Women increasingly seeking advice to generate wealth

Shayne Sommer, private wealth adviser for the Shadforth Financial Group, told ifa’s sister brand SMSF Adviser that there is a reluctance among women to invest in shares, instead they are showing a preference for property and other opportunities, but with more advice and education, that could change.

Ms Sommer said an increasing number of women are looking for advice to ensure that they and their family are taking the right steps to generate appropriate levels of wealth to maintain their lifestyle, both in the present and for their retirement years.

According to the Insignia Financial Freedom Report, 25 per cent of males reported investing in shares as a long-term strategy to strengthen their financial position, compared to just 16 per cent of females.

“There are many reasons women may be less likely to invest in shares than men. It may be due to the gender pay gap, with women having less to invest after factoring in living expenses and not wanting to add additional volatility in their savings/investments compared to a high-interest saver or term deposit amounts currently on offer,” she said.

“A second barrier may be a lack of familiarity with direct shares and the role they can play in wealth creation. Increasing awareness of the role direct shares can play as part of a wealth creation strategy is important, with males twice as likely as females to agree they feel comfortable investing strongly or somewhat in the stock market.”

Statistics indicate that younger women are becoming one of the fastest-growing groups in SMSF establishment, which Ms Sommer said indicates the desire for women in their early to mid-40s to take control of their financial situation.

“If women do not have a lot of funds available to allocate to savings at the moment, they may often review their ability to meet their living expenses now, factoring in rate rises, and if their retirement needs will be met with super guarantee contributions and associated investment return alone,” she said.

She added that women looking to establish SMSFs tend to want to do so for the investment control and wider investment options an SMSF offers such as borrowing to invest in property.

“Sometimes women show a preference to invest in property as they have had more experience with this either via their own home or investment property held in their personal name, or they may understand property investment more than shares or managed fund investing,” she said.

“But it is important that anyone with an SMSF has a strong understanding of the responsibilities of being an SMSF director or trustee along with the various rules associated with SMSFs.”

Obtaining financial advice from a mortgage broker prior to establishing an SMSF for the purpose of holding a property within super is a must, she said, as is investigating and learning about liquid assets such as shares and managed funds which could be used to fund retirement alongside property holdings.

“Keep in mind, SMSFs have their own audit and annual fees, and these need to be taken into account over the long term as well,” she said.

“As long as the property is held in the SMSF, the accountancy and audit fees will also apply, eroding the return provided by the assets in the fund. There are also rules regarding the use, upkeep, and renovation of properties held in an SMSF, so it is important to have a robust plan of how to meet lending repayments or repairs to the property with either cash in the fund or be able to fund contributions if the property becomes untenanted or requires repairs.”