244. After years of playing second fiddle to men, women are poised to take centre stage

8 March 2023 (pre-recorded 21 February 2023)

Below is a transcript of the episode, modified for your reading pleasure. Please check the corresponding audio before quoting in print, as it may contain small errors. Please remember we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at your time of listening. For more information on the people and ideas in the episode, see the links at the bottom of the post.

[INTRODUCTION] 

Staci West (SW): Welcome back to the Investing on the go podcast brought to you by FundCalibre. In a special bonus episode in honour of International Women’s Day, we’re discussing the subject of wealth transfer. When discussing wealth transfer, the tendency is to focus on the transfer to the next generation. However, the reality is that the initial transfer is typically from a husband to the surviving widow. Our guest today is an expert in the transfer of wealth story and joins us to explain what women of every generation need to consider when it comes to their finances. 

Sam Slator (SS): I’m Sam Slator, and today I’ve been joined by Gillian Hepburn who’s Head of Intermediary Solutions at Schroders. We’re going to be discussing women in finance. Thanks for joining us today, Gillian.

Gillian Hepburn (GH): Oh, thank you very much for having me.

[INTERVIEW]

SS: So, perhaps we can start with the fact that in just two years’ time, 60% of all of the wealth in the UK is actually going to be in female hands. Where’s all this money coming from?

GH: It’s a great start, isn’t it, because it’s a really interesting statistic. I mean obviously it’s research, but definitely one that we need to think about. But, if you think about where the wealth is at the moment in the UK, you know, particularly in the baby boomer generation, so two thirds of that baby boomer generation are in joint households, and typically, it’s a husband and a wife. Now, what’s interesting is that that is therefore the first point of wealth transfer. So, I’ve talked a lot about wealth transfer over the years and talked about moving to the next generation, but the first point of wealth transfer is often a husband to wife, and that gives us some really interesting challenges to think about.

SS: And so, what do women need to be thinking about? What do they need to be doing with the cash that’s coming to them?

GH: Yes, I would always say, first of all, get some advice. So, if you don’t already have an adviser …  and actually, what is interesting here is that often the couple will have an adviser, but 70% of women will actually change that adviser. And we did some research – I obviously … don’t, for any advisers that are listening to this, don’t shoot the messenger! And it’s often because these women felt that they were unheard. You know, they were kind of scared to ask basic questions and, as a result, they kind of just sat back in the conversation. And, over the years, the adviser just let that happen. So, many women feel that they kind of lack confidence when it comes to what could be potentially large sums of money. And actually equally, although we’re typically talking here about widows, it’s very much the same for women who go through a divorce. So, you know, again, a large sum of money: What do I do with that? Where do I start? 

So, the first thing I’d always say is, just try to get some advice. You know, I’m a great advocate of financial advice. But also, prior to these events happening, take part in the conversation. Know, understand where the money is within the family [and] what are the plans for passing that on? Where is it held? And who are, if I could call them the gatekeepers? So, do we know who the advisers are? Do we know the solicitors or accountants, depending on, the level of wealth that’s there? So, you know, just get involved. And so, that’s kind of the first point: just understand what’s there and what the plans are.

And then the next stage obviously is just thinking about what will I do with this? And I always talk about investing rather than saving. I know the regulator in the UK has identified that there are, I think it’s about 4.2 million people that have more than £10,000 that they could invest, that are actually holding significant amounts of that in cash. Now, clearly cash interest rates have been a real challenge, haven’t they, over the last few years and they’re rising a bit, but we’ve still got inflation sitting there. So, it’s about understanding the interplay between cash savings and inflation, and start to think then about investing and what would that look like and where to start. So, I guess that’s the second point is thinking about, where are you going to put this money and what are you going to do with it?

And that can often involve family conversations. Because interestingly, what we find – if we think about widows again – it’s often the wider family that steps in and helps out often, I guess, at the time where a female could be at her most vulnerable. 

But also things to consider are, you know, scams for example. You know, we hear awful stories about people – not necessarily just women – but you know, I look at my own mother who has not been widowed, but my dad’s had to go into a care home and suddenly she’s managing all these finances, so, it’s a similar circumstance and I’m absolutely sure there’s a scam list somewhere that she’s now appeared on. So, she’s very aware of what to do with her money, and where to go and get help. So, it is really important just to think about all of that. But I know it can be a really difficult time for people, can’t it? 

SS: So, you’ve mentioned there about scams, which is one of the dangers of obviously suddenly coming into some money. Are there any other dangers? What else could possibly go wrong?

GH: Well, interestingly another one is back to this piece about where to invest. 

I heard a terrible story the other week about a female client where she’d been investing in crypto. Now, I’m not saying all crypto is bad and you know, there’s challenges here, but it does relate to the scamming that the advisor said, we knew what she was doing and we kind of ignored it because we didn’t want to have the conversation because we weren’t very sure what to say. And she suddenly lost £200,000 which is, you know, a dreadful situation to be in. And that one actually was – it wasn’t, so we saw crypto taking a bit of a dive at the end of last year – but this was actually another scam. So, again, it’s [a case of] think about these kinds of, if I could call them, ‘get rich quick’ schemes. And there’s loads of them, isn’t there? Anybody that’s been on TikTok recently will have seen some of that stuff. So again, it’s moved back to thinking about advice and what you actually want to do with that money. 

Another thought – talking in the terms of widows – you know, women typically want to pass on wealth in their own lifetime, unlike men actually, women are more likely to do it. So, it’s thinking about how that’s going to work out. And what do you want to do? And who do you want to help? And how do you do that tax efficiently as well? So, there’s a lot of different considerations in terms of what do you do with the money? 

