Fintech helps close the gender pension gap

Now in her 50s, women’s wealth coach and for­mer banker Kim Uzzell had her two chil­dren in the 1990s. This prompt­ed her to stop the pay­ments she was con­tribut­ing to her retire­ment fund. Hav­ing the mon­ey to pay for more urgent needs like child­care became more impor­tant than her own future. 

It’s a cycle that mir­rors the life events that cre­ate and ampli­fy the gen­der pay gap. But Uzzell warns that the gen­der pen­sion gap – the dif­fer­ence between the finan­cial secu­ri­ty men and women respec­tive­ly have on retire­ment – is far worse.

“A 10% pay gap in the UK is shock­ing enough. But nobody is talk­ing about the fact that the pen­sion gap is 43%. We’re address­ing one part of the jig­saw, but the pen­sion gap is incred­i­bly wide, and is not mov­ing in the right direc­tion, because the gap is so big,” Uzzell states.

“We’ve left it so late, there’s a good chance that one half of a rela­tion­ship can afford to give up work when they reach retire­ment age, and the oth­er half then has to either become finan­cial­ly co-depen­dant or to car­ry on work­ing.”

New research com­mis­sioned by NOW: Pen­sions reveals that women are reach­ing retire­ment age with the biggest pen­sion sav­ings gaps on record. The aver­age woman in her mid-60s will have a pen­sion pot of £69,000, while an aver­age man of the same age will have accu­mu­lat­ed pen­sion sav­ings of £205,800. Women would have to work an addi­tion­al 18 years, full time, to reach this amount, accord­ing to NOW: Pen­sions.

But a new wave of fin­tech star­tups could help to change this, by mak­ing women more finan­cial­ly aware and con­fi­dent in deci­sion-mak­ing. Finan­cielle and Smart­purse are edu­ca­tion­al and coach­ing plat­forms that aim to increase women’s finan­cial knowl­edge. Half of UK women would choose to invest through an online plat­form or web­site, accord­ing to insights from finan­cial advice provider Fideli­ty. The abil­i­ty to get reg­u­lar updates on their invest­ments is the main moti­va­tor for 27%, while 19% say that reg­u­lar nudges and reminders is a key ben­e­fit of man­ag­ing their invest­ments online.

Addressing the gender imbalance in fintech

But these apps and web­sites do more than repack­ag­ing finance for a female mar­ket. For Olga Miller, a for­mer Swiss banker who co-found­ed Smart­purse in 2019, it’s a chance to redress the biggest gen­der inequal­i­ty issues that have plagued the wider finance sec­tor for years.

Fin­tech star­tups are pur­pose­ful and agile about hir­ing female finan­cial advis­ers, who are lack­ing in main­stream bank­ing – which alien­ates women from finance and tak­ing per­son­al respon­si­bil­i­ty, accord­ing to Miller. Smartpurse’s own research shows that 54% of UK women rate their finan­cial plan­ning for retire­ment as poor.

“There are too few women in key roles in finan­cial ser­vices. But even if you receive appli­ca­tions pre­dom­i­nant­ly from men, the women are there but it just takes dou­ble the effort to seek them out. It’s part of an over­all val­ue chain that starts from recruit­ment, through to man­age­ment prac­tices,” says Miller. “A new­ly form­ing fin­tech com­pa­ny with a team of just five peo­ple doesn’t have the same chal­lenges as a large com­pa­ny does to achieve the right lev­el of diver­si­ty.”

A fur­ther issue, Miller con­tin­ues, is that a tra­di­tion­al­ly male-dom­i­nat­ed finance indus­try has result­ed in bank­ing and pen­sion brands com­mu­ni­cat­ing with lan­guage and imagery that doesn’t appeal to women or is belit­tling – some­thing which Smart­purse and its coun­ter­parts aim to reverse. Indeed, when chal­lenger bank Star­ling analysed 600 stock finance images last year, it revealed that men are more fre­quent­ly depict­ed with notes while women are rel­e­gat­ed to coins, and that men are por­trayed sign­ing doc­u­ments more often than women.

But Miller warns that it is easy for this same issue to trans­late to the dig­i­tal space, with many fin­tech busi­ness­es still falling short of cater­ing to tai­lored cus­tomer jour­neys.

“Very few of them look at the lan­guage, so women still feel exclud­ed. Ini­tia­tives like ours and oth­ers aim to cre­ate a safe space, where women are wel­come to learn about what mat­ters and are not patro­n­ised,” she says. “Women want an advis­er who starts the con­ver­sa­tion from what it is that the per­son wants to do with their mon­ey, rather than just pitch­ing the next prod­uct. It’s hard for the indus­try to change. Fin­techs can see things dif­fer­ent­ly.”

Improving financial education

Doing just that also involves build­ing a com­mu­ni­ty, and using the lan­guage they use, says Lau­ra Pom­fret, who cofound­ed Finan­cielle in 2018.

“We use our cus­tomers’ words in our copy. Women say they’re ‘over­whelmed’ and ‘intim­i­dat­ed’ but, at the same, they ‘want to get their act togeth­er’. So that’s one of the biggest things we say,” Pom­fret explains. A lot of fin­tech com­pa­nies get this wrong, she adds, by focus­ing on the solu­tion with­out under­stand­ing and reflect­ing their cus­tomer voice.

Financielle’s online com­mu­ni­ty is also sup­port­ive of its mem­bers aged over 50, Pom­fret notes, over­com­ing any tech bar­ri­ers for old­er users. She gives the exam­ple of a mem­ber whose part­ner of 19 years had left her, with no pen­sion or finan­cial secu­ri­ty. Get­ting advice from the com­mu­ni­ty, she worked out what she need­ed, and found a pen­sion prod­uct that suit­ed her and her ide­al month­ly con­tri­bu­tion.

“Now she is com­plete­ly on track and is help­ing oth­ers with the same prob­lem. The com­mu­ni­ty is the best because they’ve seen it all before and help peo­ple learn from their mis­takes. It’s real­ly cool,” says Pom­fret.

Financielle’s sweet spot, though, is women aged 25 to 40. Pom­fret is adamant that tar­get­ing women ear­ly and mak­ing finance as easy a top­ic of con­ver­sa­tion as well­ness or enter­tain­ment, will resolve the gen­der pen­sion gap – with­out it becom­ing the sole domain of fin­tech.

Uzzell, who esti­mates that around 60% of her all-female client base comes to her with pen­sion con­cerns, agrees. But she elab­o­rates that finan­cial edu­ca­tion should be more estab­lished and empha­sised in schools, with employ­ers con­tin­u­ing this: “Big cor­po­ra­tions have a respon­si­bil­i­ty. The gov­ern­ment has a respon­si­bil­i­ty. Schools and edu­ca­tors have a respon­si­bil­i­ty. And the media has a respon­si­bil­i­ty to raise aware­ness of the gen­der pen­sion gap in the same way as they did with the gen­der pay gap – and make it unac­cept­able.”