The fund managers included in the portfolios will select companies to invest in that they deem to be governed well, ticking the G box in the increasingly popular ESG investment trend. As an example, the Liontrust sustainable development team engage with the companies they invest in on the gender diversity of the business board. In 2019, 36 companies in their funds increased board gender diversity. Liontrust worked with 21 companies where board gender diversity was previously less than 30%, improving the average female representation on the boards from 22% to 38%. Righting this imbalance is good for investment performance as well as society, with a 2019 McKinsey Report finding that companies that are within the top quartile for gender diversity on their executive teams are 15% to 24% more likely to have above average profitability than companies in the 4th quartile.
The fund managers will also seek out investment in companies that directly produce solutions that help address gender inequality. An example is Baillie Gifford’s Positive Change fund and its selection of a Japanese company that manufactures baby care and maternal care products. These help reduce the obstacles that women face in returning to the workplace after childbirth.
Bridging the Fin Cap Gap
When it comes to understanding and coping with their finances, statistics show that women fare less well than men. A survey by investing app Moneybox, last year, revealed that 70% of millennial women say they have never been taught to manage money. The figure for men was 42%.
At this stage, to discuss her own experience of women and their finances, I will hand over to our financial adviser, Lesley Irvine-Rae.
“In my experience of female clients, their level of comfort depends on how they have accumulated their wealth. Some female clients are generally more cautious and initially nervous about making key financial decisions, if for example they are dealing with it for the first time due to being widowed or getting divorced. When they are then dealing with the emotions of such an event, it can be very overwhelming all of a sudden to have to make important financial decisions that will impact not only them but their family in the years to come. Quite often women in this situation feel intimidated by the investment and pension world and need someone they feel will speak to them not at them. They are genuinely looking for someone to take their hand and be with them through every step of the way.
In my pre-Cornerstone advice role, I worked in a very transactional world and hated the way they didn’t want to service their clients. At my first interview with Cornerstone, I was told how the most important thing for the company is service and looking after clients on an ongoing basis. I knew then I wanted to join the business because I wanted to know that, once I have gained a client’s trust, I can deliver a longstanding relationship and make sure I’m with them every step of the way. The best part of this for me is when you see their confidence grow with making those important financial decisions. As the relationship builds and they have more confidence and trust not only in you but also in their self, at that point you can see a change – for example in their attitude to investment risk or when they recommend you to their own family and friends.
You then have the other side where you have the busy working females who are holding down super busy careers and balancing their home life – the “super mums” of today. They either don’t have the time to spend seeing their adviser and need you to adapt and work to what they have time for. I think the current COVID-19 situation will change how we deal with these clients going forward and they will like that they can fit in a virtual meeting rather than have to travel to see their adviser.”
One of our male advisers informed me that it has been their experience that a woman sat in front of an adviser will tend to ask more questions than a man. Females are less reluctant to admit that they don’t understand something and are keen to ensure that they are as fully informed as possible.
This suggests that the gender fin cap gap can be bridged if we can connect with more female clients, whether that be via our online snapshot service or our more traditional financial planning services. We will continue to do what we can at Cornerstone to address gender inequality for all our stakeholders, through opportunities for employees, access to female friendly financial planning services and the availability of our socially responsible investment options.
As the ladies of the BBB letters are extreme multi-taskers just now, we are changing the frequency of our communications to fortnightly. In the interim, our usual shout out to those we think are deserving comes from Lesley this week and reflects the importance of women supporting each other.
In what can be the competitive world of financial services in the heart of Glasgow’s international financial district, Lesley has made a great connection with two female solicitors at the legal firm Jones Whyte. With their specialism in family law, Lesley has been in productive discussions with members of their team with a view to providing a joint approach which will genuinely help clients who might find themselves in a vulnerable position.
It just remains for me to give a final birthday shout out to Lesley herself who shortly, incredibly, passes a significant birthday with a 4 at the start of the number, despite being asked for ID when she bought a bottle of wine last week! Beauty tips available as well as financial advice!
~ Rebecca Kowalski
Please note that the content of this letter is for information purposes only and should not be considered as a recommendation to invest in any particular investment strategy or any individual company.
Although our physical offices are currently closed, we are business as usual from home, and available by phone and email as always. Please get in touch!