And interestingly as well, women often overestimate how much income they will need to survive on or how much money they will need. So, again, it’s back to understanding – particularly again for widows – what your future life might look like. A really good example is [that] women outnumber men in care homes by three to one. And when they get there, they’re there four times as long. We live longer and in poor health. Now, you could kind of work that out because, in terms of those numbers, but clearly there are very specific advice requirements for women, or considerations that women need to have. 

And also, if they are on their own, you know, obviously there’s day-to-day living costs isn’t there? But there’s also things like, you know, if my roof needs to [be] repaired or I want to change my car, [or] I want to go on holiday… And actually what was interesting – we did some research into this – and what was very interesting was, we’ve seen this huge rise as well in female entrepreneurs. You know, particularly often in that baby boomer-type generation, many women said, I actually found a new lease of life once I got over all the shock and the trauma and you know, 50% of landlords in the UK are women. [SS: Oh wow.] I know. So, we’re seeing some really interesting patterns and I would always say, we shouldn’t stereotype women as to their attitudes towards finance and investing. 

SS: So, we’ve discussed baby boomers and older generations of women there. There will also be a lot of younger women who, whether they realise it or not, will be investors because they’ll be auto-enrolled through a workplace pension or similar. Perhaps we could touch on the importance of engaging with your finances as early as possible?

GH: Yeah, great question, because it’s never too early to start, is it? Back to your point there, on women not even understanding or realising maybe that they’re investing – I took part in an event a number of years ago, amid a room full of very, very engaged young women who wanted a kind of safe environment to talk about their money. And we asked a simple question as to how many of you are investing in the stock market? And I think about six hands went up. And then we asked, how many of you have a workplace pension? And all the hands went up and we said, well actually you’re all investing in the stock market. So, it’s about education, isn’t it? From, you know, get yourself up to speed. And there’s loads of different ways that you can do that. There’s lots of available resources. You know, there’s Boring Money [boringmoney.com], for example. They’ve got a site specifically for women in their forties, fifties and sixties. But there’s, you know, there’s lots of podcasts, Vestpod [vestpod.com]’s another one that does really good basic, kind of financial education. So, there’s lots of places to go. 

And I think though it’s about sitting back though and understanding that women, particularly young women, do have a challenge, you know; typically earning less, living longer, taking gaps for maternity or caring of all sorts – for women are, as we called it in our research, society’s carers, both for parents in elderly years and for young children. So, you know, women do have a gap in terms of their savings. And it’s thinking about what the impact of that is and how you can try and compensate for it.

So, I think there’s lots of different areas that women really need to think about. One of the areas I talk a lot about, is taking risk. We’re quite, I think at times, a risk averse culture, aren’t we? And it’s often said that women are risk averse; I actually think they’re maybe just a bit more risk aware. But, and for somebody in their twenties and thirties thinking about investing, they’ve got a long time until they’re going to need that money. So, it’s about making sure that they’re taking enough risk to try and meet what will be their financial goals and objectives.

And another area [that] we found women get extremely engaged, is in sustainability. So many women – and all the research points to this, that women typically want to invest more sustainably than men. I’m always generalising, so apologies. But I think women are very interested, therefore in what they are investing in. And sustainability, if you think about it, plays into a number of different areas which are really meaningful, particularly for women. So, things like addressing modern slavery or women on boards or microfinance; you know, we invest in microfinance abroad in these countries where these women are setting up very small businesses. And I think some of these stories about where your money can do good are really, really interesting, but also very, very appealing often to women. So, I think there’s, it’s not all about – am I allowed to say this? – it’s not all just about the numbers, it’s about what your money can do, for you and for wider society.

SS: And I guess it’s having more conversations like this, whereas you might meet a friend for coffee and chat about the kids or holidays, etc. actually having a money discussion.

GH: You’re right, we’re not very good at talking about money, are we? Kind of, I dpn’t know, I used to say we’re all a bit British, but we just don’t like to talk about money. And actually, often when the conversation starts, we’re very good at doing it, aren’t we? And asking questions and trying to get ourselves more educated, because it’s just so important. If we are going to be the majority holders of the assets and the future and the majority holders, then it’s really important that we’re engaged and that we understand a bit more about it.

SS: So, if you could give the women listening to this interview, three key takeouts, sort of three key steps to take next, what would they be?

GH: Yeah, so I’d probably start back [with] what I said earlier in terms of get advice. And this is both for women, as I said, if you’re in an older couple, if I could call you that, and you’re likely to inherit wealth, you know, just make sure you’re already engaging with that adviser, if you have one for the family. 

But also for that next generation, think about advice. There are lots of different options now in terms of how you can get advice. And I think what we’re seeing now is more of these coming into the market. So, subscriptions for example, we’ve got money coaches out there. So, I think there’s lots of different ways that women can get advice and actually ‘get educated’ was probably number two. And again, back to the sort of money coaches, there’s lots of – and often they are women who are quite happy on a fee basis – to help you think a little bit more about your money or actually your future money. 

And then the last one I would really say is, just be a bit more confident. So, I often hear it said that women are … you know, they lack confidence when it comes to money. Well, let’s face it, most women often manage the household budget perfectly well, so, why do we feel so afraid of money? So, I think these would be the kind of three areas that I would say, just think about it going forward.

SS: That was fascinating. Thank you very much indeed.

GH: Not at all. Thank you.

SW: For more resources about how to start taking controlling of your finances visit fundcalibre.com and to research financial advisers visit unbiased.co.uk 

Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening, elite ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.