Women in the UK have more financial independence than ever before. While there are still many inequalities that society must address, the number of women in the workforce has increased rapidly over the years.

Figures from the UK government show that there were 16.06 million women over the age of 16 in employment between October and December 2023. This is an increase of 75,000 on the previous year.

More importantly, it’s 1.8 million more than a decade earlier. As a result, women could now be more financially independent than they were in the past.

That said, your female clients may still face some unique financial planning challenges. For example, the Office for National Statistics (ONS) reports that the gender pay gap was 7% in April 2024. This could make it more difficult for women to work towards their financial goals now and in the future.

This is especially true during certain life transitions when women are at a distinct disadvantage. Fortunately, we can help them at these crucial times.

Read on to learn three ways a financial planner can support women with important life transitions.

1. Navigating a divorce and splitting pension assets equally

A divorce can take a serious emotional toll on everybody involved, and it can also be financially disruptive too, especially for women.

According to Legal & General, women see their household income fall by 41% in the year following a divorce. In comparison, men only see a fall of 21%.

Additionally, IFA Magazine reports that 25% of individuals who went through a divorce in the past 10 years hid some of their wealth from their partner. Crucially, the study found that men were more likely to do this, with 33% hiding assets compared with just 15% of women.

As a result, your female clients could be at a disadvantage during a divorce and might find it more difficult to achieve their financial goals as a result.

We can support women through this process in several ways. Firstly, we can help them review their marital assets to ensure they receive a fair split.

Also, we may explore pension sharing options with them. This is an important issue as Scottish Widows reports that 60% of divorced women didn’t discuss pensions during the divorce proceedings. What’s more, women who don’t consider pensions when splitting assets could be an average of £77,000 worse off in retirement.

Consequently, many women could find it difficult to achieve their retirement savings goals after a divorce.

Indeed, according to Scottish Widows, 60% of divorced women are not on track for a “minimum retirement lifestyle” – a single person with an annual income of £12,800 or a couple with £19,900 a year.

Helping your clients split pensions equally could reduce disruption to their retirement planning following a divorce. This may mean that women are more likely to achieve their desired retirement lifestyle.

Once the settlement is finalised, we can also support your clients in creating their own personal financial goals and exploring the most suitable ways to achieve them.

2. Planning ahead for a career break

Women are often at a disadvantage when it comes to retirement planning. Indeed, according to the UK government, the gender pensions gap is 35%. This means that women have, on average, 35% less in uncrystallised pension savings than men at age 55. Figures are based on the most recent data from 2018 to 2020.

The gender pay gap is one reason for this as it may mean that women are not able to contribute as much as men to their pensions during their lifetime.

Further to this, research from the Trades Union Congress (TUC) revealed that women are seven times more likely than men to be out of work due to care commitments. Raising young children and caring for elderly relatives could both mean your female clients need to take a lengthy break from working at some point. Female clients may also take a break for other reasons, such as travelling or returning to education.

A career break could be likely to disrupt your clients’ retirement plans as they may not contribute to pensions, savings, and investments for the future during this time.

Fortunately, we can help your clients mitigate the financial effects of a career break so they can continue working towards their long-term goals.

For example, they could increase their pension contributions in the years leading up to the break. Additionally, if they’re in a relationship, your client’s partner could make third-party contributions to their pension.

Exploring these options could mean that your female clients can still meet their retirement savings goals, despite taking a career break.

3. Coping with the passing of a partner

Dealing with the passing of a partner is incredibly challenging, and women are statistically more likely to face this situation than men.

According to the ONS, the average life expectancy for a 50-year-old man is 84, while it is 87 for a woman of the same age.

As such, your heterosexual female clients may be more likely to outlive their partners, and this could present certain financial planning challenges.

For example, when one person dies, their surviving spouse or civil partner can inherit their entire estate without paying Inheritance Tax (IHT). This could mean that your female clients inherit everything from their deceased partner.

So, along with handling a large financial windfall in a time of grief, they may also have a sizeable estate to hand to their loved ones when they pass away themselves. Without proper planning, the next generation could pay more IHT than they needed to. Plus, mitigating IHT may also be more difficult in the future after Rachel Reeves announced that pensions would no longer be exempt from IHT after April 2027.

We can support your clients in creating an estate plan so they can pass on as much wealth as possible and potentially reduce the IHT their loved ones pay.

Further to this, we can give guidance about claiming a payout from a life insurance policy and discuss the most effective ways to save, invest, and spend a windfall.

The transition from managing finances with a partner to handling everything on their own could also be difficult. With our support, your clients can navigate this change to their circumstances and revise their financial plans, gaining ample peace of mind along the way.

Get in touch

Your female clients may find themselves at a disadvantage during these important life transitions. By working with us, they may be more likely to achieve their goals now and in the future.

They can contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Note that life insurance plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.