What’s holding you back?

According to UK investment statistics, just 10% of women have a stocks and shares Isa vs 17% of men.  Furthermore, in 2017, 82% of ISA accounts opened by females were cash accounts, compared to 75% of those opened by men. Other statistics reveal that only 7% of women hold other investments or unit trusts, compared with 14% of men, and the ratio of male to female customers among the top 10 DIY investment platforms is reported to be 68 to 32.

As a firm of advisers specialising in advising women, we have more of an insight into this topic than most. So what are the factors that prevent women from investing and how can we think about things differently?

A different attitude to wealth

There is a feeling that women are somehow more risk averse than men. This is a bit of a myth; it doesn’t necessarily come down to women taking fewer risks or necessarily being more risk-averse, but women do tend to compartmentalise the way they think about their money differently from men. Women will often ring-fence some pots as untouchable – for their children’s education, for example – while other pots are there to be invested wisely.

There is no harm in compartmentalising different pots of money – and in many ways, this is a useful way to approach a portfolio. The allocations of money that are designated for investing to obtain a return will, however, need to carry an appropriate level of risk. This comes down to how comfortable an individual is with taking investment risk, their age, their earning capacity and their desired investment growth.

Desired outcomes

One of the key differences we see between male and female investors at Addidi is the end goal of investing – i.e. what money should be used to achieve. When we talk to clients about the goals, one of the questions I like to ask is: “what would you wish for if you had a magic wand?”  The responses from women tend to lean towards financial security and providing for their families. This seems to come from our instinctive desire to nurture those around us and perhaps influences the level of risk we’re willing to take. Having a suitable ‘emergency fund’ in place can act as the security you need, leaving other available funds to invest and deliver a return. For first time investors, it can be a learning curve, but there needs to be an understanding that there has to be a pay-off somewhere and the smaller the investment pot, the harder this has to work to deliver a return.

Finding an adviser that listens to and understands you

At Addidi, we believe that one of the main barriers to females wanting of take control of their financial affairs and invest their money into the markets is the institutions themselves. It’s no secret that the financial industry has historically been – and continues to be – male orientated, often failing to recognise and cater to a female audience. Yet females represent an area of huge potential client base for advisers – especially as according to a report by Kantar, by 2020, just over half of all investable assets will be held by women.

To compound this, the field is also heavily male dominated with disproportionately few female advisers. In fact, the financial services sector in the UK having some of the worst statistics for gender diversity. Furthermore, the ‘product led’, sales-orientated approach the industry has held for many years acts as a turn-off for women. Unfortunately, this has sometimes been reinforced by a poor experience with an adviser – anecdotally, many women have told me that they have been put off engaging an adviser in the past because they didn’t feel they were being listened to and understood. It’s perhaps no coincidence that 70% of widowed women sack their financial adviser after the death of their husband.

The good news is that there are many advisers and financial planning practices that welcome and embrace female clients, with Addidi being just one of them. Finding one that you feel comfortable working with and whom you trust can be achieved – Unbiased is a good place to start your search or ask around within your network for a recommendation.

There is no doubt that women can be just as capable of handling their family’s financial affairs as men. In fact, study after study finds that when it comes to managing investments, women actually outperform their male counterparts.

Taking the leap of faith on the path of investing can be difficult for anyone who hasn’t done it before. However, once you have taken the plunge and you start to see the returns, you’ll almost certainly wish you’d done it sooner.

There is a driving need for women to invest more; the gender pay gap has also led to a pensions gap with the average female pension pot likely to be 11% smaller than that held by a man by the time retirement age is reached. Yet it is women, with their greater life expectancies, who will need their pensions to last longer. So in order for women to be able to achieve their retirement goals, investing will become more of a necessity than a choice.




Making the commitment to financial fitness in 2019

After the exuberance of the festive period, many of us start the New Year with a new found commitment to getting fit and healthy. January is well-known as being one of the busiest times of the year for gyms – both in terms of new memberships and existing members stepping up their attendance.

We’re not here to tell you not to get that expensive gym membership – staying physically fit is an important part of overall wellbeing and if you’ll use it, investing in such luxuries is well worth it.

In fact our advice is to take it a step further – and put some time and effort into your personal financial fitness.

Here are some key steps to getting – and staying – financially fit for the year ahead.

Set a baseline

Before commencing any new programme of physical activity, it’s sensible to get a base reading on your current level of fitness, so you can monitor any progression you make.

The same applies to your personal finances – it’s important to have a full picture of what you have to be able to make a comprehensive plan to take forward.

Go for goal

Having a goal in mind when working on your fitness can help to provide a real impetus. Perhaps you have a significant date or event in the diary that you want to work towards, or maybe you have a target weight you want to reach. Setting goals makes your training more personal to you, also allowing you to break your time down into measurable and manageable stages.

