Women's Week 2021

Transcript: Women – why should we invest?

This video has decorative footage throughout. Where there are visuals which are not explained in the speech these are described below

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Hi, I’m Clare Stinton, one of the Financial Wellbeing Specialists here at HL. I’m joined by Susannah Streeter to talk about why we, women, should invest. Now women make up around 37% of our clients here at HL. But we’d like to see more and more women taking the plunge into the world of money and investing. The reality is that investing can unlock future possibilities, it can help us achieve greater financial independence and with that comes more freedom and more choice. So, let’s talk to Susannah Streeter, Senior Investment Analyst here at HL.”

[Clare Stinton looks into the camera at Susannah Streeter]

“Hi Susannah. Thank you so much for joining me.”

[Susannah Streeter, Senior Investment Analyst, smiles and speaks to the camera]

“Hello.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Let’s start with finding out a little bit more about you, about your career and about your role here at HL.”

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well my role here at Hargreaves Lansdown is all about keeping people informed and up to date on the markets, ultimately helping people make good choices with their investments, Now I did this as a journalist at the BBC for 15 years, and now I’m the Senior Investments and Market Analyst here at HL. I provide analysis, and commentary about stock market moves, and economic news and assess just how they can affect our investments.”

[Music increases and question appears on red background – “Why should women consider investing?”]

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“One thing we do know is that women are really good at saving. More women subscribe to ISAs than men, but they’re less likely to opt for stocks and shares. Opting for cash can be detrimental to women’s wealth over the longer term. So why should women consider taking those first few steps into investing?”

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well, the UK is facing a problem. Far too few people are saving anywhere near enough to enable a comfortable retirement. Now this problem really is being exacerbated by issues such as the constantly rising cost of living and longer average life expectancy. Now women are just as likely to save as men, but once they’ve squirreled away that cash, they’re far more likely to neglect that nest egg as it were. Either pay the miserable price of high street savings rates or if they do go for a tax wrapper, or an ISA they’re less likely to opt for a Stocks and Shares ISA. Now this means that their savings are often languishing in accounts that pay less than the rate of inflation, which is also set to rise significantly over the coming year. Now over time, that will erode meagre savings even further.

Investing in the stock market, even by just opting for a fund which tracks an index like the FTSE 100 would offer the prospect of much better returns. It's known as passive investing because you don’t actually have to actively choose anything, but over time on a historical basis, such an investment strategy has offered a total return of around 8% a year. Now this isn’t a guide to what you will receive in the future though, as investments can fall as well as rise in value, so you could get back less than you invest.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“In summary then, investments are fundamental financial instruments used to help shelter our savings and protect them from eroding due to inflation. Investing can make our money work that bit harder, but of course it comes with risk. It’s this risk that may mean that women lack confidence or are reluctant to invest because they deem it too risky. How would you define investment risk and given the market volatility that we’ve experienced due to the pandemic, for those concerned about risk, what do we say to them now?”

[Music increases and question appears on red background – “How would you define investment risk?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well I think risk is much misunderstood and investment risk is often thought of in the context of losing all of your money. However, holding money in cash also has risks. Mainly that your money doesn’t grow fast enough to keep pace with rising prices. Now, investing will always present a certain level of risk and when we see the headlines of a rollercoaster ride some share prices have been on over the past year, it really can be daunting, however if you diversify your investments, you can spread and reduce that risk significantly and stand a chance of making much greater returns than if you had left your money in an account paying minimal interest.

The most important lesson though is don’t put all your eggs in one basket! In fact, to be well diversified, you really do need a combination of eggs and baskets which should be taken to mean sectors and geographies, not just individual companies. Just by holding lots of investments doesn’t mean your risk is spread properly. The investments need to be different so that if one specific sector takes a hit, your holdings won’t all go down in value. Now, it is common for investors to use funds to complement shares for specialist sectors or markets to ensure diversification. And what you could do is think of your investments as like a planet of core investments and the more riskier shares orbiting around it. Or another way of thinking about it is viewing your individual stocks as kind of side dishes to your main diversified plate of investments.

Now, finally, the right level of diversification really does depend on your circumstances. If your investment horizon is a decade or more, you could afford to take a little more risk and invest a bigger part of your portfolio in share-based investments across different geographies.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Do you need to be an expert and I ask this because from my own client research, I’ve found that women tend to set the bar too high when it comes to investing. That they equate being a good and knowledgeable investor with making it a time-consuming hobby.”

[Music increases and question appears on red background – “Do you need to be an expert?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well you don’t need to be a professional to be an investor, but there are some really broad principles you should follow. For example, you should only start investing when you have some cash to fall back on. Start small and try and take a long-term view. You also need to make sure your investments are diversified, and you mustn’t neglect them. Check them regularly to see how they’re doing.

Now if you are investing in individual shares, you need to do your homework, analyse reports on companies results and also the news to find out if there are any trends or events happening which could affect the sector. Take an interest simply in what’s happening. Trends in the high street, hospitality, travel, the housing sector; has it marked the way we socialise, the way we live? They may all impact the companies listed on the stock exchanges in some way.

Now, if you don’t feel confident enough about managing your own portfolio of shares or you simply don’t have the time, you can invest in a fund run by a fund manager whose job it is to pick stocks. Or, you can invest in a fund which simply tracks an index like the FTSE 100 which is an index of top 100 companies listed on the London Stock Exchange. “

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Susannah, I think that’s a really interesting point. There’s generally a feeling of disconnect on what’s going on in the stock market. Even though the reality is that how we behave as individuals and how we behave as consumers has a direct impact. That awareness that daily life, social trends and public opinion all feed into the stock market and will affect the value of a company or an investment at a particular point in time.

For those women that do invest, it's often said that they’re more considered in their approach than their male equivalent. In your opinion, what are the considerations that investors should use when they’re considering their investments?”

[Music increases and question appears on red background – “What should investors consider when selecting investments?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well I think the important strategy is to take a long-term view of your investments. Switching and ditching stocks and funds quickly isn’t really a sound investment strategy and that is behaviour that studies have shown women are actually less likely to indulge in. According to analysis by Warwick Business School in 2018, over a three-year period, returns for women investing outperform men by 1.18%. Now this was attributed to the type of investment that they tended to favour. While men are more likely to take a risk on more speculative stocks which they believe have the potential to make a lot of money very quickly, women were found to take more of a long-term perspective. Trading less frequently and also, they were more likely to focus on shares that already had quite a good track record. So, this really is welcome behaviour. I mean, it’s really important not to chase after those so-called ‘hot stocks’ and instead if multiple investors are going after one particular investment then they’re probably buying it at a price higher than what it’s actually worth. So, you just have to keep checking your risk and also work out how much you have invested in one company. If it’s more than 10%, it may be too much so stick to your long term, well thought out position.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Absolutely – 5 years is generally the minimum timescale suggested when considering investing and as individuals we really need to distinguish between both the short term and long-term financial planning and goals.

With that in mind, it is often said that women are on the financial backfoot when it comes to investing. A result of the pay gap but also of reduced earnings due to unpaid domestic responsibilities. Do you think investments could play a role in achieving female financial resilience?”

[Music increases and question appears on red background – “Can investments play a role in achieving female financial resilience?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Yes, I do. I mean I do think investments can play a really big role in helping women achieve financial resilience, but we do need to spread the word. Particularly now because between March and October last year, the number of people with low financial resilience increased by three and a half million to 14.2 million – a massive number. But this has to be a long-term plan. Drip feeding an easy access savings account month by month will help build up an emergency fund. Now typically you need three to six months of essential expenses as a buffer against unforeseen circumstances. Then depending on your circumstances, it really might be prudent to put over and above that amount into an investment via a Stocks and Shares ISA, for example. Now shares pay out often an income known as the dividend, not always, but often, which is a share of profits of the company that you have invested in. If you reinvest those sums by buying more shares or diversifying your portfolio, that strategy known as compound investing can really add up over time building that long-term resilience.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“As individuals, having control of our money will ultimately give us greater financial independence and more choice. So why do you think it is that many women put off investing even if they have good intentions?”

