REVIEW
GENERAL INSURANCE
Bridging the gender gap in financial literacy and confidence Emma Green director of distribution, Paymentshield
T
he narrative around women and finance is often not a positive one. Whether it be the gender pay gap, the cost of unpaid care work, or the financial effects of the pandemic, the odds never seem to be in women’s favour. Women also don’t seem to fare as well as men when it comes to financial comprehension. Last year, a major international study conducted by researchers from Germany, the Netherlands, and the US found that, on the whole, men are more financially literate than women, with stronger performance in financial tests. However, the same study also showed a serious disparity in confidence, which the researchers credited with driving the financial literacy gender gap. Women are more likely to plump for a “don’t know” answer if there is one – but, in the words of one of the researchers, “When you force women to give an answer, they often actually do know.” This gender gap is something that emerged in a recent YouGov survey we conducted with 2,059 UK adults. When we asked respondents about their understanding of the mortgage process, only 52 per cent of women described theirs as “good,” compared to 58 per cent of men. The gender difference was more notable, however, when we asked questions that related directly to confidence. When we asked respondents how confident they are that they understand the jargon used to explain financial products and services, one-third of women (33 per cent) said they were not confident, compared to
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one in five men (19 per cent). Likewise, when asked why they would avoid asking a financial adviser a question regarding their financial situation, 18 per cent of women said it is because they struggle to understand or are intimidated by jargon, compared to just 12 per cent of men. Moreover, women seem to feel overwhelmed by financial decisions more often, with 21 per cent of female respondents saying they find managing their general finances overwhelming (compared to 14 per cent of men), and 24 per cent saying they find buying insurance overwhelming (compared to 15 per cent of men). So what does all this mean for advisers? Well, clearly, it’s important to recognise the need to tailor the communication approach to each individual client. However, advisers may not be aware of just how different men’s and women’s relationships to finance are. While age, experience, profession, or even economic status might seem like obvious conversational filters, in 2022 gender might not seem like it requires much nuance in communication. Yet the research suggests otherwise. Obviously, this doesn’t mean being patronising. But it could mean explaining technical terminology or taking advantage of resources such as Paymentshield’s customer guides and jargon-busting glossary as a pre-read or follow-up to client conversations, or even using explanatory videos if clients would prefer to receive information in an alternative format. We also know that women are more likely than men to feel that they don’t know which questions to ask. Tackling this by talking through popular client FAQs is a good approach, as is checking the client’s understanding before moving on, or ensuring there are plenty of opportunities to invite questions. Our research also suggests that women
would appreciate being offered more extensive support. When asked whether they would expect advisers to review their home insurance needs at the same time as a remortgage, 40 per cent of women said they wouldn’t necessarily expect it, but they would be happy if advisers did so, compared to just 31 per cent of men. This indicates that women might be more receptive to receiving more holistic financial support – in turn, presenting advisers with an opportunity to strengthen the client relationship. Advisers don’t need us to tell them that there’s no one-size-fits-all approach to advice, but they might just be surprised by some of the gender differences thrown up by recent research – and it pays to take note. As for wider society, it’s great to see various financial inclusion and empowerment initiatives out there – from both the public and private sectors – to try to bridge that confidence gap. Across the Atlantic, we’re already seeing the gap start to close. The US Bank’s 2022 Women and Wealth Insights study, completed very recently, shows that women are closing in on men when it comes to financial confidence, with just a five per cent difference between the two groups, compared to 13 per cent two years ago. The research showed that younger women are significantly more confident, too – a really positive sign that will hopefully be replicated among each new cohort. Closer to home, we’ll be continuing to monitor gender differences in our research surveys, and I’m hopeful we’ll see that same trend emerging in the UK, too. M I All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,059 adults. Fieldwork was undertaken between 1 and 4 April 2022. The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+). www.mortgageintroducer.com