When we engage in discussion with a potential new client, goals is one of the key areas we focus on. In order to develop a financial plan that is right for an individual, we need to know where they want to get to and by when. Personal goals can vary hugely from person to person and aligning financial goals with personal goals may involve some work. Goals may change over time as circumstances develop; but starting off in the right direction initially will form the basis on which future plans can be built upon.

Get professional help

Undertaking physical training or exercise under your own steam is commendable, especially if you are able to remain motivated and stick to your training schedule. However, many people find themselves losing momentum after a while, needing the extra boost that can be provided by the likes of personal trainers.

Similarly, a financial adviser can help to develop a financial plan – and help you stick to it – so you can be confident you’re on the right track. Whilst you may be happy looking after bank accounts, savings plans, investment and pensions etc to a certain degree, a financial adviser will be able to take this a step further so you know you are making the most out of your financial circumstances.


Undertaking exercise is one thing, but being able to monitor your progression and look back over your fitness achievements is both rewarding and motivating. These days, tracking your activity has never been easier. Be it reaching a specific step count in a day or hitting a certain heart rate, tracking devices are readily available.

Putting the right measures in place to monitor your financial situation and the performance of your investments can be equally as attainable with the right guidance. Engaging a financial adviser for the first time can be somewhat of a leap of faith, but once you can start to see returns, and the power these have when reinvested, regular reviews of your portfolio can become both enjoyable and exciting.

If 2019 is the year you want to take you financial fitness to the next level, the team at Addidi can help.

Addidi Insights Issue 17: Politics and portfolios

Brexit and your portfolio

Whichever way one voted, it is hard not to be dismayed by the shambles that is Brexit, concocted by all sides. In the event that any deal agreed gets voted down in Parliament, or there is no deal, there is a material chance that the government could fall. One or both of these events would come with great uncertainty.

We set out three key investment risks relating to Brexit and how sensible portfolio structures can mitigate them.

Risk 1: Greater volatility in the UK and possibly other equity markets
In the event of a poorly received deal or no deal, it is certainly possible that the UK equity market could suffer a market fall as it tries to come to terms with what this means for the UK economy and the impact on the wider global economy. A collapse of the Conservative government and a Labour victory would add further uncertainty.

Risk 2: A fall in Sterling against other currencies
In 2016, after the referendum, Sterling fell against the major currencies including the US dollar and the Euro. There is certainly a risk that Sterling could fall further in the event of a poor/no deal.

Risk 3: A rise in UK bond yields (and thus a fall in bond prices)
The economic impact of a poor/no deal and/or a high-spending socialist government could put pressure on the cost of borrowing, with investors in bonds issued by the UK Government (and UK corporations) demanding higher yields on these bonds in compensation for the greater perceived risks. Bond yield rises mean bond price falls, which will take time to recoup through the higher yields.

Mitigant 1: Global diversification of equity exposure
Although it is the World’s sixth largest economy (depending on how you measure it), the UK produces only 3% to 4% of global GDP, and its equity market is around 6% of global market capitalisation. Well-structured portfolios hold diversified exposure to many markets and companies. Changing your mix between bonds and equities would be ill-advised. Timing when to get in and out of markets is notoriously difficult. Provided you do not need the money today, you should hold your nerve and stick with your strategy.

Mitigant 2: Owning non-Sterling currencies in the growth assets
In the event that Sterling is hit hard, it is worth remembering that the overseas equities that you own come with the currency exposure linked to those assets. Remember too that a fall in Sterling has a positive effect on non-UK assets that are unhedged. The bond element of your portfolio should generally be hedged to avoid mixing the higher volatility of currency movements with the lower volatility of shorter-dated bonds.

Mitigant 3: Owning short-dated, high quality and globally diversified bonds
Any bonds you own should be predominantly high quality to act as a strong defensive position against falls in equity markets. Avoiding over-exposure to lower quality (e.g. high yield, sub-investment grade) bonds makes sense as they tend to act more like equities at times of economic and equity market crisis.

Some thoughts to leave you with
Even if you cannot avoid watching, hearing or reading the news, it is important to keep things in perspective. The UK is a strong economy with a strong democracy. It will survive Brexit, whatever the short-term consequences that we will have to bear, and so will your portfolio. Keeping faith with both global capitalism and the structure of your portfolio and holding your nerve, accompanied by periodic rebalancing is key. Lean on your adviser if you need support.
‘This too shall pass’ as the investment legend Jack Bogle likes to say.

Risk warnings
This article is distributed for educational purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.
Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
Errors and omissions excepted.

Top pension planning tips for women

Research released recently revealed that women in the UK currently face retirement incomes of £4,900 lower per year than men. Although women’s average annual retirement incomes will hit a record high of £16,900 this year, this is still markedly lower than male retirees, who average £21,800 a year in retirement according to latest figures.

