Why greater access to financial advice is key to closing the gap on financial inequality

The result is lost earnings, higher tax payable, unrealised opportunities i.e. less in the bank. For women especially, financial advice is even more important. Aussie women on average:

• earn 3 per cent ($13,182 each year) less than men.
• have 8 per cent less in superannuation.
• are overrepresented in insecure part-time and casual work.
• are 70 per cent of primary carers (unpaid work).
• are the fastest growing demographic for homelessness (women 55 and over).
• outlive men by 4.1 years.

In short, we live longer than men but do so with far less. Hence the urgency in making the most of what we do have. So how to improve women’s access to financial advice? There are many roadblocks to addressing this complex problem. Among the most prevalent are:

1. Education

Most school leavers have at least a basic idea of what an accountant or a lawyer does, but few if any know anything about financial advisers.

Better education about the role of financial advice and what it delivers would go a long way — both for children before starting their working lives, and the general population.

2. Regulation

The purpose of the recent Quality of Advice Review, as noted in its final report, was “to ensure Australians have access to high quality, accessible and affordable financial advice”.

It found that current industry regulation “makes it hard and expensive for financial advisers to give their clients the advice they want at a price they are willing to pay”.

Arguably though, the report fails to deliver recommendations that would bring meaningful change. Rather, it proposes yet more compliance on advisers, which in turn will further drive up the cost of advice and further restrict accessibility — especially when living costs and interest rates are already hurting.

A more balanced approach to regulation is required, to protect consumers without driving up advisers’ training and compliance costs (which, for advisers to earn a living themselves, are passed onto clients).

3. Recruitment

Michelle Levy’s report also notes that with 25 million Australians and just 16,000 licenced advisers, “there are too few financial advisers to provide financial advice to all who need it”.

More advisers — particularly more female advisers, given women often prefer dealing with other women — would boost women’s access to independent advice.

Do we explore subsidised training and accreditation? Gender quotas? Incentives like enhanced super contributions? All ideas are worth considering to attract more people to the profession.

(Could it be a new career opportunity for you?!)

4. Domestic violence

Financial abuse is a common aspect of domestic and family violence: finances controlled, incomes withheld, employment opportunities restricted.

Many remain in abusive relationships because the alternative is themselves and their children living in poverty.

What can you do?

You needn’t wait for government or industry to act to seek out financial advice.

• Get involved: I often see women who — because of time constraints, traditional gender roles or both — leave finances to their partner. Be more actively involved in household finances, accompany your partner to adviser and accountant appointments, and make decisions jointly.
• Look for value over cost: The tax savings, enhanced earnings, and costly mistakes avoided from quality advice should easily outweigh the cost of that advice.
• Find an adviser you like: Having someone you trust and have a good rapport with means you’re more likely to discuss matters honestly, be receptive to recommendations, and maintain ongoing contact. If you’d prefer to deal with a woman, you can find one specifically or ask a preferred firm to consult with a female adviser.
• Look for specialisation: Just like doctors and lawyers, many financial advisers specialise in particular areas e.g. high-net worth individuals, the self-employed, retirees. Consult with someone experienced in your particular needs and situation to get the best outcomes.

After all, it’s your money and your life. Make it count!

Helen Baker, licensed Australian financial adviser and author