Mind the gap! What women need to know about investing


This is an audio transcript of the Money Clinic podcast episode: ‘Mind the gap! What women need to know about investing

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Claer Barrett
Think of an investor and what’s the picture that emerges in your mind’s eye? If it’s a man in a suit, you could be forgiven. Investing is, unfortunately, an area of life where women are still massively under-represented. Not only are we less likely to save into stocks and shares ISAs than men. The huge pensions gap has opened up. The average woman’s retirement wealth will be worth just one-fifth of the average man’s — even though we tend to live for longer. But women are also typecast as nervous investors. We don’t like to take risk, and you obviously need nerves of steel, considering what’s going on in financial markets right now. But the good news? My guest today has dedicated her life to educating women about investing. And she’s come to the FT studio armed with tips and advice.

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Welcome to Money Clinic, the weekly podcast about personal finance and investing from the Financial Times. I’m Claer Barrett, the FT’s consumer editor.

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Emilie Bellet my guest today is used to being a woman in a man’s world. She achieved what many people dream of: landing well-paid job in the city of London, working for a big bank and worked her way up. That was seven years ago. Today, she’s the founder and chief executive of Vestpod.

Well, Emilie, a pleasure to have you in the studio today. Thanks for joining us.

Emilie Bellet
Thanks for having me, Claire.

Claer Barrett
So tell the listeners about, about their Vestpod. What is it? Why did you set it up? What’s your mission?

Emilie Bellet
So, as you mentioned, I have a background in finance. I worked in private equity, so I was an investor. That was my day job. But actually I wasn’t proactively managing my finances and you’ll see that quite often actually in the city and in banks, we don’t receive any financial education, so we may not have the financial acumen to start saving, start investing, thinking about pensions.

Claer Barrett
And that’s women and men, not just women.

Emilie Bellet
That’s women and men. And I didn’t have a pension for a few years, so I thought, OK, how do I actually get started learning about money? So that was the beginning of the journey and I thought, let’s start talking to friends and empower them along the way. So from a newsletter, we started to educate and build classes and workshops, and for me we actually don’t talk about money. It’s still quite, you know, taboo. You may think it’s, it’s quite impolite to talk about money, but we actually build financial habits from a very young age . . . 

Claer Barrett
Mmm.

Emilie Bellet
Even without realising you do certain things with money or you overspend or, you know, your saver, how do you, you know, realise these behaviours? When we look at the gaps and you mentioned, you know, the pension gap that’s, that comes from, you know, the gender pay gap. So especially for women, I was interested to understand why. How can we bridge this gap? How can we help women save more, invest more, understanding that there’s a lot of structural issues for women specifically?

Claer Barrett
Now, what are the two main financial questions that you get asked from women in your community?

Emilie Bellet
So the first one, the more obvious is how do I get started investing? And most people think they don’t have enough time. Maybe they don’t have enough information . . . 

Claer Barrett
Or enough money.

Emilie Bellet
Enough money, exactly, to get started investing. So you have some platforms now on online. You can start with maybe £25. You can even start investing with your spare change with some of the apps. So it’s first of all, learning and understanding that you can start small. And the other question is around balancing your finances between the short term and the long term. Because we want to be able to live today and with the cost of living this, you know, finances can be extremely stretched at the moment. So how do you put money aside for today? And just one anecdote from the community. Something I have heard quite often is women would start saving for their kids, but they don’t necessarily have a savings and pensions for themselves. So it’s also looking at, you know, your priorities and how do you make sure you are financially secure and financially independent. And that’s probably the best gift you can give to your children.

Claer Barrett
Well, very good point. And I’m glad you mentioned the C word, children (laughter), because obviously this is one thing that is blamed for why women’s finances tend to come to a juddering halt in their thirties when they start a family. That is feeding into so many things, the gender pay gap being one, especially if women are working part time, working fewer hours, getting less pay, and by extension, the gender pensions gap, which is a percentage of our pay. Now when it comes to starting a family, having children — how much do you think that is holding back women?

Emilie Bellet
I mean, you mentioned the gender pay gap. So the gender pay gap today, if you look for all employees, is about 15 per cent. But now when we look at the pay gap between mothers with two children and non-mother, it’s actually 25 per cent.

