Helen Baker AFP® founder of On your own two feet financial planning discusses the importance of making financial advice more accessible to women to improve outcomes for their security and wellbeing.
In the World Economic Forum Global Gender Gap Report 2017, Australia ranked 35th. Many would consider this an achievement at first glance – 35 out of 200+ countries looks good on paper. To put this in perspective, Ireland and New Zealand ranked eighth and ninth respectively. Meanwhile many developing nations also outperformed Australia, including Rwanda (fourth), Nicaragua (sixth) and The Philippines (10th). So why is Australia lagging in closing the gender gap?
Barriers to financial equality
The barriers to financial equality for women are many, making this issue complex to address. Most obvious is the gender pay gap, which in turn fuels the superannuation gap. Australian women in 2021 earn on average 13.4 per cent less than men – a difference of $242.20 per week for full-time employment.The superannuation savings gap is even larger, with women on average having less than half the super balance of men.
Then there is what I call the career choice gap. Women often assume far greater unpaid caregiving responsibilities, both for children and elderly parents and in-laws. They are left with little time for paid employment, or forced to accept insecure, low-paid casual jobs outside of school hours. This results in all sorts of financial difficulties for women including affordable housing, disposable income, super savings and more.
Social and cultural attitudes also play a role. Women have traditionally left financial matters to their male partner, leaving them exposed in the event of divorce or poor investment choices. Add to this simple biology – Aussie women on average live 4.2 years longer than men. Effectively, women are paying for a longer lifespan with fewer resources.
Risks of doing nothing
Given these factors, it is sad yet unsurprising that women over 55 are becoming the new face of homelessness in Australia. For the majority, homelessness was thrust upon them suddenly following divorce or the death of their partner. Despite working their entire lives, these women cannot afford a permanent roof over their head. Moving somewhere more affordable is not a feasible option – isolating themselves from family and friends cuts off what limited support they have.
For other women, the only way to avoid homelessness is staying in an abusive relationship. The cost burden on welfare, healthcare and, in domestic violence cases, the justice system – is significant. Yet what of the productivity losses? With intelligent, skilled, and qualified women being forced into low-paid jobs – or out of the workforce entirely – their expertise goes underutilised. Government tax receipts are lower, as is spending at local businesses so the wider economy suffers.
Progress to date
Perhaps the fact I am writing this article is proof in itself that there is much progress yet to be made. Many parents – predominantly women – still find it unfeasible to return to work, simply because childcare costs leave them working for a net benefit of just a couple of dollars per day. Most employers still don’t offer equal parental leave rights regardless of gender, entrenching the stereotype of women as primary caregivers.
There are, however, rays of hope.The gender pay gap has fallen to its lowest level in 20 years, and has steadily decreased since hitting a peak of 18.5 per cent in 2014. The federal government has pledged greater assistance to supercharge employment, including childcare support to support working parents back to full-time work.
LinkedIn’s recent announcement of the introduction of ‘stay-at-home parent’ as an employment type is a step towards breaking down the misnomer of unpaid caregiving being a ‘career gap’.
Supporting our most vulnerable
Multi-faceted problems demand multi-pronged solutions. For younger women, our best hope of closing the gender gap is through empowerment. Providing opportunities to earn an income on par with male colleagues and build comparable retirement savings delivers greater financial security. Arguably a combination of regulatory and cultural change is required. Women with financial independence are also less reliant on toxic relationships, and are more likely to achieve career satisfaction.
I have long advocated for universally free or at least heavily subsidised childcare as a means of empowering working parents. Such measures, however, come too late for older women doing it tough. These women need immediate assistance, especially in housing. Social housing alternatives could help them achieve stability, which in turn enhances their employment prospects. A singles tax incentive could make up for the economies of scale benefitting couples.
Women (and men) of all ages who have been out of the workforce or underemployed could benefit from a back-to-work transitional grant, to cover the costs of clothes/dry cleaning and transport for job interviews.
Furthermore, support for victims of domestic violence must be expanded to address financial concerns. For instance, many women fleeing violence don’t qualify for Legal Aid or other support programs due to the value of joint assets for which they often have no control particularly when companies are involved. Financial control by a partner is also a common element to domestic abuse, leaving vulnerable women without access to cash for even the most basic living costs.
A different approach
Walking the same path simply delivers the same result. A different approach is needed to generate meaningful change on gender inequality and better assist women to take control over their finances. As financial planners, we play a crucial role in helping women achieve that independence.
At its most basic level, I believe our profession needs to be more accommodating and accessible to women. Many women still view financial planning as a ‘boys’ club’ from which they are excluded, discouraging them from seeking advice. Breaking down this perception demands a dedicated approach, including a greater intake of female planners.
Those women who do seek advice are generally in a desperate position. By collectively beefing up education and public awareness among working women, we can demonstrate the benefits of seeking advice earlier to avert a crisis, not just help them manage the fallout.
In my experience, when couples divorce, the husband tends to focus on the monetary matters while the wife focuses on the legal matters. Again, greater education (the reason I wrote my divorce book) and support is needed for women going through a separation to help them realise the financial implications of their settlement before they sign.
At the same time, we need to continue advocating for regulatory change and government support on behalf of our current and future clients – especially women. Our work, by its very nature, affords us unique insights into our clients’ financial matters – a powerful force for positive change when well-communicated to legislators, industry, and other stakeholders. However, the cost of advice limits many women from access.
In so many ways, we are advisers on matters of life as well as finance, given their inextricable links. Understanding this point enables us to better meet the needs of women and support them towards financial independence.
Helen Baker is a licenced Australian financial adviser and author of two books: On Your Own Two Feet – Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce – Your Survive and Thrive Financial Guide. Proceeds from the books’ sales are donated to charities supporting disadvantaged women.
Note this is general advice only and you should seek advice specific to your circumstances.
