Holly Black: Welcome to the Morningstar series "Ask the Expert." I'm Holly Black. With me is Emma Morgan. She's a Portfolio Manager at Morningstar Investment Management.
Hello.
Emma Morgan: Hello.
Black: So, we've just had International Women's Day. So, we are flying the flag for all things female today.
Morgan: Yes.
Black: But one thing that's not that rosy when you start to look at the bigger picture is the gap between savings and the finances in general of men and women. So, how bad is the gender gap?
Morgan: Yes. So, getting exact data is a little bit difficult. But what you can see is there is definitely a savings gap for women, particularly over 65s in retirement, and there's a couple of reasons for that. It's well publicized the pay gender gap we have. We need to remind ourselves we've made tremendous success in the UK where we've gone from pay gender gap of about 40% in the 70s to about 17% now. So, we've made great progress, but there's still a lot more to do. But that is impacting the savings gap.
The other issue for women is that they tend to work less due to a number of circumstances such as they're more likely to have children and take time off, they're more likely to have a part-time job and they're also more likely to look after their elderly parents, which means they have less ability to save or they have to stop saving at a certain point in their life.
And the third factor is that women also tend to live longer than men on average. It means they tend to live alone, and they'll have higher expenses. So, they also need higher savings. And all of that is contributing really to the savings gap that we see.
Black: And I suppose that makes it even more important that women do invest, and women can often be a bit more cautious than men, I think. So, that could be limiting the amount of growth they can get on their savings. But I mean, what are some of the things we can do to help close that gender gap?
Morgan: You need to take control of your own destiny. We need to educate women, encourage them to talk, empower them with the knowledge so they know what they need for retirement and how they can achieve that. There's also issues obviously around the pay gap, and obviously some social issues as well where more equilibrium around parental leave as well will help.
Black: So, I think the investment industry has a big role to play in this because apparently, by 2030, women in the UK are going to have 60% of the wealth, which is great, but the industry needs to communicate with them so they know what to do with it. What do you think the role is of the industry?
Morgan: Yeah. So, I think there is specific planning needs that women do need. So, as we said, they tend to live longer, so they perhaps need a higher savings. Women also need to be treated as individuals. They shouldn't be just coupled with their husband when you think about their financial needs. And the industry, I think, also needs to look at focusing more on goal-based investing. Women like to see more tangible impacts of their investing. But ultimately, when you think about the products that women need, I think they need things that are very similar to what everyone needs. So, they need low-cost products. They also need transparency. They need to know what they're paying, and they need more access to information. Women tend to like more information before they consider investing. And the other thing they really need is great technology to be able to invest easily and quickly.
Black: As you say, that's just everyone. That's not just women.
Morgan: Yeah, exactly. Yes.
Black: And I think it is really important not to just bash the industry because there are a lot of excellent women in this industry, two of them in front of the camera right now. What do you think that already has been done to improve diversity or is being done?
Morgan: Yeah, I think companies have taken a variety of approaches. Generally, I think people were hoping that it would more organically happen, that we see more women in senior roles, and they're now realising that they probably need to take a more active and targeted approach to achieve that. But there's also some other practical things that companies are doing. So, they're looking at the job roles and how they're advertising that. They're also removing resume data.
So, you don't know if it's a man or woman who's applying. They're putting women onto more interview panels as well. And then, in terms of how to move them – once women are in the industry, how do you move them up into those senior roles? And we're seeing things like a move away from more mentoring. Women tend to be over-mentored and under-sponsored, and a move towards this kind of sponsorship. And the difference there is a mentor is kind of listening to you, giving you advice, but a sponsor is really going to move you up and put you into the parts of the organization where you can be seen and then move up. So, I think there's been some great progress and a lot more to do.
Black: Well, thank you so much for your time.
Morgan: Thank you.
And thanks for joining us.
