If you are a woman who is interested in making the most of her money, but are not sure where to start when choosing a financial adviser, then you are not alone. Women invest less than men1, and the pandemic has amplified financial issues for women, including the gender pay gap.
There is also a sharp difference in the size of pension pots between the sexes. The Centre for Economics and Business Research shows a gender pension gap2 of more than £180,000 among people over 55. Despite women contributing more into their pension pots than men (9.4% of their income for women and 8.3% for men) a lower income leaves the average woman needing to work an additional 14.5 years to catch up.
Savings also demonstrate a female/male divide. Government statistics3 show a fairly even split between the sexes for ISA savings in 2018/19 (the most recent figures available), but the value of women’s ISAs is often worth less4 than men’s.
Research from investment companies shows that women can be more cautious about investing than their male counterparts. It is not that they are risk averse, but they require more information than men before making a financial decision. They can also lack confidence in their knowledge base, believing they do not know enough about changes to tax rules, allowance usage etc to invest.
And with thousands of different financial products on offer, choosing between them can be difficult. A financial adviser can help, saving you time and ultimately money, but how do you choose one?
Here are eight key questions for women to consider when choosing a financial adviser:
1: What is financial advice?
Firstly, it’s worth noting that there is a difference between financial guidance and financial advice. Guidance gives a general explanation of the different financial options that may be available to you, but doesn’t tell you which to pick. A financial adviser should consider your individual circumstances and goals and discuss which specific products will best suit your particular needs.
Guidance services (often provided by charities like Citizens Advic5) are also not regulated by the Financial Conduct Authority (FCA). That means that you may not be able to complain to the Financial Ombudsman Service or Financial Services Compensation Scheme if things go wrong.
2: What are the different types of financial adviser?
When choosing a financial adviser make sure they are qualified, registered by the FCA. There are two types:
- Independent financial advisers (IFAs) give unbiased advice about a range of financial products from all the different companies available
- Restricted advisers give advice on a limited range of products. They may specialise in one area, for example retirement, or they may only offer advice on products offered by a limited number of companies
3: What part of my financial life do I need help with?
To help you decide the focus for your advice, you should think carefully about your current financial position and your goals for the future, as well as your appetite for risk.
These might incorporate different stages of life – for example buying a house, starting a family, rebalancing your work/home life, saving for retirement – or particular things you hope to achieve, such as retiring early, buying a boat, paying for private school fees, or investing ethically and sustainably.
4: Which financial services do I need?
Once you have mapped out what you want to do with your money, it’s time to think about the services you need to achieve this. Products could include pensions and investment platforms (including ISAs, stocks and shares), life and health insurance, mortgages and equity release*, tax and inheritance planning, childcare and school fees planning, estate planning or long-term care. If you feel you need a complete financial plan, choosing a financial adviser who offers the whole package is vital.
5: What is robo advice?
Robo advice is an investment platform that uses artificial intelligence (AI) to assess your attitude to risk and uses algorithms to recommend investments, usually through a portfolio of funds. Robo advice can be used online and will usually not offer advice on tax or savings.
6: What happens after I’ve chosen a financial adviser?
Once you have chosen your adviser, they should arrange an introductory meeting to explain their services and find out what you are looking for, as well as outlining their fees. Once you are happy with them it will be time to share your considerations and work together to create a financial plan that is tailored to you.
7: How often should I meet with a financial adviser and review my portfolio?
Regular meetings with your chosen financial adviser are crucial for peace of mind and to update your portfolio to incorporate any changes to your circumstances or any legislative changes that might impact your finances. It’s also a good chance to review where you are with your goals and adjust your risk appetite or level of investment if necessary.
8: How do I choose a financial adviser that’s right for me?
Trust is a crucial component in any relationship and is certainly what you want from someone who is helping you make the most of your money and achieve your lifetime goals.
At Morrinson Wealth, nearly 40% of our clients are women. We know that it can be difficult to find time to manage your financial affairs and that’s where choosing a financial adviser who is proactive comes in. By understanding you and your financial goals, the right financial adviser can support you in making changes, keeping things straightforward and saving you time and in the long run, money.
To find out more about how Morrinson Wealth can help you, get in touch and read our latest guide to key wealth management priorities for women, empowering you financially for the important moments in life.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.
*This is a lifetime mortgage or home reversion plan. To understand the features and risks associated with such products, please ask for a personalised illustration.
1 Why do women invest less than men? Independent, accessed August 2022
2 Money Marketing – Gender pension gap worsens among over-55s, Cebr, accessed August 2022
3 Commentary for Annual savings statistics: June 2021, Gov.uk, accessed August 2022
4 Women open more ISAs than men – but are they taking full advantage of them? HMRC, Individual Savings Accounts (ISA) Statistics, accessed August 2022
5 Getting financial advice, Citizens Advice, accessed August 2022