[Music increases and question appears on red background – “Why are so many women put off investing?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well I actually think there are three broad reasons. Worries about taking risk, time and a lack of confidence about investing. First of all, it is often the perennial work life balance that gets in the way, it’s always really hard to carve out the time to deal with long term finances when there are so many day to day pressures, especially during the pandemic many of us have been working full time while juggling the demands of home and work life, including home schooling. There has been very little time to think about anything else, including what we do with our money. But you could try and carve out time to make it part of a me time welfare check. Setting up a Whatsapp group with friends could help spur you on to making more time to deal with your finances. Or simply diary reminders to move your money. But even among women who do have more time and money to invest there’s also a reticence about spending and taking a risk. It is important though to stress that we are taking more risks with our money if we do nothing because it will erode over time, particularly if inflation rises, but interest rates stay relatively low.

Now the third thing I think is that it’s all around confidence and worry that you don’t have the knowledge to invest – that it isn’t for you. But there is a whole host of ways to gain that knowledge through Hargreaves Lansdown, or if you don’t have time, you could take financial advice and get someone to help you build that knowledge and make those decisions. Alternatively, you could invest in a simple tracker fund, mirroring the performance of an index on the stock market which could also increase your chances of making more money over the longer term than leaving your money in a savings account. “

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Building financial resilience is fundamental. It should be everyone’s priority regardless of gender. It provides a security net and gives individuals more choices should the unexpected happen. But is it possible to marry up investing and your own personal beliefs?

So my day to day is usually spent hosting financial education sessions and individual client meetings and in my personal experience, I’ve found that women, more so than men, are likely to want their money to do good. And both the pandemic and climate change have really increased awareness around the possibility of responsible investing. In the past, there’s been a stigma around responsible investments with regards to their performance because you’re limiting the investment opportunities available. Do you still think that’s the case?”

[Music increases and question appears on red background – “Do you think there is still a stigma regarding responsible investing and performance?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“I do actually think that attitudes are changing really fast with many more people understanding that investing with environmental, social and governance issues and those considerations really at the forefront of your mind is simply good risk management. Investors really should be looking to fill their portfolios with companies that are sustainable; delivering sustainable revenues and profits. And in order for a company to be sustainable, the management must be taking into account threats to the business’s financial health. So, governments, regulators and consumers are showing preferential treatment to companies which look after their customers, their staff and the planet. And a failure to engage with these themes and issues could mean fines, scandal, a loss of market share so it is really fantastic to see that this appetite for so called ESG investing hasn’t waned over the past year, despite all these headwinds that we’ve had. And it also is really good to see our clients busting the myth that ethical investing is only of interest to millennials because the data reveals that those investing for and in retirement are also increasingly buying funds which have an ethical or environmentally friendly mandate. Now investing in companies that get those criteria right should equal long-term positive returns and long-term positive returns is good news for investors regardless of their age.“

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

It’s fantastic that it's not only becoming easier for individuals to allocate their capital towards companies whose values and practices align with their personal beliefs but also that it’s a growing market with increasing responsible investment opportunities.

Final question for you, given your vast expertise in finance, but also your background in stock markets and investing, what key lessons would you tell yourself if you had your time over, if you were leaving education and starting your first job?”

[Music increases and question appears on red background – “What advice would you offer to your younger self?”]

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Well, if I could go back in time, I think I would thank my younger self a little bit because I have been pretty careful and balanced and I’ve taken a long-term view in the investments I have made. I haven’t rushed to buy or sell shares to make short term profits and I have never invested really hastily. However, I have also been reminded that splashing the cash and all those little things can add up to really big bills over time and eat into the cash that we might have to invest.

Now we talk a lot about compounding investing – putting small amounts of money you make on your investments back into the pot as over the longer term it will multiply that much faster – but the same thing can happen in reverse. I’m talking about compound spending. So if you totted up the cost of all those takeaway coffees, clothing, home, lunch purchases, those big nights out, imagine just how much you could have squirreled away had you just made half of those impulse purchases and added instead to your investment pot over time. So, while we will all really relish the chance to go out spending once more, saving that little bit extra each month will mean that over the longer term we will be so much more resilient.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Absolutely – I dread to think what my lockdown coffee and pastry spend totals to. We know that little indulgences add up to big spends.”

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“We certainly do.

It’s been really great to chat Clare, and to anyone watching, we’re really hoping that this will help you make informed decisions in the future, but this isn’t personal advice.

Remember if you’re really not sure what is right for your own circumstances, do seek advice because tax rules change, and benefits will really depend on your individual circumstances.”

[Clare Stinton, Financial Wellbeing Specialist speaks to the camera]

“Thank you so much for joining me Susannah – I have no doubt that this will be invaluable information for both women and men who tune in because the message we really want to get across is that investing is for everyone it’s not a gendered activity. Thank you so much for your time. “

[Susannah Streeter, Senior Investment Analyst speaks to the camera]

“Thank you”.

[Music crescendos – compliance warning shows]

We’ve put this together to give you information to help you make informed decisions, but this isn’t personal advice. If you’re not sure what’s right for your circumstances, seek advice.

Tax rules change and benefits will depend on individual circumstances. Investments rise and fall in value, so you could get back less than you invest.

Filmed on 12/02/2021

Transcript: Female financial resilience in the wake of the pandemic

This video has decorative footage throughout. Where there are visuals which are not explained in the speech these are described below

[Susannah Streeter, Senior Investment Analyst talks to the camera]

“I’m Susannah Streeter and I’m a Senior Investment and Market Analyst here at Hargreaves Lansdown. Now we know many more people are facing financial difficulties because of the crisis. More than 395,000 workers were made redundant in the 3 months to the end of November 2020 and UK unemployment is likely to reach 2.6million by the middle of this year.

Between March and October last year the number of people with low financial resilience increased by 3 and a half million to 14.2 million. With spending opportunities limited though others who may have been on furlough have built up their short-term savings. So how do you build up long-term resilience in such an uncertain climate? Well here to discuss this we have Sarah Coles who is the Personal Finance Analyst here at Hargreaves Lansdown, hello Sarah.”

[Sarah Coles, Personal Finance Analyst to Susannah Streeter]

“Hello”

[Susannah Streeter to the camera]

“Also Jo Middleton, a single parent to two daughters and creator of the award winning blog, Slummy Single Mummy. Hi there Jo.”

[Jo Middleton, Slummy Single Mummy Blogger to Susannah Streeter]

“Hi”

[Susannah Streeter to the camera]

“And Clare Stinton, one of the Workplace Financial Wellbeing Specialists here at Hargreaves Lansdown.

So, let’s first of all talk about whether COVID has changed the conversation around money.

Sarah what do you think?”

[Music increases and question appears on red background – “Do you think COVID-19 has changed the conversation around money?]

[Sarah Coles to the camera]

“Well as you say peoples experience of the pandemic has been so different, so we know that 38% of people are saying that they’re worse off as a result but actually 14% of people say they’re better off so there’s this huge gulf between people who have lost work or who have lost their income and are struggling to make ends meet, and those people who have maybe kept their income and their outgoings have even fallen so they are actually going to have conversations around what they are going to do with the extra money. The important thing though is to actually have those conversations. So if you’re living with loved ones to have a chat to them about exactly what your joint plans are and what your objectives are with the money.”

[Susannah Streeter to the camera]

“So what would you say that are the top three rules that you apply to your budget or finances should be. Given the pandemic would you say as well that they might have changed over the last 12 months Jo?”

[Music increases and question appears on red background – “What are your top 3 rules for your personal finances and have they changed over the last 12 months?”]

