Now in her 50s, women’s wealth coach and former banker Kim Uzzell had her two children in the 1990s. This prompted her to stop the payments she was contributing to her retirement fund. Having the money to pay for more urgent needs like childcare became more important than her own future.
It’s a cycle that mirrors the life events that create and amplify the gender pay gap. But Uzzell warns that the gender pension gap – the difference between the financial security men and women respectively have on retirement – is far worse.
“A 10% pay gap in the UK is shocking enough. But nobody is talking about the fact that the pension gap is 43%. We’re addressing one part of the jigsaw, but the pension gap is incredibly wide, and is not moving in the right direction, because the gap is so big,” Uzzell states.
“We’ve left it so late, there’s a good chance that one half of a relationship can afford to give up work when they reach retirement age, and the other half then has to either become financially co-dependant or to carry on working.”
New research commissioned by NOW: Pensions reveals that women are reaching retirement age with the biggest pension savings gaps on record. The average woman in her mid-60s will have a pension pot of £69,000, while an average man of the same age will have accumulated pension savings of £205,800. Women would have to work an additional 18 years, full time, to reach this amount, according to NOW: Pensions.
But a new wave of fintech startups could help to change this, by making women more financially aware and confident in decision-making. Financielle and Smartpurse are educational and coaching platforms that aim to increase women’s financial knowledge. Half of UK women would choose to invest through an online platform or website, according to insights from financial advice provider Fidelity. The ability to get regular updates on their investments is the main motivator for 27%, while 19% say that regular nudges and reminders is a key benefit of managing their investments online.
Addressing the gender imbalance in fintech
But these apps and websites do more than repackaging finance for a female market. For Olga Miller, a former Swiss banker who co-founded Smartpurse in 2019, it’s a chance to redress the biggest gender inequality issues that have plagued the wider finance sector for years.
Fintech startups are purposeful and agile about hiring female financial advisers, who are lacking in mainstream banking – which alienates women from finance and taking personal responsibility, according to Miller. Smartpurse’s own research shows that 54% of UK women rate their financial planning for retirement as poor.
“There are too few women in key roles in financial services. But even if you receive applications predominantly from men, the women are there but it just takes double the effort to seek them out. It’s part of an overall value chain that starts from recruitment, through to management practices,” says Miller. “A newly forming fintech company with a team of just five people doesn’t have the same challenges as a large company does to achieve the right level of diversity.”
A further issue, Miller continues, is that a traditionally male-dominated finance industry has resulted in banking and pension brands communicating with language and imagery that doesn’t appeal to women or is belittling – something which Smartpurse and its counterparts aim to reverse. Indeed, when challenger bank Starling analysed 600 stock finance images last year, it revealed that men are more frequently depicted with notes while women are relegated to coins, and that men are portrayed signing documents more often than women.
But Miller warns that it is easy for this same issue to translate to the digital space, with many fintech businesses still falling short of catering to tailored customer journeys.
“Very few of them look at the language, so women still feel excluded. Initiatives like ours and others aim to create a safe space, where women are welcome to learn about what matters and are not patronised,” she says. “Women want an adviser who starts the conversation from what it is that the person wants to do with their money, rather than just pitching the next product. It’s hard for the industry to change. Fintechs can see things differently.”
Improving financial education
Doing just that also involves building a community, and using the language they use, says Laura Pomfret, who cofounded Financielle in 2018.
“We use our customers’ words in our copy. Women say they’re ‘overwhelmed’ and ‘intimidated’ but, at the same, they ‘want to get their act together’. So that’s one of the biggest things we say,” Pomfret explains. A lot of fintech companies get this wrong, she adds, by focusing on the solution without understanding and reflecting their customer voice.
Financielle’s online community is also supportive of its members aged over 50, Pomfret notes, overcoming any tech barriers for older users. She gives the example of a member whose partner of 19 years had left her, with no pension or financial security. Getting advice from the community, she worked out what she needed, and found a pension product that suited her and her ideal monthly contribution.
“Now she is completely on track and is helping others with the same problem. The community is the best because they’ve seen it all before and help people learn from their mistakes. It’s really cool,” says Pomfret.
Financielle’s sweet spot, though, is women aged 25 to 40. Pomfret is adamant that targeting women early and making finance as easy a topic of conversation as wellness or entertainment, will resolve the gender pension gap – without it becoming the sole domain of fintech.
Uzzell, who estimates that around 60% of her all-female client base comes to her with pension concerns, agrees. But she elaborates that financial education should be more established and emphasised in schools, with employers continuing this: “Big corporations have a responsibility. The government has a responsibility. Schools and educators have a responsibility. And the media has a responsibility to raise awareness of the gender pension gap in the same way as they did with the gender pay gap – and make it unacceptable.”