Despite ongoing efforts, the gender wealth gap remains a significant issue that the financial services industry must address, as highlighted by a recent survey.
Limited Access to Financial Advice and Investments
According to a survey conducted by Principal, less than half of women feel they have access to high-quality and affordable financial advice, as well as high-quality investments to help them reach their financial goals.
A Stark Contrast
The survey reveals a noticeable difference in responses between men and women. While 61% of men believe they can achieve financial goals such as purchasing a home, covering wedding expenses, and raising children, only 43% of women feel the same.
Unequal Access to Financial Inclusion
The gender disparity extends to other aspects of financial inclusion as well. Nearly two-thirds of men feel they have easy access to high-quality investment products, compared to only 39% of women. Similarly, 62% of men claim they can easily access high-quality and affordable professional financial advice, while only 42% of women share this sentiment.
Contributing to the Gender Wealth Gap
This disparity contributes to the overall gender wealth gap, with women on average having less money saved for retirement. This is partly attributed to the persistent pay discrepancy between genders, which directly impacts women’s ability to save.
Stagnant Progress in Gender Pay Gap
Despite significant diversity and equity efforts in recent years, the gender wage gap has remained largely unchanged for the past two decades. According to the Pew Research Center, women earned an average of 82% of what men earned last year, compared to 80% in 2002.
The financial services industry must acknowledge these disparities and take proactive steps to bridge the gender wealth gap by providing equal access to financial resources and addressing the underlying gender pay gap.
Closing the Gender Pay Gap: Addressing the Challenges
The gender pay gap continues to persist, despite some progress being made in recent years. Women have made gains in higher-paying roles that were traditionally dominated by men, such as professional and managerial positions. However, according to Pew, women are still disproportionately represented in lower-paying occupations relative to their share of the workforce.
Compounding this issue are inflationary pressures, which further exacerbate existing disparities. A report from Bank of America reveals that women are less likely to receive pay raises that keep up with inflation. This is partially attributed to the sectors in which women tend to work. For instance, the healthcare and education sectors, where women make up three-quarters of the workforce, saw the second-lowest nominal wage increase last year, as reported by the Bureau of Labor Statistics.
The combination of lower pay and limited access to investments and financial advice often leaves women with smaller retirement savings. This is concerning, considering that women typically have longer average life expectancies, which can result in higher long-term costs compared to their male counterparts. Vanguard’s annual analysis of retirement plans revealed that in 2022, men’s median retirement account balances were 43% higher than those of women.
Even when comparing balances among higher-income participants, a noticeable gap persists. Women earning over $150,000 annually have an average retirement account balance of $307,365, which is approximately 22% smaller than the average balance of $395,219 for men in the same income bracket.
The disparities highlighted above emphasize the urgency to address and bridge the gender pay gap. It is essential to create equitable opportunities for women in all sectors and ensure that their pay aligns with inflation. Moreover, providing equal access to financial resources and guidance will contribute to improving women’s financial security in the long run.