Claer Barrett
So that’s comparing women to women.

Emilie Bellet
Yeah, women to women, and that’s called the motherhood penalty. So when you go back to work, there’s gonna be some biases around women who already had children, and that’s going to have an impact on on your earning and getting your promotions and stuff like that. So on top of that, there’s a lot of structural issues. You know, the bigger one is the cost of childcare. UK we have the third most expensive childcare system in the world. So what do you do when you actually want to plan for, for children? And I think the planning is super important. So it’s trying to look at, OK, how much money will I need? What am I gonna do after I have my children? What type of, you know, maternity pay will I get? And when you talk about pensions, this is literally the last thing you want to think about. When you’re planning for children or having a baby, you don’t think about your contribution, but because you’re gonna be earning less, maybe you’re gonna be out of the workforce, that’s gonna have an impact on your pension contributions.

Claer Barrett
Hmm. So one of the key messages for women is start thinking about investing before, a long time before, you start thinking about having a family. Get some money inside some tax wrappers like Isas pensions, compounding away so that if you do have to slow down the contributions for a few years, there’s something in there working for you. Now, Emilie, we recently interviewed the author, Jonathan Hollow, for a feature episode of Money Clinic. There is a stat about pensions in his new book, How to Fund the Life You Want. That really jumps out at me. Here’s a clip of Jonathan talking about it.

Jonathan Hollow
I’ll tell you some of the stuff that we uncovered. It just shocked me. It really did shock me. I mean, particularly this key figure: the average pension pot for a 65 year old woman in the UK is £35,800 and that’s a fifth of the average pot of a man of the same age. I mean, that disparity was just galvanising for me.

Claer Barrett
So, Emilie, what do you make of that statistic? I mean, is it in line with other statistics you’ve heard about women in pension saving?

Emilie Bellet
That’s a huge difference. And, you know, that’s actually, when I saw these statistics that I decided to start Vestpod. If you look at the average woman in her twenties, they can expect to have £100,000 less in their pension than men of the same age. And some research shows that women in retirement will have 70 per cent lower pension income than men. So that means that women need to start contributing earlier to their pensions, but also that these average women in their twenties would have to work 37 years more to get to the same pension wealth as men.

Claer Barrett
Yeah, slight problem with that. They’ll probably be able to retire for about one year before you pop your clogs.

Emilie Bellet
And that, and that’s a massive responsibility actually, to start saving for a pension and keeping up with contribution, especially when, you know, you’re gonna be out of the workforce or work part time. So women need to be a lot more proactive with their pensions. And also, you see that with auto enrolment, a lot of people, most people are going to be enrolled in a pension. But what if you come back to a job that pays less than £10,000, then you need to ask your employer to be, to be enrolled in the pension. And we’re going to see also some some issues around the state pension where women can’t get their full state pensions.

Claer Barrett
We’ll come back to auto enrolment in a moment. But on state pensions, what Emilie’s talking about here is that in order to build up enough credits to get the full whack when you retire, you need to have 35 years of national insurance contributions under your belt. And there’s one big reason that women often don’t manage this, and it is . . . 

Emilie Bellet
Yeah, because they drop out of the workforce. And when you don’t earn, you actually don’t, you know, contribute to your national insurance. And actually, you will have gap in your national insurance record.

Claer Barrett
But there is a way to top up your National Insurance credit, as Emilie explains.

Emilie Bellet
So if you’ve been out of the workforce because you’ve been taking care of children, you can claim child benefit for a child under 12. Even if you can’t get the payments because your partner earns more than the £50,000 tax free limit, you can still claim this credit so you can catch up with your National Insurance credit and that will allow you to get the full state pension.

Claer Barrett
In other words, even if you’re not entitled to the actual money because your partner earns too much, you can still make sure you’re registered for enough National Insurance years to make you eligible for the full state pension when the time comes. And the reason Emilie know so much about this? She missed out herself.

Emilie Bellet
Yes. So I have three kids. And for the first one, I didn’t even think about it. You should receive letters maybe from NCT or, you know, any points where you actually do your check-up or you do maybe your scans. And people should tell you, you have to claim for your child benefit. So I didn’t do it. And then I did it for my second and my, and my third child. And that’s extremely important. And you can check actually your, your state pension online and you can check your national insurance contributions.

