Women may be a permanent fixture in the workforce, but they are lagging behind in financial planning

With women statistically earning less over their lifetime, there’s a risk of increased financial pressure at the end of their lives, especially for the single, divorced or widowed. The challenges they face mean a further step is required in the female financial revolution.

On the question of gender equality, Belgium was a respectable 11th out of 136 countries in the World Economic Forum’s latest annual report. But on the question of equal salaries for equal work, it dropped to 42nd place. Women earn around 21% less than men, while part-time employment, lower salaries and career breaks mean they accrue lower social security benefits and pensions.

The reasons for this are complex, ranging from caregiving tasks making it more difficult to devote time to work, to choosing work that requires less travel and regular hours, which can affect career advancement. Although post-divorce there is increasingly joint custody of children, single women are more often custodial parents, requiring them to take time off or work partially from home. Women setting up their own business tend to do so later in life and may also favour an improved work-life balance, thereby decreasing revenue.

The subject of finance and women particularly interests Marie Helsmoortel, head of private banking at ING Belgium. The single mother has 26 years’ experience, including asset management, and has worked in the US, France and Switzerland. She manages a team of 40 and is regularly invited to speak at workshops organised by Elle Belgium and Jump, the Brussels branch of a Europe-wide social enterprise that advances gender equality. “It’s a good idea that only women are invited, as they can talk openly about the issues that concern them at home and at work. As soon as you bring men into the discussion, they shut up and take a back seat.”

For Helsmoortel, it’s primarily an issue of how much you earn and what you do with the money you’ve earned and inherited. “Women regularly delegate to their father, their brother, their husband, including money they have acquired with their husband over a lifetime.” Hence the importance for women entering marriage to negotiate a marriage contract. “We see people getting married without a contract when they have nothing; they earn money together, they become wealthy, and then they’re stuck together because if they split they have to divide everything in two.” The increase in second marriages and blended families is another important reason for a contract, adds Helsmoortel. “You have to be able to say that you want to leave an inheritance to your own children,” she says.

“Money is power; a husband can control his wife by saying ‘I have a mistress but I will continue to maintain you’, and she can be stuck, especially if she has no degree or she stopped working to raise children, or when the family moved abroad. What surprises me each time is that women are not aware of the consequences.”

They also need to wise up about climbing the career ladder, she says. “I’m always surprised to see women who expect to become the CEO of a company while working part-time, and if you work less you are going to earn less and accumulate less.” Helsmoortel warns women about taking advantage of the family entitlements available in Belgium if they’re serious about advancing their career.

One of the key challenges for Helsmoortel is convincing women that they need to take an interest in financial matters. Her seminar presentations include simple elements such as pension, salary and negotiating a raise. “These are particularly important if you think your marriage or relationship is in difficulty,” she says. “While a man may calculate the financial cost of divorcing, women are more likely to say ‘I don’t love you anymore’ and slam the door. They should ask themselves if they can afford to split in such a radical way.” She recommends women take a long look at their priorities, “asking themselves if they can afford not to work full time, do their children really need them to stay at home, and would they be happy living in a one-bedroom apartment instead of a nice home? It comes down to the compromises you are willing to make and drawing up a balance sheet to see if you can afford to leave your partner.”

Helsmoortel is also continually surprised by how many women are not well informed and feel it’s not their field. “In a recent workshop, one woman feared going into a bank and being told ‘this stupid woman does not understand anything’. I always tell people that banks spend millions in marketing and that we are a shop like any other, so if you come in and we don’t do a good job at explaining and providing a good service, you can go somewhere else.” This lack of financial education and interest could be addressed by schools devoting to finance one of the two hours a week currently spent on religion, says Helsmoortel. People don’t understand the money markets, and it’s important that they do, especially if they want to start a company.

As for trailing spouses, Helsmoortel suggests negotiating some form of separation insurance. “Before leaving your job to follow your spouse, raise the issue of what you should get if you’re left financially stranded. A partner has a responsibility to not leave the other in misery; maybe that is what should be included in the wedding contract of tomorrow.”  

Responding to the need for bespoke financial planning for women is the Fry Group, Belgium, which launched a service last year called 4women. Director Pauline Curran, who has been a financial adviser for 27 years, acknowledges that there is little difference between planning for men and women, yet women frequently have a higher need but lower provision than men. The service takes into account the fact that “women may have had career breaks for children, made less money, saved less and yet need more money for the end of their lives. This is in addition to having possibly worked part-time for some of their career and taken time off to care for parents or other family members.”

All this has ramifications for a woman’s career, says Curran. “We know that the people with the best pensions are the people who have worked for one company throughout their lives, and the lucky ones are those who have the final salary pension schemes.”

The key for her is regular, life-long savings. Like Helsmoortel, she recommends an honest appraisal of financial needs and priorities. “Instead of saying, ‘this is my money coming in, these are my expenses, let’s spend and see if there is anything left to save’, how about saying ‘here’s my expenses, and I’ve got this amount left, so let’s make a standing order to my savings, pension, whatever, every month and I’ll spend what’s left’. It’s a question of discipline and ongoing saving.” Protection, in case of divorce and widowhood, can take the form of putting assets such as property into your own name, she suggests.

Her final message to women is that if they’re working from 25 to 65 with potentially the odd break, they need to save throughout their career to have provision for their retirement and potential healthcare. She also recommends considering work that can be continued later in life if necessary. “It’s about having a choice of when to end your career.”

This article was first published in The Bulletin Business Guide 2015