[Jo Middleton to the Camera]

“Yes, definitely they’ve changed. I guess for me the top three things are: one is to save before you spend. I think people kind of have a tendency to think oh that’s fine savings after but as you know there is never anything left over in my experience you always kind of spend what you’ve got so making the savings a priority. I’ve put pension contributions, you know, go out of my account at the beginning of the month, before I’ve even got time to think about it and that’s one thing that’s definitely changed with the pandemic because my income has just been so much more unpredictable. Cash flow has been unpredictable and I haven’t been able to save in the same way.

I think the second thing would be thinking about priorities. You don’t have to do everything, I think, especially as a single parent you get so used to doing everything for everybody you know you want to pay off your mortgage early, you want to pay off your loans, you want to save, you want to have a pension but things like you know setting up the emergency savings of 3-6 months, you know, do that one first then move on to something else. Don’t feel like you have to do everything.

And I guess the third thing from me would be to review your spending, I think, I know I’ve been guilty in the last 12 months particularly of doing things like signing up to TV subscriptions, you know, treating myself to a magazine subscription maybe and all of those little expenditures kind of add up and you forget about them, so just sort of reviewing what you’ve got going out on a monthly basis can often save you a lot of money.”

[Susannah Streeter to the camera]

“Yeah those little things really do add up don’t they? Over past 12 months the word, protection, has connotations of PPE and face masks but the pandemic has really also highlighted the need for financial protection as well hasn’t it? Why should this be a priority right now Clare?”

[Clare Stinton to the camera]

“The last year has taught us to really prepare for the unexpected, to have a plan B for the what ifs. What if I’m unable to work, what if I’m made redundant or what if my income was to suddenly stop or decrease. Where possible if you haven’t already built up an emergency fund, it’s time to do so. So for many people this is 3 to 6 months’ worth of expenses. I appreciate that’s easier said than done so I want to stress that it is the needs, the necessities, not the wants. If you’re approaching retirement then you probably want to put more aside than that. It’s a cash cushion that can be used to cover any unforeseen circumstances or it can buy you more time should you lose a source of income. And crucially it will reduce the likelihood of people needing to turn to credit.”

[Susannah Streeter to the camera]

“Yeah, that is crucial isn’t it? But building up that cash cushion is very difficult for many people. Lots will be thinking it’s just simply a step too far at the moment. How should they view this Sarah?”

[Music increases and question appears on red background – “Why should financial protection be a priority?”]

[Sarah Coles to the camera]

“Well for some it definitely will feel that way but one of the really important things that the pandemic has shown us is just how much difference it can make if you’ve got something to turn to, some money to fall back on. So even if you can’t stretch to the 3-6 months’ worth of expenses, then it’s really important to just put away whatever you can afford as soon as you can afford to do so, so that you’ve got something if your circumstances change.”

[Susannah Streeter to the camera]

“How has the pandemic overall affected the way we save Clare?”

[Music increases and question appears on red background – “How has the pandemic affected the way we save?”]

[Clare Stinton to the camera]

“There has been a polarization between high and low income households. Higher income households and those that have experienced very little change to their income have been able to save more. Whilst they’re working from home, there’s fewer opportunities to spend their money on going on holiday or socialising. In December, we had £1.631 trillion in the bank, that’s an increase from £1.504 trillion back in March. That means we saved £127 billion over just 9 months. So the peak was in May, and then the second highest increase was in December where there was a flood of money coming from the NS&I savings which really boosted the total.

That’s a really stark contrast on the impact that has been felt from low income households where they may have had to use what little savings they’ve had, depleted those in order to compensate for any loss of income. 1 in 3 households have lost income but that rises to 2 in 3 for those that are self-employed. Citizens Advice have evidence that suggests that around 6 million adults have fallen behind on at least one household bill since March. So in fact, rather than save, by December last year 8.9million people had the opposite reality. They’d had to borrow more as a result of Coronavirus.”

[Susannah Streeter to the camera]

“When you lay out all of those stark figures about debt, it’s no surprise that financial worries are the biggest cause of stress and anxiety outside of the workplace and women are more likely to feel anxiety than men. What do you think is the root cause of this?”

[Music increases and question appears on red background – “Why are women more likely to feel financial anxiety than men?”]

[Clare Stinton to the camera]

“Part of that anxiety will be likely due to social economic factors so women typically are likely to earn less, they will have longer periods where they are economically inactive due to having children or child care and therefore that all has an impact on their savings capacity. In some instances that lack of confidence may in fact actually be strengthened by gendered perceptions that exist around finances.

Numerous studies indicate that women are statistically less confident then men when it comes to investing. 63% of millennial women admit to deferring to their male partner when it comes to long term financial planning. So women really need to make an active choice to become financially fluent. Being in control of our money gives us more choices and education is key to achieving financial independence and resilience.”

[Sarah Coles to the camera]

“Our research actually shows that most households will split the financial jobs so that women will say they’re more likely to look after the day to day finances whereas men will take control of investment and pensions and more sort of long term planning which can mean women really do get divorced from that long-term perspective on their finances.”

[Susannah Streeter to the camera]

“Jo, what has been your experience. Does what you’ve gone through reflect that?”

[Jo Middleton to the camera]

“Yeah, I do think that finance generally can be very much seen as a kind-of male industry and a lot of the information around like bigger finance stuff, financial planning and pensions can feel very geared towards men. I think even just like having more women in the industry would make it feel more accessible you know having women visible in those kind of roles – just to kind of get away from that sort of men in suits vibe. And I know my own experience and a lot of the women I know going through separation or divorce and becoming a single parent for the first time, finances are a really big worry, it’s often the very first time they’ve had to make big decisions about money and they’ve already got other stress of the separation to process and even knowing where to go for advice can be quite confusing I think.”

[Sarah Coles to the camera]

“That sort of thing really does show the fundamental risk of being out of touch of half of the finances in your household and it’s not nice to remember, but two in five relationships will end in divorce and the rest of them will end in death so there is a really strong chance that you will be left on your own and if you’re trying to get to grips with half of your finances at the time it’s really really stressful. There is also the risk that your partner won’t necessarily have the same priorities as you so if you hand over all responsibility for long-term planning it doesn’t necessarily mean that they’ll take everything you want into consideration.”

[Susannah Streeter to the camera]

It’s really interesting. When you look at the numbers what are we seeing about the financial impact of the pandemic on UK households. Is there a cohort most affected, Clare?”

[Music increases and question appears on red background – “What’s the financial impact of the pandemic on UK households and who is most affected?”]

[Clare Stinton to the camera]

“As Sarah pointed out the pandemic has had an unequal application across society. Recent data suggests that it’s those under the age of 30 and on the lowest income that would’ve been most severely impacted and it’s because that particular group of people are over represented in the shutdown sectors where they will have likely lost income or worse been made redundant. We’ve seen 115% increase in the number of young women who have made a welfare claim between the months of March and November last year.”

[Susannah Streeter to the camera]

“Now, Jo, I want to turn to you now and talk about a bit more about your experience of being a single parent because in the UK there are around 1.8million single parent households and 90% of those are headed by women. You’ve talked in the past about the high cost of being a single parent. What has been your experience?”

[Music increases and question appears on red background – “What’s your experience of being a single parent?]

[Jo Middleton to the camera]

“I mean I’ve had very minimal financial support from my ex-partners so being a single parent has been incredibly expensive. I think as a society we’re just not set up for single parents you know think of anything pretty much; holidays, days out, housing costs, bills, when you don’t have another adult to share those costs with, you know it’s a big deal. Even stuff that we might think of as frivolous things like holidays and attractions they’re all priced in favour of two adult families. So if you’re a single parent you end up paying over the odds. Take something like the family rail card as an example, you pay exactly the same price whether you’re a two adult or one adult household so if you’re a single parent you’re effectively paying twice as much.

When you start to look at the bigger things you know you see again and again how single parents miss out. If you think just of the last 12 months, and the financial support for freelancers. As a single parent household you know, you could be just over the cap of £50000 and not qualify for any help at all but as a two parent household you could have two adults earning £49000 each - almost double the household income - and both parents would qualify for support. There’s just so much unfairness in the system. It’s really expensive.”