Claer Barrett
So that’s your state pension taken care of. But what about workplace pensions? Now, the beauty of auto enrolment, which is now ten years old, is that we’re automatically nudged into making payments into a company pension now in the UK. But one thing that many people don’t know is that you can actually opt to pay in more to your company pension. And often there’s a sliding scale of how much your employer will match if you pay an extra. Now, that’s something that women and men miss out on. How would you advise that they investigate this, Emilie?

Emilie Bellet
So legally, when you have a workplace pension and you’re auto enrolled, you will contribute 5 per cent of your income into your pension and your employer will contribute 3 per cent. So this makes it 8 per cent. But for most people, that’s not gonna be enough to build like a sustainable pension pot when you retire. Especially for women who have lower, lower incomes. So you can check if your employer is sometimes offering to match your contribution. And just to give you an example, if your employer is sometimes offering you to match your contribution up to 6 per cent, 8 per cent, 10 per cent. So if you put 6 per cent of your gross income into your pension, your employer will match the same amount. So that can make a huge difference in terms of your long term savings.

Claer Barrett
Umm. And it’s free money.

Emilie Bellet
And it’s free money.

Claer Barrett
Of course, you’re having to give up the benefit of that money now, which is difficult in the cost of living crisis, but you’re not having to pay any tax on it. Now, when it comes to managing money with your partner, when you’re bringing up a family together, one thing I’ve noticed is that women tend to shoulder the responsibility for paying for childcare. They’ll say things like, But friends of mine will say things like, all of my salary goes into paying for the childcare. It’s very much seen as the woman’s issue to pay for all of this stuff. I mean, how is this going down in your, in your community? What are members of Vestpod telling you about this, this kind of financial responsibility for paying for everything, for the kids being something that women just absorb?

Emilie Bellet
Yeah, definitely. That’s, you know, one of the conversations that, that women are having and they feel, you know, a big burden from childcare, but all these other costs linked to, to children. So that could be, you know, I’m gonna go buy, buy the uniforms, pay for the, for the, for the activities and stuff like that. But I think you have to look at the overall household income and compare that to the cost of childcare and take a decision together of, you know, are we gonna pay for it together and maybe proportionally to, to our income? So I think people are having these conversations. They are not easy conversations to have, but this is really changing and that will allow women to stay in work if they want to, to not reduce their hours as much as, as they would have had if they were to pay childcare on their own. So I think women really are leading the conversations.

Claer Barrett
What can Emilie tell us about the wider financial industry? Is it moving with the times and realising that more women are interested in investing and finding ways of closing this extremely galling gender pensions gap?

Emilie Bellet
So you see a lot of initiatives in the financial industry by bank, by, you know, investment providers trying to address women and to help women actually get started. I mean, very often people told me, you know, helping women invest is quite niche. I mean . . . 

Claer Barrett
(Huh!)

Emilie Bellet
You think about it (laughter), it’s not niche, it’s a huge market. Women are earning more. We have, you know, huge black purchasing power. We making a lot of the household decisions. So it’s, it’s the time to address women. These conversations are maybe not gonna be different from, you know, men’s conversations about finances, but it’s just that it’s nice to see, you know, women investors. How do they look like? You know, when you see us Claer, we don’t necessarily look like investors.

Claer Barrett
We’re not men in suits.

Emilie Bellet
We’re not men in suits.

Claer Barrett
Yeah.

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It’s not just this idea of the investor being a man. It’s everyone who works in the City. Bankers, traders, fund managers. Very few female fund managers. More coming through now. And also financial advisers, wealth managers. It’s much less common, unfortunately, to encounter women in these financial roles. Do you think that’s part of the perception problem when it comes to women in finance?

Emilie Bellet
I think it’s, it’s part of the problem. And I think women feel very disconnected from, from all these worlds and they feel it’s maybe not for them. There’s also a perception that women are risk-adverse when it comes to investing. But actually, when I speak to the community, women tend to be risk aware, so they understand risk. But to be able to understand risk, especially when you invest money, it takes actually getting started. And when you get started investing, that’s when you can take different decisions in terms of that’s the level of risk I want for my portfolio. That’s a level of risk I want for my investments. So we need to make sure women just get started at any level. It doesn’t matter at this stage, and then they grow their contribution. Once women start investing, they stay invested. And if you look at the statistics around women investors, there’s this study that shows that women return more on their portfolios than, than men.

