Are your clients struggling to save for retirement?

Not having enough to money to fund retirement has been revealed as the main financial concern for 44% of UK men and women.

This is according to YouGov research on behalf of Scalable Capital – a digital investment manager – reflecting the current pension gap for the UK of £311 billion. This research from Aviva would suggest that in order to obtain a reasonable standard of living upon retirement, a 30-year-old would have to save a yearly total of £2,700. This figure would rise to £4,100 for someone over 40.

However, of the pre-retirement women surveyed, over half (56%) had not started to save for their retirement at all. For men, this figure was 49%.

In comparison to 48% of men, 62% of women stated they lacked a sufficient level of financial knowledge to feel comfortable with investing. This was mirrored by the 17% portion of women surveyed, who stated that they had previously or are currently investing in capital markets, compared to 31% of men. Gender parity was found in relation to barriers to investment, however, with the proportions of both men and women citing unexpectedly high losses at the similar figures of 22% and 23% respectively.

Commenting on the findings was Dr Ella Rabener. The UK Founder at Scalable Capital stressed that the gender difference was related to financial resource inequality rather than women being more risk-averse than their male counterparts.

“Our results did not confirm the preconception that women are more risk-averse than men when it comes to investing. The reasons for the different investment behaviour of men and women are the unequal financial resources at their disposal and the lack of financial knowledge of women. As a result, women do not succeed in properly preparing for their retirement and miss out on the long-term growth potential offered by investing in capital markets.

“As a financial service provider, we need to better address the needs of women so as to take away the fear of capital markets.”

The majority of women stated that greater transparency around performance and fees would encourage them to invest in capital markets, as well as a better understanding of downside risk. The figures also indicated that men were more cost-conscious than women, with 19% of men citing reduced fees as something which would influence their investment, compared to 13% of women.

Also commenting on the research was Adam French, the Founder and CEO of Scalable Capital. He stated: “Wealth managers need to help investors better understand investment risk. For example, at Scalable Capital we ask clients to select, in percentage terms, how much they are prepared to lose in a bad year. Our technology-driven approach means every portfolio is customised to the risk suitable for each investor and is managed to keep the level of risk stable over time, limiting unexpected fluctuations. By providing a professional, transparent, low-cost investment service, we can overcome some of the concerns women have about capital market investments and can help them achieve their financial goals.”

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