[Sarah Coles to the camera]

“There’s so many extra things as well that single parents need to think about and it’s really easy to overlook some of the extra things. So one of the issues that tends to get missed is protection. So one of the issues if you are getting maintenance payments from your ex-partner, you need to consider what would happen if something was to happen to them. So if you rely on that money you need to be sure that their life is covered so that if they are to pass away you would still continue to get your maintenance payment.”

[Clare Stinton to the camera]

“Absolutely, longer term there is much to be said for protecting before investing. We insure a lot of things in our private lives - we will have home or travel insurance or phone or car insurance, but we often forget about the most valuable asset and that’s ourselves. The main trigger for people looking at whether to protect themselves or insure themselves is down to whether they have financial dependents; a spouse or perhaps children. Equally you will need to look at the support that is already available to you and dependant on the type of insurance it could provide security for the future of your loved ones or it could provide income replacement if you are unable to work. Given the significant number of redundancies we’ve seen over the last 12 months, relying purely on employer provided insurance isn’t wise. It’s not just about growing your wealth but it’s also about securing the future of your loved ones and protecting what you’ve already accumulated.“

[Susannah Streeter to the camera]

“Let’s talk now about low income debt, I mean how has the pandemic affected borrowing overall particularly for women, Sarah?”

[How has the pandemic affected borrowing, particularly for women?]

[Sarah Coles to the camera]

“Well overall the Bank of England statistics show that borrowing on things like credit cards and loans has actually really fallen during the pandemic. So since the beginning of March we’ve repaid 17.3 billion pounds which is a huge amount of money but those overall figures as usual they’re masking a big difference between those that haven’t been affected by the pandemic and those who are really struggling. So 19% of people say that their level of unsecured debt has fallen, but 14% have seen it rise and there’s a risk that if you’re borrowing and trying to get through the crisis by borrowing, that you’re going to run out of road.

Now women are more likely to have borrowed during the crisis than men and those that borrowed money are more likely to borrow more and they’re more likely have borrowed over £1000 so they’re really quite serious debt issues that are sort of building up for women and it’s likely to be because women are earning less on average so they have less to fall back on and whilst they are less likely to of been furloughed right at the beginning of the pandemic they have actually stayed on furlough for longer so since July there has been more women on furlough than men so they are having to deal with those lower incomes at the same time.”

[Susannah Streeter to the camera]

“Yeah it’s interesting that women are earning less on average. Many women do find that their careers are detrimentally affected when they have children - for example starting to work part time, juggling work with childcare and also their ability to save. They often put their children’s immediate needs before their own long-term savings.

Is this your experience Jo?”

[Jo Middleton to the camera]

Oh absolutely. Yeah, after my second daughter was born I had to give up a well-paid, full time job and instead ended up working three separate part time jobs. They were all really low paid but it was just to have that flexibility around children. I was totally over qualified and under paid for every job I had for about seven or eight years at least until I decided to work for myself because that was the only way I could get the flexibility and the kind of earning potential that I needed.

And I know so many women in similar positions, you know, parents who feel like they’ve basically sacrificed their careers and just been left behind.”

[Susannah Streeter to the camera]

“One consequence of the pandemic is the flexible working pattern that many employers across industries have adopted. Do you think this could actually be a silver lining for some women Sarah?”

[Music increases and question appears on red background – “Could flexible working be a silver lining for women?”]

[Sarah Coles to the camera]

“Well yes and no. So if it takes off then women who are juggling family responsibilities and work will hopefully be able to make better compromises that will suit them and there’s also the hope that men who’ve been working from home around family and will be able to take on more of the load and share some of those responsibilities, but in order to get to that point you’ve got to overcome quite a lot of hurdles first.”

[Susannah Streeter speaking over Clare Stinton’s video]

“Clare what do you think are some of those hurdles?”

[Clare Stinton to the camera]

“In lockdown women are having to juggle both paid work and bearing the brunt of childcare responsibilities. We know that 16% of women reduced their working hours in the first lockdown for home schooling, in comparison to just 9% of men. We also know that women are one and a half times more likely to have quit or lost work since the first lockdown, so some women who have been made redundant have reported difficulties in finding an alternative role that allows flexibility for childcare responsibilities and there is a concern therefore, that the Gender Pay Gap will widen as a result. This will feed into that overarching systemic issue that women generally have a lower earnings capacity therefore a lower savings capacity and they receive consistently lower pension contributions from their employer, in comparison to their male counterpart. So the pandemic is exacerbating inequalities that already existed and that’s going to have an impact on female financial resilience both in the short and the long-term.“

[Sarah Coles to the camera]

“It’s not just women that need to step up to the challenge. So managing people and teams in a flexible environment is a new skill for a lot of people to learn and after the initial enthusiasm for you know working from home and all the excitement around not having to commute anymore, there were some problems that people started talking about and sort of finding that it was very difficult to manage people remotely and so they started to conclude it is not possible to do it sensibly. But there needs to be more work done to develop the workplace and to develop people so that they can cope with flexible work otherwise there really is a risk that it will be dismissed as a possibility.“

[Susannah Streeter to the camera]

“Well let’s keep talking about the future, the future of work, the future of financial resilience. Jo I’d like to ask you what do you say to your daughters for example when it comes to money and building financial resilience?”

[Music increases and question appears on red background – “What would you say to your daughters about building financial resilience?”]

[Jo Middleton to the Camera]

“Start early. Start as early as you can. Never too early to start a pension or savings and of course anything you save in your 20s is worth so much more than the money you can save later in life.

I think I’d also say don’t be afraid of money. I think so many people get into debt because they’re scared to face up to it, they bury their head in the sand but it’s going to catch up with you so you may as well deal with it. And I think what you often find and what I certainly have found is most organisations really are happy to help you, you know with payment plans and different options if you’re struggling, as long as you’re honest with them and you keep them in the loop.

I know I had a lot of debt in my twenties as a result of going to university as a single parent and you know I did try and run away from it to start with but once I kind of faced up to it and dealt with it, it was so much more empowering and really liberating.”

[Susannah Streeter to the camera]

“Don’t ignore those letters. Well thank you very much Jo and Clare and Sarah. So much to think about. Plenty of organisations and individuals whether friends, family are there to help. It’s just often starting the conversation which can be the tricky bit to get on the path to long term financial resilience.

We’d love you to continue the conversation online or do get in touch with our Helpdesk if you have anything you’d like to talk through. For more information on any of the topics we’ve been chatting about you can check out the learn section of our website for guides, interactive tools and some frequently asked questions. You can find it at hl.co.uk/learn. Alternatively the Money Advice Service does offer some free and impartial resources.

From all of us here, thanks very much for being with us.

Goodbye.”

[Music crescendos – compliance warning shows]

We’ve put this together to give you information to help you make informed decisions, but this isn’t personal advice. If you’re not sure what’s right for your circumstances, seek advice.

Tax rules change and benefits will depend on individual circumstances. Investments rise and fall in value, so you could get back less than you invest. You can’t usually access money in a pension until age 55 (57 from 2028).

Filmed on 17/02/2021

Transcript: Pensions Panel

This video has decorative footage throughout. Where there are visuals which are not explained in the speech these are described below.

[Clare Stinton (Financial Wellbeing Specialist] speaks to the camera:]

“Hello and welcome to this pension panel where we’ll be looking at women’s later life finances. We all know about pay inequalities, but how much do you know about pension inequalities. Pay gap equality is targeted for 2050 and pension equality targeted for 2100, but what if any damage has been caused to those timescales by the pandemic? Secondly, we’ll be discussing what women can do now in order to boost their pension savings and have choices after retirement. I’m Clare Stinton, a Financial Wellbeing Specialist here at HL and I’m joined by three panellists. Sarah Coles a Personal Finance Analyst at HL – Hi Sarah”

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“Hi”

Clare Stinton (Financial Wellbeing Specialist] speaks to the camera:

“We’ve also got Iona Bain, Founder of the Young Money Blog and the go to voice in the UK on millennial money. Hi Iona.”

