Women generally have lower pensions than men as they usually work for fewer years (as prime carers for both children and adult loved ones). They also have lower lifetime earnings.
This leaves them at greater risk of later life poverty – especially as they tend to live longer than men.
The issue is particularly pressing for those currently in their mid-forties – or older– as they don’t have a huge amount of years remaining to build up a decent nest egg for retirement.
While auto-enrolment – where eligible employees are signed up to their employer’s scheme unless they opt out – has made a real difference for UK workers, itl eaves out millions of women. This is because someone needs to earn more than£10,000 a year to be automatically enrolled – and get the benefit of their free employer contributions.
In addition, auto-enrolment doesn’t take into account overall earnings from different employers. When women go back to work after having children, it is common for them to choose to work part-time – or to opt for more flexible work from a number of different employers. This is in no small part due to the eye-watering cost of childcare. But this also plays against them when it comes to auto-enrolment.
For those women who fall through the cracks, saving for a pension may feel too difficult – or not worth the effort. Others may have completely lost interest in saving for their later years – or feel they don’t have the time and energy to give it any attention.
But slotting money away for retirement is not a ‘nice-to-have.’ It is a necessity.Relying on the State pension is simply not an option: women need to build up private pensions.
And those age 45-plus need to act now, as there’s no time to put it off until another day.
With this in mind, there is a pressing need to look at other ways to address the pension gap – and this means finding ways to get women (and especially those in their 40s and 50s) engaged with saving for their later years.
And this is where innovative fintech companies may be able to step up – with automated online advice services.
This new breed of adviser, which makes financial advice accessible and affordable may be particularly appealing to older women who want to do something about their retirement savings, but who don’t know where to start looking for the right product – or even the right questions to ask. The simplicity of automated advisers makes them well-suited for first-time or reluctant investors who don’t have the time, expertise or inclination to manage their own money.
Automated advice may also offer a fresh proposition to women in their 40s and 50s who have some savings and money tucked away in workplace pensions – but who don’t really understand what these may add up to as a retirement income. There’s a lot to be said for a service which can walk even the most of unsure of individuals through the advice process.
At the same time, automated advice may appeal to those anxious about the cost of professional advice. Women may like the fact that as the majority of automated online advice is technology-based, they are getting the same kind of regulated advice they would normally get face-to-face – but without the hefty price tag. This,in turn, may make them more willing to trust their financial future to an automated adviser, rather than to a human.
In addition, women in their 40s and 50s may be attracted by the convenience offered by this type of adviser, as the busy mum or time-pressed professional maybe drawn to the idea of being able to sort out their pension in their own time– rather than having to fit around a human adviser’s busy schedule. There’s a lot to be said for an adviser which is accessible 24 hours a day – and which can be used again and again as the user’s situation changes.
So what does all this mean for the advice industry?
By making automated advice part of their offering, advice firms can not only support many more customers as a result of the risk management and efficiencies automation brings, they may also find they broaden their appeal to women savers and investors (rather than primarily to men).
Automated advisers who are able to offer older women a straightforward and less costly route into the ‘advice’ experience could find themselves ideally place to help those who haven’t given much thought to their later years.
Put all this together, and automated advice has the potential to offer a real alternative to those individuals who might otherwise choose not to save into a pension at all.
In practice, for advice firms, this could mean offering user-friendly apps across mobile, tablet and desktop devices to deliver a simple customer experience, with plenty of flexibility.
Such a service may be just what is needed to guide women through the process of choosing pension suitable for their attitude to risk – and the path towards making better provision for their future. After all, women these days are going to need a sizeable pot if it is going to fund even a half-decent pension.
By putting women in control of their money, and giving them clarity and insight,firms can play an instrumental role in helping them get on the right track towards accruing a nest egg and building a comfortable retirement.
But before getting too carried away with the benefits of artificial intelligence,it’s important to bear in mind that some women – and older women in particular,some of whom may be less tech-reliant than younger generations – may feel areal need for some level of flesh-and-blood human interaction in the advice process.
And this is where a hybrid service comes in to its own – offering not only automated advice, but also advice from a real human being.
Such an offering can offer women the full package – including the reassurance and hand-holding they need, when it’s required, that they are making the right choices for their financial future.