New report urges firms to tackle financial security 'gender gap'

Women are increasingly making more household financial decisions, and are set to take the majority of financial decisions in the home by 2020, according to a new report by Pinsent Masons, the law firm behind Out-Law.com; and the Fawcett Society. However, women tend to invest less in pensions and investment products, and are underinsuring themselves relative to men.

The report makes a number of recommendations to financial firms around marketing and product development to address these issues. They include changing the perception of finance as an area of male expertise by promoting more women into senior roles, and re-framing risk warnings to raise awareness of the dangers of under-investing.

Pensions and lifetime savings expert Carolyn Saunders of Pinsent Masons said that some organisations were "already recognising and engaging with" the need to target products specifically to women. However, on the whole, "financial products continue to be developed and marketed in much the same way as they always have been".

"Pensions and investment products need to work harder for women," she said.

"Financial service providers and policy makers need to help change the perception that finance is a man's world, boost women's confidence in their financial capabilities and develop products and advertising that speak to women. For the financial institutions that recognise and engage with this change there is significant opportunity to make a positive impact on society while opening up a market which is arguably underserved," she said.

The report found that women face distinct financial challenges when compared to men including a lower average starting salary when they enter the workforce, the impact of the gender pay gap and the effect of having to take time away from work to care for children or relatives. Women are also more likely to be affected by an unequal split of assets and loss of income after divorce, childcare costs and a higher likelihood of living with long-term, severe health conditions, according to the report.

Despite these risks, women are slightly less likely to be contributing to a pension than men, while the pensions of those that are saving tend to hold only 70% of the value of men's pensions. Women are also far less likely to be paying into additional personal pensions, or to be contributing to a pension while self-employed. Only 31% of women have life insurance policies compared to 36% of men, while there is a 32% difference between the insurance wealth held by women and men with high-value estates on death.

More than half of UK women do not have a financial adviser, while 73% of those that do say that they feel misunderstood by them, according to the report. Women are also less confident about their knowledge of financial products, which in turn puts them off from investing their money in the most efficient ways due to concerns about the complexity of the products. Although women are just as likely as men to save, they tend to save less and in ways that may mean that they are not maximising their wealth, the report said.

The potential rewards to financial firms of better engaging female consumers are significant, while the nature of the risks faced by women mean that there is a "strong moral case" for the industry to invest time and resources into developing products that better suit their needs, according to the report. A quarter of women working full time now earn over £35,000 per year, while 20% of women live in households with over £50,000 of financial wealth.

Fawcett Society chief executive Sam Smethers said that women were both "carrying more risk throughout their lives and also less able to take action to address those risks".

"This is partly because women earn less and also tend to prioritise other things over their own financial security," she said.

"But even when women are earning enough to save and invest, the financial information available to them and the choices they are presented with don't appear to work for them. The financial services industry has a huge opportunity here to both put that right and help women achieve financial independent at the same time," she said.