Iona Bain (Millennial money expert) speaks to the camera:

“Hi Clare”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“And last but not least, we’ve got Rosie Richard, Head of Financial Advice for South Wales and the South region. Hi Rosie.”

Rosie Richard (Financial Adviser) speaks to the camera:

“Hi Clare.”

Clare Stinton (Financial Wellbeing Specialist] speaks to the camera:

“So, my team and I are constantly looking for ways to add pizzazz to pensions. Let’s face it there is always something more exciting to spend our money on and retirement may seem a far-off target in the distance. So, Iona, why should young women take an interest in their pension?”

[Music increases and question appears on red background – “Why should young women take an interest in their pension?”]

[Iona Bain (Millennial money expert) speaks to the camera:]

“Well Clare, you’re right to say that pensions do need some pizzazz adding to them because they can come across as boring, complicated and irrelevant to young women which is really unfortunate because they are in fact the key to our future. Young women need to understand that pensions are a feminist issue. And if they want to achieve parity with men, then they have to start engaging with their pensions at a much younger age.

So, we all know that we have the gender pay gap, even if the reasons for it are quite complicated, but what a lot of women may not be aware of is that we also have a gender pensions gap. So, by the time a woman reaches 65, her pension pot could typically be worth just a fifth of a man’s according one piece of research. And divorced women meanwhile typically end up with a pension worth around £26000 compared to £103000 for divorced men according to another piece of research. So clearly something is going very badly wrong"

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“What’s causing this disparity?”

[Music increases and question appears on red background – “What’s causing this disparity?”]

[Iona Bain (Millennial money expert) speaks to the camera:]

“Well there are a number of factors behind the gender pensions gap. Women miss out on building up their workplace pension because they take more time out of their jobs to look after children or elderly parents compared to men and they are also much more likely to work part time and not qualify for workplace pensions. They also typically earn less than men, but that also leads to lower contribution levels because our pension contribution levels are set as a percentage of our earnings, so if we’re not paid as much as the men then we’re not building up as much of a pension as the men. And also, a lot of women do tend to rely on their partner’s pension which in and of itself might not turn out badly, that might not lead to a woman getting into financial trouble, but that will end up being a problem for them should they divorce. And we have seen that women typically end up much worse off when it comes to their pension should they divorce or separate from their partner in the future.”

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“I think yeah, the gender pay gap has a real impact, so women tend to as you say earn less than men, so they’ve got less available to put aside for the future. The other big problem is they tend to have more insecure earnings from men. So this is particularly things like having to take career breaks and things like that, which means that they’re less confident in putting that money aside for the long-term and they tend to favour saving for the short term in things like cash ISAs. I think one of the other issues is that women when they take a break from their careers often they’ll think well I can’t really afford to keep going with my pension contributions, and will cut them before they leave and that actually has quite a big effect. So if you cut them before you actually go on maternity leave, then your employer doesn’t have to make any contributions while you’re away either. However, if you do decide to stick with them, and your income drops below the trigger level, then you don’t have to make any contributions towards your pension, but your employer still has to. And if you have enhanced maternity pay, which means that you earn more than the trigger but less than usual, then the contributions will be the same percentage of your maternity pay as it used to be on your salary but actually you’ll be paying over less, whereas the employers have to pay that percentage of salary. Another big question that people run into when they stop paying into their pensions of course, is how they restart them. So I know this from personal experience that I actually stopped making payments into my pensions when I went on maternity leave and I just assumed that I’d be back in work and back paying shortly. What actually happened was I ended up being a single mum and having really sort of tight finances and it was a long time before I was able to start making pension payments again and really then having to play catch up.“

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“It’s a well-known fact that childcare is hugely expensive and as a result, some women may give up work because it’s more cost effective to stay at home and look after their children. Rosie is there anything that women can do to boost their pension savings if they’re not working?”

[Music increases and question appears on red background – “What can women do to boost their pension savings if they’re not working?]

Rosie Richard (Financial Adviser) speaks to the camera:

“There are a few options Clare. So, if you do take a longer break to look after children then you still do have a pension tax efficient allowance which is up to £3600 pounds a year so you or your partner could pay into this. It actually costs you £2880 so you’d get £720 worth of tax relief so that option is available for you. Realistically, not everybody is able to do that but when you go and you take that extended break you should look at all your bills and keep pensions as a priority to see if you can afford something up to that allowance. And there’s another key reason as well to keep paying into your pension if you can do. It’s when you get to retirement. If all the money is in one person’s name, well, when you start to withdraw it, you’re more likely to pay tax.

So, as you are hopefully aware, you’ve got a personal allowance which is currently £12500 a year, so you can earn up to £12500 and not pay a penny of tax. So, when you withdraw that amount from your pension, it’s the same, so you could withdraw £12500 from your pension in retirement and not pay tax. So, say all the money is in one person’s name and you want £20000 out, well that means the first £12500 will be free, but the next £7500 will be taxed. Whereas if you had money in both people’s names, you both could take £10000 out, use your allowances and not pay a penny of tax. So, it is worth and now everybody’s situation is different, but it’s certainly worth making sure you consider this as part of your planning. Now of course, tax could change, you know, and it will depend on your situation, but I just would really encourage women to understand the rules around this so they can make informed decisions on this.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Absolutely. Evidently, it’s a combination of both social and economic factors that are causing this inequality. Iona in your opinion what can be done to close the gender pension gap?”

[Music increases and question appears on red background – “What can be done to close the Gender Pension Gap?]

Iona Bain (Millennial money expert) speaks to the camera:

“Well at the moment the pension system here in the UK is very closely tied to the labour market. And I think it’ll always be that way to be honest and so any gaps in earnings and job opportunities will inevitably lead to gaps in pensions between the genders. The solution that’s often put forward is to have more childcare and social care subsidised by the state so women can go back to work and start building up their pension pots again. And that is probably the best chance that they have of achieving pension parity with men. But I think as much as we need to address the huge cost of childcare and social care which is a problem for families right across the UK, I don’t think that is the whole solution because I think the whole essence of feminism for me is about giving women choice. And I think that that means women who do not want to go back to work straight away after giving birth and wanting to bring up children for instance, that they have a right to that choice and I think it would be wrong if we were to force women to go back to work sooner than they want just partly so that they can build up their pension because many new mothers need time to adjust to their situation. Some may experience mental health issues and will need that extra support and time to manage their new situation.

And I think all parents really, especially after the pandemic will want to achieve a much healthier balance between looking after family and working. And that could be achieved perhaps by working part time or remotely and that option should be open to both mothers and fathers. So I think we also need to look at shared parental leave and see if there’s more that we can do to encourage an uptake of that parental leave because at the moment, fathers are not taking the full parental leave that they’re entitled to, only a third of men are taking that full parental leave. So what’s happening there, what could we do to encourage the dads to perhaps share childcare and care of parents. And then perhaps post pandemic we could look at fostering and building workplaces that allow employees to have that better balance between their working and family lives. And that may go some way towards closing the gap in pension contributions, alongside of course, education for men and women about the pensions gap and what they as individuals can do to close that gap and help women build up their pension pots so there isn’t that big gap at retirement.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“In the interim, is there anything that women can do individually?”

[Music increases and question appears on red background – “What can women do individually?]