Claer Barrett
Oh!

Emilie Bellet
That’s amazing. I think it’s really motivating for for women. And why is that? Because they tend to pick less speculative stock, but they have a long term plan to invest for the long term.

Claer Barrett
They’re diversified. They’re putting in small amounts of money every month rather than big lump sums, chasing the big gain and ending up with a big loss.

Emilie Bellet
And they’re very diligent with their investments.

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Claer Barrett
Emilie started Vestpod with the ambition to empower 1mn women financially and to provide the space for them to come together to do that. But how does it all work in practice?

You said you think one of the most powerful things about your community is for women to be able to talk to one another. Strangers, in a way that they can’t talk, maybe to their family or friends, for fear of sounding like a show off “oh, I’ve got lots of spare money and I want to learn how to invest it”, when maybe other friends are really struggling to make ends meet. You’re on Facebook, you’re on Instagram, you’ve got your website, you’ve got your podcast, The Wallet. Tell me a little bit more about how women are starting conversations with each other online.

Emilie Bellet
So we’re studying online and in-person, actually. So we do a lot of courses, so there’s different types of courses. You could come and do a two hour course on, on investing. You could come and do a six weeks boot camp with a smaller number of women where you can really talk about your personal experiences. Again, we are not providing advice. It’s guidance, and it’s the power of peer to peer learning and sharing your different experiences. And the beauty of it is, some women will start literally with, OK, I’m struggling to repay debt. I don’t have a lot of savings. How do I start there? And there’s gonna be some women in the same situations and there’s others started investing and they can share a little bit of their journey. So it’s not about comparing yourself to others. It’s not patronising, but it’s really trying to do it together and grow and define your own journey.

Claer Barrett
As Emilie says, it’s not all virtual anymore. Vestpod put on a festival last week about taking charge of your financial future, and recordings of the talks are available on all the Vestpod channels. Check out the links in the show notes. A lot of the festival workshops and talks were centred around money mindset and understanding your own attitude to money. Why is this so important, particularly for women?

Emilie Bellet
I think understanding that money is just a tool that will allow you to do so much in life. So it’s how do you master money? Where do you actually start? And practically, there’s a lot of tools and tips and guidance we also give during our boot camps. We give worksheets where people can just get started and plug their numbers and do their budgets and use retirement calculators.

Claer Barrett
And finally, Emilie, what would your last piece of advice be for listeners who’ve heard the podcast and then thinking, “OK, I need to do something about this”. How should they go about tackling their finances?

Emilie Bellet
I think today’s a great time to review your budget, especially given the cost of living and from your budget trying to look at your goals. Where will you need money in the next year, five years, ten years and really think about the long term. So starting investing on a very small scale or looking at your pension.

Claer Barrett
OK. Well, thank you very much for joining us in the studio today. It’s been wonderful to have you coming into the FT.

Emilie Bellet
Thank you, Claire.

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Claer Barrett
That’s it for Money Clinic this week, and we hope you like what you’ve heard. If you did, spread the word and leave us a review. and if hearing from Emilie encourages you to embark on your investment journey, I recommend that you listen to our previous episode about navigating the markets during turbulent times. We’ve put a link in today’s show notes. There’s a very useful discussion about whether you should think of falling markets as an opportunity or a big no no. And if you’d like to chat with me on a future episode of the show, get in touch. You can email me, our address is money@FT.com. Or DM me on Twitter, Instagram or TikTok, I’m @Claerb. Money Clinic was produced by Persis Love and Philippa Goodrich. Our executive producer is Manuela Saragosa. Our sound engineer is Breen Turner, and the original music is by Metaphor Music. And finally, the Money Clinic podcast is a general discussion around financial topics and does not constitute an investment recommendation or individual financial advice. With that, you’ll need to find an independent financial adviser. That’s the small print over and done with. See you back here soon. Goodbye.

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