To answer this question, it can help to think about another demographic dichotomy: those in the early stages of their careers, versus those nearing or at the end.
All else being equal, we would tend to advise younger individuals to take on more risk and anyone in retirement to take on less. This intuitively makes sense.
But when you think about it, what really matters is not age per se, but financial situation. Younger investors can stomach more risk not because they’ve had fewer birthdays, but because they typically have decades of income yet to earn. Their portfolio is not all they have left to live off.
By contrast, those enjoying retirement may worry that they cannot afford substantial investment losses, because they have limited scope to refill a depleted pot.
Interestingly, the same can be true of younger investors too – such as those who have achieved early wealth through a successful but relatively brief sporting career.
More generally, the point is that the guiding principles of financial advice do not vary with age. But differences in age do typically result in changing financial circumstances, and that is what matters.
Similarly, there should be no such thing as ‘female financial advice’. Even if it can sometimes seem as though men and women inhabit different planets, the rules of the financial game are universal.
However, that doesn’t mean a woman’s financial plan wouldn’t look any different were she a man. Women do face unique challenges and must look ahead to specifically female risks.
For starters, women live longer on average. This simple fact alone should mean that, all else being equal, they have to either retire later and/or take a smaller pension income.
And of course, all else is not equal: a significant contributor to the gender pay gap is arguably the motherhood penalty. Those who take extended career breaks to raise their children effectively perform years of unpaid labour, punctuating their lifetime incomes. But there is no question that they themselves suffer financially and can become dependent on their partners – which can bring its own risks. Viewed in this light, it makes perfect sense for women to treat their capital with commensurately greater care.
Consequently, financial advice is at its most valuable when tailored not to ‘him’ or ‘her’, but to them. Mothers must make financial planning a family matter.
And if they don’t opt to raise children? Life expectancy aside, any self-made woman whose financial circumstances and preferences differ little from the typical man should, in theory, receive indistinguishable advice.
Unfortunately, female-focused investment information is too often either driven by stereotypes or, ironically, can be rather patronising. Women can be perceived as more receptive to messages that emphasise the importance of empathy, for example selecting ethical investments.
We can certainly assist in that regard if necessary. But good advice should not centre on fine-tuning a hyper-personalised portfolio. Instead, it is about seeking clarity when it comes to the bigger questions. When do you and/or your partner want to retire? How much income will you require? Do you need to set aside money to take care of elderly relatives? If so, how much?
The approach we have taken at Weatherbys is demonstrably true to all of the above. No jargon. No stereotypes. Just high quality, professional financial advice on what matters, from our family to yours.