Iona Bain (Millennial money expert) speaks to the camera:

“Absolutely. There is actually an awful lot that younger women can do about this situation and earlier on I talked about how perhaps younger women aren’t really thinking about pensions. And that’s definitely something that I can relate to. Prior to coming into my work into this career, I didn’t think at all about pensions and I didn’t think they were at all relevant to me. But as I’ve learned more and more about this area, I’ve realised just how important they are and I’ve realised just how much of a difference I can make in my 20s and how much I can plan ahead to my 30s and 40s to try and reduce some of these problems around the gender pensions gap. So, I think my main piece of advice is start saving as soon as possible and as much as you can. And if you are enrolled into a workplace pension, stay in that pension because you are getting free money from your employer and you’re also getting tax relief. And your pensions being invested in the stock market and there are no guarantees about stock market investing but based on the past, we can hope for better returns if we invest our money rather than save it. And we’re also getting the benefit of compound interest where returns are earning their own returns. So really you’re getting a whole lot of factors there that are going to help you build up that pension over time and some research does suggest that starting that pension sooner in your 20s and really committing to it, that alone may help to compensate for any gaps in pension contributions that might occur in your 30s or 40s if you decide to take career breaks.

And you can also make sure that you’re filling in any gaps in your state pension by contributing to your national insurance contributions. So that you are making up your national insurance record over time as well. And if you are worried about what might happen if you take a career break, then you can make your own pension plans. You don’t have to rely purely on your workplace pension, and in fact it may not be entirely sensible to do that as the minimum contribution levels may not be enough to create the pension pot you need anyway. So it’s well worth looking into making your own pension plans, setting up your own private pension and that’s especially important for self-employed women because they do not qualify for workplace pensions and at the moment we have a huge problem with the self-employed not making pension plans and there is an even bigger pension gap for self-employed women so I think that’s something that you need to look into straight away if you are freelancing and you don’t have any pension plans at the moment.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“I absolutely second what you’ve said there. It sounds obvious when you say it out loud. But of course, the earlier that women start saving for later life the better. Rosie, what do you wish you could have told your 20-year-old self about savings and pensions?”

[Music increases and question appears on red background – “What do you wish you could have told your 20 year old self about savings and pensions?]

Rosie Richards (Financial Adviser) speaks to the camera:

“Well just to really build I suppose on what Iona’s just gone through. If I channel back 20 years ago and talk to myself age 20, I can tell you at 20 I couldn’t imagine being 30 let alone 60 something. And what my plan for my life to be at 20, turned out to be very different to how it is now. So the first thing that I would be talking to myself is making sure you have a short term, a medium term and a long term plan because you just don’t know what life is going to throw at you – so that’s the key thing and make sure your plans are flexible. Then the next thing we’ve touched on a little bit already is to make sure you start young with your savings. There’s always other priorities to spend your money on and as we’ve said right at the beginning, putting pizzazz into pensions is not something that an average 20-year-old would ever think about.

So, if I had joined and I did join my pension scheme I have to say, influenced by my parents, but just put the minimum in because I thought that would be enough. But we’ll just look at a couple of calculations, if I put in £100 and I was working for an employer and they put £100 in and if they offered it through a salary sacrifice basis and I was a basic rate tax payer that would cost me £68 and I’d have £200 going in. So, I did that from 20 to 67 when I could hopefully get my state pension say, then I would have built up a pot of £212000 – quite a significant amount of money. Now, if I had decided to pay a little bit more in. So, say I put an extra £50 in, costing me £39 then actually that could get me to £265000 at the age of 67. So a huge difference from just that little bit more. And, but if you think what quite often happens is people delay, they delay until they think they’re going to feel grown up at 30 or in sometimes my cases - my friends cases 40 and they start saving into a pension. So, if I had waited until 30 saving £100 and employer £100 you’d be looking at £118000. So, you can just see the difference that compound growth that we were just discussing makes because that growth and then that gets growth and that builds month on month, year on year and makes a huge difference. So, I‘d say start saving as much as you can do as quickly as possible. Perhaps take you lunch into work occasionally, get a few less takeaway coffees and actually save a bit more because you will need it.

Also, I had no concept that if I did have children - as I have you can see behind - how much that would cost in childcare as I made the choice to return to work. The average cost per week for children under 2 to be in full time childcare is over £250, I think it’s £252 the average, so a lot of money. And I think it's higher in London as well. And I was in a position with two children under the age of 4, in childcare, it was costing me £1500 a month. So, if I go back to that 20-year-old, I always thought I would be better off, so therefore when I had got to 30 my career would be more established, and I could afford to save. But actually, things were never tighter than what they were in my 30s when we were paying £1500 out plus mortgages etc. for that, so I would encourage women again to save for that reason. And the fact that I did save in my 20s meant that I couldn’t save quite as much in my 30s which means that now I’m in my 40s, they’ve gone through school, I’m in a position to catch up. It’s just given me a lot more flexibility. Now of course, with those assumptions, there is growth assumptions in there so I’ve worked on there on a 4% growth net of all charges, which if you invest in the stock market is seen as reasonable over the longer term and of course you have to be aware through those years that those values can go up and down. And the reason those values are doing so well is because you’re invested for a long time. That’s the key thing here – regular small amounts for a long period of time. That’s the key to getting a decent retirement pot.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“As we’ve just heard, money can be really tight when we’re juggling our various different expenses. Sarah how has the pandemic made things worse?”

[Music increases and question appears on red background – “How has the pandemic made things worse?]

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“Well it has caused a lot of problems and a lot of cash flow problems for a lot of families and we know that 6% of people who were previously paying into a pension have actually stopped making contributions altogether and 10% have really cut them back. We know that while men are more likely to have made cuts to it, it’s women who are likely to have stopped those contributions. And there’s all sorts of reasons for this, but one of them is that women have been on furlough for longer.

So right at the beginning of the furlough scheme, more men were put on furlough, but when we got to about July it switched over, we had more women on furlough than men and that’s continued right up to now. So, over those long periods of time people’s monies got really stretched and they’ve been looking for things to cut out of their budget. When you’re in this position it can make sense to cut the pension contributions, especially if you’ve been through your budget and you’ve sort of cut it to the bone and you’ve looked at cutting out all the non-essentials and trying to make all your bills as cheap as possible. But if you haven’t taken these steps, then it’s worth doing them before you cut your pension contributions because you are giving up that sort of top up from the government and from your employer at the same time.

Of course, if you stop making contributions, the key really is to start them as soon as possible. Because if you’re going through something in the pandemic and temporarily facing a problem, then a few months of not making contributions isn’t going to make a vast difference, whereas if that carries on for years, it really will.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Iona, is there perhaps a bigger problem at play here – do men and women view money differently?”

[Music increases and question appears on red background – “Do men and women view money differently?]

Iona Bain (Millennial money expert) speaks to the camera:

“Well this is a controversial subject and there are lots of different views on whether men and women view money differently. Personally, I think there is a difference there, but I don’t think that difference is primarily down to biology. So, we can debate whether men and women have different attitudes because they are inherently different, or whether they are conditioned to be different. And I tend to believe that most of the differences that men and women have when it comes to their views on money, that they are down to their upbringing and their childhood. And I think the reason why men and women grow up with different attitudes to money is because their parents talked to them in very different ways and we have to be very conscious of that if we are parents, or we know children and young people in our life. We have to ask, are we talking to boys and girls in different ways about money. In 2018, there was a survey of 500 children which found that 64% of boys had received the money talk from their parents, compared to 54% of girls. And parents were 17% more likely to say their sons were intelligent with money compared to their daughters which is quite worrying. But then that difference may continue well into adulthood and then it may be reinforced by our environment and by the influences around us.

So there was another piece of research conducted which found that when it came to women’s magazines, two thirds of articles about money, talked about women being big spenders who needed to keep a tight grip on their budget and very much talked about the realm of household day to day finances. But they tended to shy away from what I would call the big money subjects like finance, stock markets, pensions. By contrast, when the research looked at men’s magazines, they found 70% of articles talked about money making as this masculine ideal. It very much focused on the pursuit of money and earning more money and making that money go further in the long term. And they portrayed investing as an exciting frontier for men. So, there was a very different tone and approach in the men’s magazines compared to women’s magazines and that’s just one example of many where we can say there is a definite cultural and environmental difference here. And this is getting better. I think that as time has gone on, we’ve become more aware of these differences and lots of us are trying to overcome those differences.

