The problem with ‘a man is not a plan’
The gender-based savings gap does not exist because women don’t know the benefits of financial independence. We need our advice, innovation and education to focus on where the biggest problems lie.‘
Gender-based gaps are so normalised in the developed world, we are almost immune to the shock of data that shows some women – who statistically speaking live longer than men – are actually facing poverty in retirement because of the state of their savings.
On average, women end up with around $150,000 less in superannuation upon retirement than men. According to ASFA’s research, average super balances at retirement today are $138,150 for women compared with $292,500 for men.
To create the right fixes, we need to be clear about what overwhelmingly contributes to these figures – the structural inequities that mean, on average, women earn substantially less than men in like-for-like roles. This is based on indisputable ATO data.
Women are also not afforded the luxury from a government policy perspective or from an Australian business culture perspective of having a family without it significantly disrupting their career. There are exceptions, many in the SMSF and accounting professions are, but this is the rule. Again, hard facts, not hysteria or bias, inform this view. The latest figures from the Australian Institute of Company Directors show that only 25.4 per cent of directors across the ASX 200 are female.
Armed with those facts, and immeasurable anecdotal evidence, I fundamentally reject any suggestion that Australian women are in this position because of their own knowledge level, capacity to save or a lack of desire for financial independence. In short: women in 2017 know they need money. Financial co-dependence is a problem for women overwhelmingly because of structural inequities, not because their attitudes created this situation.
Yes, engagement, particularly with superannuation, is a problem. This is a pervasive national issue for men and women alike.
Yes, women have historically not been the keeper of household finances, and may lack experience on this front. No doubt this is still the case for a lot of clients. First, that is changing – for example, NAB recently found women make the lead decision in purchasing a property in 91 per cent of cases. Also, many of you joke about clients needing to run a financial decision past “the boss” – in reference to a wife or female partner. Jokes are only funny when they’re true.
Still, much of the material created to address the gender savings gap is focused on correcting women’s attitudes to money. We can’t create the right products, implement the right strategies, and get those superannuation balances boosted for women if we are dealing with the wrong problems.
I see well-meaning examples of this everywhere. With that in mind, I recently got in touch with FPA chief executive Dante De Gori about one of the FPA’s articles which pedalled some problematic messages. To his and the FPA’s credit, the article was amended following my email, and Mr De Gori has agreed to chat further about the issue with me.
The introduction to this article reads: “Divorce is the leading cause of financial hardship for women. So it’s important to take control of your money and plan for a time when you may become financially independent.” You realise how deeply stereotyped optional independence for women is when you reverse the genders in that statement. In this context, you would simply never read that statement about a man.
Most importantly, the article also had “a man is not a financial plan” in its headline. Here’s what I said to Mr De Gori about that:
“It's well intended and great to see associations backing female participation in wealth planning.
“However, it also shows adherence to a pervasive and flawed view of what is motivating the savings gap.
“Financial literacy might be an issue for a mass consumer audience – i.e. members' clients – but there is no compelling evidence to suggest that it is the primary motivator of the wealth gap.
“A financially illiterate man is still statistically ahead in earning capacity to a woman in the same position.”
Most professionals and leaders in this industry are well meaning, and my correspondence with the FPA confirms the good intentions of its leader. But in 2017, when women in a developed country can’t independently sustain a basic retirement, it’s not the answer.
This is an issue with deep roots that requires more understanding than most in financial services and professional services realise. We can’t create the right solutions and tailored advice services if we are giving a disproportionate level of attention to the wrong offenders.
By and large, the advice and accounting professions mean well.
Let’s get this right.
Katarina Taurian is managing editor, SMSF and accounting, at Momentum Media, publisher of ifa.
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