Can advice help to close the gender retirement confidence gap

Women are less confident than men about their ability to retire due to structural factors
However, when women seek advice, the gender confidence gap closes significantly
Women are still more risk averse than men and advisers can help in this respect

The gender confidence gap

Our survey sheds new light on the gender confidence gap when it comes to retirement planning. Men remain more certain of their retirement plans than women but advice helps to close the gap.

69% of advised and 63% of non-advised men said they were confident that they would be able to retire when they wanted. But only 59% of advised and 53% of non-advised women believe they will be able to retire at the age they want – a significant gap of 10 percentage points (pp) in both cases.

This difference is rooted in a range of structural factors, as outlined in the Scottish Widows Women & Retirement Report*. The income gender gap means men still earn more than women and save more as a share of income. That income gap is particularly stark at higher wage levels – there are 2.5 times as many men earning over 50K than women. Maternity leave, career breaks and a lack of affordable childcare are also contributing factors. While the statistics show that men hold greater pension wealth at every stage in life, the good news is this gap is narrowing for younger generations.

Advice and the gender gap

While many academic and industry studies have indicated a financial confidence disparity between men and women, our barometer shows that a financial adviser helps to close this gap. A 67% majority of non-advised males said they were confident that they would be able to achieve their retirement plans, compared to only 56% of non-advised females – a gap of 11pp. Advised men and women, however, were both more confident, at 69% and 68% respectively, separated by a mere one percentage point, suggesting that advice helps to close the gender retirement confidence gap.

Similarly, 70% of non-advised men are confident they know how much money they need to retire compared to only 52% of non-advised women, a difference of 18pp. Advised clients, however, showed only a 3pp difference, with 72% of men and 69% of women being confident that they know how much money they need to retire. More evidence that advice helps to bring women up to equal levels as men.

In all surveyed circumstances, non-advised women report they would be more open to seeking advice than nonadvised men. They are more likely to seek advice due to a significant life event (64% women versus 55% men), ahead of retirement (59% versus 54%) and due to the higher cost of living (37% versus 21%). Non-advised females (52%) were also notably less confident than men (65%) that they can meet their goals without the help of a financial adviser.

The gender confidence gap is also notable at the point of deciding on a retirement income route. 11% of advised and 24% of non-advised men were unsure of whether to take their pension income through drawdown, annuity, or a blended approach. This compares to significantly higher levels for women – 23% of advised women and a very high 41% of non-advised women. While women are undeniably at a disadvantage to men in their ability to plan and execute their retirement strategy, our findings suggest having an adviser to help guide the journey goes a long way to closing the gap.

“Women’s lower retirement confidence is rooted in lower pension wealth, and in turn, lower
average incomes. There is still work to be done to close the gender income gap – especially when
it comes to seeing more female representation in higher-paying roles. Fortunately, the benefits
of financial advice are particularly pronounced when it comes to women, so it is great to see that
women are also more prepared to seek it. While higher wages for women are out of advisers’
control, one area where they can help women build the greatest potential pension wealth is
by encouraging them to take on the appropriate level of long-term market risk, since they are
typically a little more risk averse than men.”

Jackie Leiper
CEO, Embark Group