In my own work I’m trying to talk about investing and pensions as women’s issues that they need to engage with. But we’ve still got an awful lot of work to do and I think that we need to constantly be aware of these differences in messages that we receive about money and if we have grown up with certain attitudes about money, then we can always rewire those attitudes and change them to more positive, empowering attitudes today. We can always decide that we’re going to become better with money, and that we are going to start engaging with big money issues.”

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“I think also some of this idea of how we talk to women and men, it goes beyond money to look at a broad cultural idea of what you’re supposed to be like. So, if you go back to magazines, if you look at the men’s magazine section in WHSmith, most of the titles are specialist so you get cycling, health and fitness, or fishing or whatever it is, and those are sort of specialist subjects. Whereas if you look at women’s magazines, they’re much more generalist so there might be food and fashion and interiors and relationships and finances are sort of fed into this, but a broad dusting of financial knowledge. But it’s not something that we’re expected to specialise in. And it’s one reason why when you ask women and men who takes responsibility for making decisions about money in the household, women might say that they take control of day to day finances, but men are more likely to take control of things which are perceived as needing more specialist kind of knowledge which is things like investments and things like pensions. So, women actually have to step out of the cultural norm in order to take an interest in their pension.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“This can be a problem in later life in the event of divorce can’t it Sarah?”

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“Yes, so obviously if you’ve divided your family responsibilities and you know men are in charge of pensions, it means that women are completely disengaged with their pension. So two thirds of men know how much they pay into their pension pot and only half of women do. The problem with leaving everything up to men is that you can’t expect your needs to be top of the list. So if you talk to a couple who may maintain their contributions while the woman was on a career break, they might say they put the contributions into the man’s pension because he was a higher rate tax payer and so therefore he could get more from the tax relief. And while this is true, if that couple then divorces and the woman has no connection to the actual value of her pension, then there’s a real risk that she chooses to forego that and so she might trade it off for something like a share of the family home for example. And she will not really know the value of what she’s giving up and so she’ll end up with very little to fall back on in retirement. So if you’re part of the decision making process throughout your life, and you’ve very much got to grips with pensions and you understand them, then you know if anything is to happen in your relationship that its absolute priority to make sure you have a share of that pension.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Rosie, as a financial adviser who talks to clients day to day, have you noticed any patterns when you’ve been advising women post-divorce.”

[Music increases and question appears on red background – “Have you noticed any patterns when you’ve been advising women post-divorce?”]

Rosie Richards (Financial Adviser) speaks to the camera:

“Yeah quite similar to what Sarah’s just been talking about. So you quite often meet women post receiving a settlement of the pension from the husband, isn’t aware – wasn’t aware until that point how much his pension was and what that amount is likely to give her in retirement. So the themes I’ve seen quite often when the divorce happens, they’re still continuing to look after the children which has an impact, their career has been on the back burner for at least ten years which makes an impact on what they can obviously earn in the future as well. They’ve got little in savings except this pension pot that they’ve been given and of the money that’s been split, they’ve spent more on the house exactly what Sarah’s done because they’re wanting traditionally to give stability to the children. You know so that becomes their priority, which I’ve seen time and time again. And they’ve made plans but they’ve only made plans until perhaps when the maintenance payments stop for the children. So the children could be a 14 or 16 year old child, but have no plans once that 14 year old, was 18 and was off to university – so what income are you going to live on there? You’ve got 15 years until you retire – what’s your plan and how are you going to save. And actually, your role becomes slightly outside of financial advice, in saying ‘I think you’re going to need to return to work and full time and what did you do before?’ So that’s the discussion that you need to have. Think right ok, let’s not just think short term – as I said before - what’s the plan longer term. That’s why it’s absolutely crucial that you understand, in the negotiations of divorce, what you’re likely to get and what that’s going to mean longer term.

The choices that you make when you have a family, if you’ve had a family and what choices you make at the point of divorce make a huge impact on retirement. Because the man walks away perhaps with a fair settlement on both sides, but then he returns to work quite traditionally full time, whereas you’re still working part time, saving part time to a pension if anything at all, with a smaller settlement. So, I do encourage women particularly to make sure they get advice and help - legal advice and financial advice at that time. I mean the divorce rate is coming down – I was surprised at that figure to be honest, post pandemic – but it is going up in the 60s and of course that’s even more important because you haven’t got as long to actually make that money back up if you don’t get the right arrangement set up. Also, in this current pandemic, trying to get a job as well is really tough so it’s all those different things feeding in. Going back to what Sarah would say, when I sit down with a couple who are very happy, I do encourage both of them to engage in the plans so they fully appreciate what they’re doing because you just don’t know what the future holds and that’s what I would encourage women to do.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Thankfully it’s not all doom and gloom, there is some light at the end of the tunnel – when women do take an interest, they’re often better investors aren’t they Iona?”

[Music increases and question appears on red background – “Are women better investors?”]

Iona Bain (Millennial money expert) speaks to the camera:

“Yes, and that’s backed up by the research. So many studies do show that women who do invest tend to outperform men. And they can earn returns anywhere up to 1.8% higher than the blokes, which is quite amazing because that’s quite a significant outperformance. It doesn’t sound like a lot, but over time per year, it does add up. And it could mean that women are earning many thousands more pounds in the long term than men. So, we know that women can be really good investors. And they may even be better than men. But why is that the case? Well it’s the cause of much debate it could be that women are more cautious than men so perhaps they don’t chase certain headline grabbing investments – shares that seem to be a one way bet and exotic assets that promise really high returns, but which may turn out to be a big disappointment, or even fraudulent. And studies also suggest that women may trade less, they’re much less likely to fiddle about with their portfolios, and they’re more patient, so they look at scary events in the stock market like the big crash that we saw when the pandemic hit last year and they don’t make decisions and often not doing anything is the best thing you can do! And that means that they don’t sell out when markets fall and crystalize their losses whereas maybe men are a little bit more hot headed when it comes to those kinds of events in the stock market. It’s a big generalisation, but that could help to explain why women tend to outperform the men.

But it raises a lot of questions. Are women naturally cautious or are they simply conditioned that way? And do women behave more cautiously because actually they often have less money to invest than men? And therefore, they just can’t afford to take greater risks. So that makes them more cautious. And I think we need to be aware that being excessively cautious as an investor is not a good thing. Being an investor is about taking informed calculated risks. And there is such a thing as reckless conservatism – and that’s often used when we’re talking about the tendency to save money rather than invest. We think that we’re doing the right thing, but of course if we just keep our money in savings then we risk our money being eroded in real terms, over time by inflation. So, we need to make sure we’re investing to outpace inflation and to meet our long-term goals and that we’re not being too cautious. So I think we need to be careful about reinforcing the stereotype that women are inherently more careful as that might then influence them to take fewer risks, to live up in essence to that stereotype and therefore that could dent their ability to earn returns over the long term that are going to meet their goals and are going to help them really build their own personal prosperity.”

Sarah Coles (Personal Finance Analyst) speaks to the camera:

“I think one of the reasons why women are more reluctant to invest also comes down to the idea of the threshold of certainty. So, if you ask men and women about their level of knowledge about investments, men are much more likely to be confident about their investments. But then if you go on and talk a little bit more about the nature of investing and ask more questions, while men know slightly more than women the gap is so much smaller. So men are much more confident on a much smaller level of knowledge improvement over women and so it seems women need a higher level of knowledge to feel secure and so they have to have this higher threshold of certainty. So, part of getting women to be more enthusiastic about investment is gaining an understanding that you don’t need to be a specialist, you don’t need to be able to sit an A Level in the subject before you start investing. You just need to get to grips with the basics and engage with it.“

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Iona, still on the topic of investing, responsible investing is hugely topical at the moment. Do women have the power to align their pension savings with their personal views?”

