Adviser Guidance

More financial role models needed for women

3 months ago

I am writing this column on International Women’s Day. Understandably my social media is packed out with posts – by both men and women – shouting out to women who have inspired them. This fills me with optimism. It also resonates that we all need support and role models in, I would argue, almost all areas of our lives.

But maybe money matters are one area where clear role models are missing. AJ Bell has recently carried out some research to establish who women’s financial role models are. The results are a little uninspiring: more than half of all women say they don’t have a financial role model.

This is disappointing. Just under a quarter of women said they did get inspiration from family members with mums being the parent most women, particularly those under 40, said inspired them. Slightly older women (40 to 50) are a little more likely to turn to a celebrity to guide them.

Perhaps it’s because money is still too often seen as a taboo subject, not something to chat about with friends in the same way we would talk about relationships or fitness. But talking about money and investments can be incredibly powerful. These are areas where we make relatively rare decisions. Mostly not everyday occurrences. And it can be useful to know others’ experiences and to learn from them.

Some areas though need expert help. Making decisions about when and how to take pension income is such a subject. Pension freedoms have meant more flexibility but that also means more choices. The key question is how do people get the help they need to make these decisions?

The regulators believe the answer lies mainly at the door of Pension Wise. Those that receive regulated advice are not within their gaze. But both The Pensions Regulator and the Financial Conduct Authority are keen the non-advised consider booking an appointment with Pension Wise.

Providers and pension schemes are busy implementing new processes that will nudge non-advised customers to book such an appointment. The nudge will be given when someone decides they want to access their pension or transfer with the intention of doing that with another provider.

This could be a useful step forward but it’s unlikely to be a runaway success. Possibly because the nudge is coming too late – in my experience when someone has finally decided how to access their pension, they just want to get on with it, and won’t appreciate being asked to stop the process to go see Pension Wise. For that reason, automatic appointments – where the customer has to stop and take action to opt out of an appointment with Pension Wise – will be seen as interference and undoubtedly unwelcome by most pension savers.

So, we need to explore other ways of getting people the help and support they need. Signposting them to Pension Wise and MoneyHelper throughout their pension journey is a given. But there is more providers could do to nudge pension savers into thinking harder about the key decisions they make about their later life income. This isn’t advice or a recommendation of action. But it could shine a light on why advice is needed.

As society adjusts to having to make decisions about defined contribution pensions, I think we will find more people are seeking help from a variety of places. That could mean more role models – their friends or family; it could be Pension Wise; a financial adviser or planner; or it could be their pension provider. The main thing is we all talk more about these decisions, compare notes, and seek help.

This article was previously published by FT Adviser

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Rachel Vahey

Rachel Vahey

Job Title
Head of Policy Development

Rachel is Head of Policy Development helping financial advisers and planners understand the changing pensions and savings environment, as well as how new legislation and regulation affects them and their clients. She’s well known within the pensions and savings industry, and regularly speaks at AJ Bell events, alongside writing content and articles for our website.

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