A tailored approach to financial planning for women

Because of the nature of your relationship, which can span decades, your financial planner will become a trusted partner – one you’d happily recommend to your friends and family. This depth of relationship only comes when you feel completely at ease when sharing what can be very personal information about your circumstances and your money. Sometimes it’s easier to build this level of relationship with someone of the same sex.

Women tend to be good listeners and good communicators. They have good levels of empathy and understand the challenges other women face in life. They also happen to be good at long term planning. These are all the ingredients of a great financial planner.

We’re proud to have a number of skilled female financial advisers, working across the country, ready to support you with empathy and expertise. If you’re more comfortable discussing your financial goals with a woman, or you think a female adviser might better understand your specific needs, Amber River is here to help.

Here are a few considerations to get you started:

Motherhood can lead you to make significant decisions that can reshape your earnings ability and career. Whether it’s reducing your hours, or stepping away from work for a longer period to raise a family, these choices – though deeply personal and sometimes necessary – can have a big impact on your financial position.

Switching to part-time work might give you the flexibility you need during certain life phases, but it usually comes with lower earnings and slimmer chances for career advancement, which can make it harder to save for the future. Moreover, taking time off for maternity or caregiving duties can interrupt your career and reduce your lifetime earning potential, affecting not just your salary growth but also your retirement savings and benefits.

It’s crucial to understand the financial impacts of career breaks and part-time work, and develop financial strategies that minimise their effects. Solid financial planning is key to sustaining your long-term financial health through any career breaks.

Although no one enters marriage planning for a divorce, the reality is stark: according to the ONS, 42% of marriages end this way. For women, divorce can be particularly financially challenging, impacting everything from asset division to pension management. Understanding and preparing for these changes is crucial to maintaining financial stability for the rest of your life.

Asset management: Beyond pensions, managing your assets during and after a divorce involves the fair division of property, investments, and other financial resources. It’s important to assess your assets thoroughly and make informed decisions about who should keep what, and what could be sold. Although research conducted by Opinium Research (Nov-Dec 2023) found that men and women tend to agree that the division of their finances at the point of divorce is fair and equitable, many women may still be signing over their rights to key financial assets.

Pension sharing: Pensions are often one of the largest assets in a marriage, yet women sometimes overlook them in favour of other assets during a divorce, which can be dangerous for long-term financial security. The research conducted by Opinium found that 30% of women waive their rights to a partner’s pension compared to 17% of men. This raises concerns about women’s ability to fund their retirement, given that, at the point of divorce, women had an average of £23,000 in their pension pot compared to £60,000 for men. Understanding how both pensions will be valued and divided is essential, often requiring a court order or a mutually agreed-upon settlement to ensure a fair share of joint pension savings.

Adjusting financial plans after divorce: After a divorce, revisiting and revising your financial plan is essential. Women often face a significant financial hit post-divorce, with household income dropping by 41% in the first year, compared to 21% for men, according to Legal & General Retail. This may involve setting new financial goals, re-evaluating your budget, and planning for future needs such as retirement or education funding. Working with a financial adviser can help ensure your plan reflects your current circumstances and future aspirations.

A study of 4,000 people conducted by Bristol University found that women tend to be more cautious with their money than men, leaning towards safer investments like bonds or savings accounts.

The Journal of Economic Behaviour and Organisation provides further insight, observing that women tend to be more cautious with financial decisions for several reasons. Many have less investment experience and taking financial risk is therefore more daunting to those more experienced investors. Women are more sensitive to higher risks and more pessimistic about outcomes compared to men. Other social factors and emotional responses also play a role, leading women to be more careful with their money.

Opting for lower risk investment vehicles can mean missing out on the potential for higher returns, and while playing it safe can help protect against losses, it might also limit the potential for higher earnings that are crucial for long-term financial growth. This is especially important given that women typically live longer than men.

A longer life means retirement savings need to last longer, too. This highlights the need for a portfolio that not only keeps money safe but also helps it grow. Being too conservative with investments might risk your money being eroded by inflation, possibly leading to a shortfall in your golden years.

Of course, life moves on and things change, so it’s important to continue to monitor how much risk you’re comfortable with, and can afford to take. Something your financial planner or investment adviser will do with you during periodic reviews. Understanding your capacity for loss, and balancing it with the need for greater returns, can enhance your investments. Detailed financial planning with an independent financial planner can help women align their investments more effectively with their long-term financial needs.

Remember though, there is always a risk to investing. Investments go down as well as up and you might not get back what you invested.

It’s a hard truth that many women find themselves financially unprepared for retirement when the time comes. The 2024 Gender Pensions Gap Report reveals that, on average, women retire with pension savings of just £69,000, compared to £205,000 for men. Given their lower lifetime earnings, career breaks for family care, and the simple fact that women generally live longer than men, it’s essential to prepare and save for retirement.

• Start saving early and keep at it: The magic of compounding means that the sooner you start saving, the more time your money has to grow. Make it a habit to contribute regularly, and you’ll see your nest egg build up over time.
• Diversify your savings: A well-rounded, diversified investment plan avoids the ‘eggs in one basket’ cliche. A mix of stocks, bonds, and other assets can help you ride out periods of volatility, as you’ll have the potential to make gains on some when losing on others.
• Protect your money: Insurance policies including income protection, life insurance and critical illness cover are foundation blocks in a financial plan. After all, if you became incapacitated, or worse, and lost the ability to earn, your other goals will be at risk.
• Plan for health costs: According to the government’s Women’s Health Strategy for England, although women tend to live longer than men, they spend a significantly greater proportion of their lives in ill health and disability in comparison. Your financial planner can use cashflow modelling software to demonstrate the impact of care, and how you might fund it if and when the time comes.
• Consult the experts: Retirement planning can be complicated, especially if you have multiple pension pots. Retirement comes in many shapes and sizes and a financial adviser will be able to offer personalised advice and a plan that suits your ambitions for life beyond work.
• Monitor and adapt your plan: You might choose to sign up to ongoing servicing with your financial planner, which will include invitations to regular reviews. Adjusting your plan according to changes in your circumstances is a must if you want to keep on top of your finances.

By taking these steps, you can approach retirement confidently, knowing you’re as prepared as possible to enjoy those well-earned years of leisure and freedom.

At Amber River, our female financial advisers are on hand to develop a strategy that reflects your personal and financial goals. They have faced many of the same financial challenges and opportunities your facing now, and are able to blend expertise with understanding and empathy.