[Music increases and question appears on red background – “Do women have the power to align their pension savings with their personal views?”]

Iona Bain (Millennial Money Expert) speaks to the camera:

“Absolutely women do have the power to align their savings to their views and it has never been easier to make a difference with your money. So, responsible investing is simply ensuring that your money is invested in a way that doesn’t harm society or the environment, and ideally is put into companies and initiatives that solve big problems or help to move the world forward. Now there are many different kinds of responsible investing today. And we’ve I think moved beyond the simple idea that responsible investing should really only be about excluding companies that are seen as problematic. That’s called negative screening. And while it does have its place in responsible investing as a way to ensure that your money is more aligned with your views, you can go beyond that. There is a much bigger world of responsible investing options out there. And today pension funds are being expected by the government and increasingly the public, to routinely invest with an ESG agenda in mind. So, at the very least excluding those companies that are seen as problematic and hopefully going beyond that and investing proactively in companies that are seen to be making a positive difference.

Now the term that you’ll hear used an awful lot in this debate is ESG. What does that mean? Well it stands for environmental, social and governance. Now, that covers a huge spectrum of issues but if I had to sum it up very quickly, they basically cover a company’s environmental policies, how that company treats its workers and suppliers, also perhaps how it pays its taxes and how it's run. So, for example what their gender and BAME representation is like at senior levels. So ESG encompasses an enormous number of issues there that I think all of us care about and all of us want to see some progress on. And I think the best development really that we’ve seen in recent years is this realisation that if you take an interest in these issues, it’s not only good for the planet and wider society, it's actually good for your investments too. You could actually be earning better returns in the long term if you invest with these issues in mind. And that’s because the people managing your money are becoming aware that companies need to be sustainable in all senses of the word. So a company that’s building vital infrastructure or offering important innovation that will be widely adopted to fight climate change, they may become a more prosperous profitable company in the long term because they’re at the vanguard of that change in wider society. And also if they have a happy productive workforce that are paid well, if they have a diverse inclusive management team, those can contribute to the quality of decisions made and the quality of output of that company. Therefore, they will be more profitable in the long term and that will make for a more promising investment in your portfolio.

And you can also go one step further. You can opt for investments that actively try to make a positive impact. And this is known as impact investing. So, the traditional view is that impact investments earn lower returns. In essence that you’re sacrificing some profits to do good, but I think that’s been debunked in recent times by the fantastic performance of lots of different companies and enterprises out there that really are contributing to the fight against climate change and have outperformed a lot of other companies in the process. So I think it’s well worth looking into what you can do as an individual because we all can make a difference in this and I think the single most powerful thing we can do is to look at where our money is invested, so if we would prefer to have a more responsible investing portfolio then that’s a choice that we can make. Now an easy win would be to look at your workplace pension and if you are in the default workplace pension, find out what its ESG policy is if it has one. If it doesn’t, then you can switch to an ESG fund. You can also open a pension or a lifetime ISA if you’re under the age of 40 that very much has a green policy and that will ensure that your investments are in responsible companies. Now we still have a long way to go. We are by no means at that stage where we can say that we have fully incorporated this idea of ESG into the entire world of investing, but I think the financial industry, the government and the world of business have made huge progress in this area and we now have a huge world of responsible investing options for women who want to do good with their money.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“It’s certainly a growing area. Finally, Rosie, it’s not just about pensions is it? What are good foundations for later life finances?”

[Music increases and question appears on red background – “What are good foundations for later life finances?”

“Yeah so it doesn’t have to be later life finances Clare, it can be for any age. And I think finances and documents have been written by men for men. So, let’s just break down the basics that you need to understand to make sure you can get everything together. So first thing, if you’re 25 or you’re 55 you’ve got to make sure that if you weren’t here, or you weren’t able to work because you were unwell, what would happen to your dependents? So that’s the first key thing as an adviser I would look at, right, so to make sure you’ve got cover. You may be provided cover through your employer, but if you’re self-employed, you need to make sure that is cared for. Now that’s priority number one.

Then going back to what we were discussing a few minutes ago was cash reserves. So pandemic, emergency reserves have never been, and cash reserves have never been more important. So, textbooks wise, you should always have 3-6 months’ worth of expenses in the bank. I haven’t always had that, you know that isn’t always realistic. But that’s what you should be aiming for. And going back to making sure you haven’t got too much cash in the bank as well. As an adviser I would be questioning clients on what are your plans on holidays, capital expenditure on the house, cars, so you make sure that what you are likely to buy or need in the next 5 years is accounted for, and you keep that in cash because you don’t want to invest that. So you organise them that way. That’s how you start to decide your level of cash. If I lose my job, how am I going to pay the bills, how long will it take me to find another job and what am I likely to need over the next five years that I can’t risk putting into an investment that could go up or down. So that’s the next stage – protection, cash.

Next thing, it’s back to our favourite subject – it’s pensions. Because that has the most tax efficient way of saving for your retirement, so I would be saying, right how much are you putting in, where are you investing, are you happy with where you are investing, what difference on the ESG side of things, are you happy with the risk you’re taking, what do you believe that’s going to give you in retirement. And making sure that the individuals fully understand right if I put in x, what am I going to get at that end. And actually then looking at their budget to say, actually what is the priority here. Is there any scope for any change because if you want to retire at 65 on £30000 a year, to achieve that, you might need to make some tweaks right now otherwise you’re going to live very well now, but perhaps not at 65. And what I find from advising clients is from 65 to 75, is when they really want to live. That’s when all the travel plans come in and that’s when they make up for the gap year they didn’t have. So those are the key questions with pensions. Savings, investing and what’s your plan - when do you want to retire, look at that. There are also things you should be aware of that an adviser would look at – slightly older plans have certain guarantees and benefits. Really important you look at that as part of it. Then the next stage when the pension’s sorted is your wider savings, so I’m talking about ISAs there. They can be really good to support your pension in retirement. You can take that earlier than your pension, so that can provide a nice tax-free income. And then, the next stage then is inheritance tax planning and care, longer term care, which people leave too late.

Actually, if you’re approaching retirement, it’s really important to look at what position you are in if something was to happen to you and what tax might be paid and making plans now at that stage. Because people come to us in their late 70s or late 80s asking for advice, there’s fewer options then available at that stage. So you know, just to summarise, make sure you know what happens if something happens to you and you can’t work, make sure your cash reserves are planned, know what’s going on with your pension, once you’ve got your pension sorted, look at your wider savings, and then finally as you approach retirement and you get more organised, established and know what you’re going to need for retirement, look at inheritance tax and your longer term care.”

Clare Stinton (Financial Wellbeing Specialist) speaks to the camera:

“Thank you so much to our three panellists for joining me. So much insightful information and no doubt a lot of food for thought. In brief summary, we all need to know the answer to these three questions with regards to our pensions. How much do you have in your pension, where are your pensions held - so what providers, and where is your pension invested? If you don’t know the answer to those questions, then we choose to challenge you to find out and to take control of your financial future.

We’d love you to continue the conversation online, or do get in touch with our helpdesk if you have anything that you would like to talk through. For further information on any of the topics discussed today, then you can check out the Learn section of our website, where there is a whole host of resources, including downloadable guides, interactive tools and frequently asked questions. You can find that at hl.co.uk/learn.

If you’re over the age of 50, then the Government run a service known as PensionWise, which offers free and impartial guidance to help you understand your pension, your options and the withdrawal flexibilities.

Thank you so much for listening.”

[Music crescendos – compliance warning shows]

We’ve put this together to give you information to help you make informed decisions, but this isn’t personal advice. If you’re not sure what’s right for your circumstances, seek advice.

Tax rules change and benefits will depend on individual circumstances. Investments rise and fall in value, so you could get back less than you invest. You can’t usually access money in a pension until age 55 (57 from 2028).

Filmed on 17/02/2021