Just in time for International Women’s Day 2019, UBS Investor Watch has published a study of women and their personal finances which reveals that the majority of married women, 58 per cent, surveyed across the world defer to their husbands for long term financial decisions despite striving for equality in other areas of their lives.
Shona Baijal, Managing Director at UBS Wealth Management, explains that this global study is the first for the bank and reflects the importance of this type of client.
“There is a role in the market for us to claim, not just for ourselves but the industry,” she says, emphasising the urgency of the matter as women’s life expectancy increases, as do divorce rates.
“There is a critical mass of women who are left high and dry not really understanding finances and finding they are on their own and having to deal with them.”
On a global level, women tend to focus on short-term finances, with 85 per cent of married women either taking the lead or sharing responsibility for managing day-to-day expenses.
However, fewer than a quarter (23 per cent) of married women lead long-term financial planning, such as investments and insurance. This trend is mirrored in the UK, where many women opt out of longer-term decisions that impact their future and instead, let their spouses take the lead.
Many married women in the UK tend to take more of a lead in short-term finances than long term financial decisions. Indeed, 62 per cent of respondents said they leave most long-term investment decisions to their husbands.
“The good news is that more women are engaged in some sort of financial decision making with 80 per cent globally participating in the day to day finances, because people make assumptions that women just aren’t able,” Baijal says.
She comments that there is a significant difference between the day to day and the long term: “But this signals that they are able to understand the technicalities so that the ‘dumbing down’ comment is blown out of the water but the long term stuff is as important as the day to day. The long term is what will leave you in an uncomfortable position, so while there is some good news, that figure should be 100 per cent.”
The reasons why British women defer to their spouses are wide ranging. Almost three quarters (73 per cent) think that a high level of knowledge is needed in order to make good investment decisions. However, only 48 per cent believe that they have that required knowledge. Furthermore, nearly nine in 10 of women in the UK (85 per cent) feel that their spouses know more about investing than they do, while over half (55 per cent) say their spouses discouraged them from being more involved in the family finances.
When it comes to financial decision making, many younger British women in particular let their spouses take the lead. Indeed, 69 per cent of British women between the ages of 20 to 34 defer to their spouses (well above the global average of 59 per cent).
This is the second surprise in the findings for Baijal. “It’s really surprising,” she says. “Is it lack of time or a feeling of being pushed away?”
Two thirds (62 per cent) of married women in the UK feel confident that if something were to happen to their spouses and they were forced to manage all finances alone, they have the knowledge required to do so. However, women who have actually experienced the tragic loss of a spouse paint a different picture: Almost half (49 per cent) of widowed or divorced British women said they were not prepared financially for life after this moment.
Those left suddenly single were not always happy with what they discovered once they were left to handle their finances alone. Half (50 per cent) of British widows or divorcees said they found spending that their spouses had hidden from them. On a positive note, 46 per cent were lucky enough to find that they had more assets than they expected.
From these experiences, 81 per cent of widows and divorcees advocate for married British women to take a more active role in understanding family finances. Furthermore, 80 per cent advise that women insist on full transparency of accounts in order to lessen the prospect of financial surprises down the line.
Baijal says: “We feel a real sense of duty and responsibility to women for our whole industry. It’s not just for us trying to talk to our clients but also our role within the whole industry – financial services are not doing enough and we want to get some momentum behind these messages.”
Baijal encourages women to have a ‘financial date night’ with their husbands and discuss the important stuff.
“The satisfaction levels within a marriage go up if they tackle this stuff together so schedule that time,” she says.
“Try to focus hard and be honest with yourself as the chances are that you are going to be on your own due to divorce rates or outliving a husband, and those chances are going up not down, so do plan for the worst.”
Baijal says that investors also need to work out what their priorities are. “If you sit with clients separately, you get different answers and nothing is wrong or right but as a couple work out what your priorities are.
“I feel strongly about this generational shift, a passion for the topic, a call to action that we can make a big difference for the generations to come.”