The research by Prudential also showed that one in six women will have a retirement income below the minimum benchmark standard of £9,982 set by the Joseph Rowntree Foundation, compared to one in ten men.

It has been interesting to read the media commentary on these facts. Some are framing the statistics in a positive light; hailing the new ‘record high’ averages; others note the gap that still exists between the sexes. Whilst it is encouraging to see the gap between men and women’s pensions narrowing, we think there’s still a long way to go.

So here we offer women some food for thought around paying into pensions and closing that gap.

Earn as much as you can

The main reason that women pay less into their pensions than men is that they earn less. So the number one tip is to try and ensure you’re earning the maximum you can. Far too many women still shy away from asking for a pay rise. If you think you should be paid more or are earning less than the industry average for your role, don’t be scared to approach your employer about it. If you know or suspect you are being paid less than a male counterpart, this is unlawful. Approach your employer in a well-structured, measured and positive manner. Remember that if you are paying into a workplace pension scheme and you earn more through knowing your worth, your employer will also pay more into your pension as pension contributions are usually based on a percentage of your salary.  So a pay rise will not only boost your income now, but also into the future.

This is particularly important for women who are in lower paid industries, or are earning less due to working part-time hours.

Save as much as you can

Recent statistics from the Department for Work and Pensions (DWP) show that 84% of workers who qualified to be in a workplace pension actively took part last year. This is a real victory for auto-enrolment pensions; the 84% figure is a dramatic increase from when they were introduced in 2012.

However, there are real concerns that the amount people are setting aside is too low a proportion of their earnings, leaving the distinct possibility of a shortfall by retirement age. The current minimum level of contribution into defined contribution workplace pensions is only 3% from the employee and 2% from the employer, totalling 5% of income. Although this is set to rise to a total of 8% by April 2019 (5% from the employee and 3% from the employer), many commentators say this is still too little.

If you are able to accumulate ‘savings’ after all your monthly outgoings, you should seriously consider directing some of this into your pension.  The longer you can leave a pension fund to accumulate; the better off you will be thanks to the effects of compounding (the process of reinvesting any gains made). Starting to save as early in life as possible is also vital to benefitting from compound interest.

Understand the impact of decisions

The effects of earning less than men are made worse by the fact that many women take career breaks or change to part-time work – often following on from having children but also to care for older relatives. We’re not decrying these important, noble choices that are essential for our society: we know family comes first and you can’t buy or get back precious time with loved ones.

However, we are saying that you should at least be fully aware of the impact these decisions can take on your long-term finances. Most of the time we base changes in our working patterns on the immediate affordability, not considering that part-time working or a career break will mean we will also be paying less into a pension. More needs to be done to communicate the impact that such decisions can have on retirement savings. Although money isn’t the only factor when making life decisions, it is at least important to know about and understand all the financial outcomes. If you take a career break or reduce your hours, be aware that you will contribute less to your pension fund during this time, and may need to return to try and make up for the shortfall later on in your career.

The same applies if you decide to set up your own business or work for yourself, which a growing number of women are doing. It may be a struggle financially in the first few years and paying into a pension comes bottom of the list. When the fruits of your labour start to pay off, you should think about setting up and contributing to a private pension plan.

For more advice on any aspect of pension or financial planning, contact us and one of our advisers will be happy to answer your questions and help you out.



Top Financial Planning Tips for 2019

If you can believe it, 2018 is almost drawing to a close. Getting to grips with your financial affairs at the start of a New Year is always a good idea, as it will not only help you save money in the coming months, you could also find that you are better placed to make money from your investments.

So here are my top tips to improve your finances in the coming year.

  1. Have a financial plan – Approaching your personal finances in the same way a business approaches its annual planning may seem like a strange strategy, but it really does work.

You don’t really need to create an incredibly detailed plan with profit forecasts for your household, but you should create a set of financial objectives for the coming year. Goal setting is one of our favourite motivational techniques at Addidi – once you know where you are headed, you can work out how to get there.

  1. Budgets – It sounds boring, I know. But if you get your budgeting right then you will have more money available to enjoy yourself, which can only be a good thing.

The biggest stress you are likely to face is having a lifestyle not matched by the amount of money you are earning. Often when we take a good look at our finances, there are always things that we pay for that could be cancelled to save money. For example, unused gym memberships, Netflix subscriptions when you rarely watch it/could share with someone else, or long-standing subscriptions to magazines you no longer read. All of these little expenditures in a month can soon add up, and you are essentially just throwing money down the drain. So, stop wasting money and start saving it, or if you really cannot do that, then at least make sure you are getting full enjoyment out of the things you spend monthly money on.

  1. Compare your insurance and utility bills each year and make sure you are getting a competitive quote. It may seem like a chore, but when it comes to your insurance and utility bills it really is worth checking the details each year. You can use comparison sites to help you do this, and for a small investment of time you can make big savings.
  2. Do not borrow unless it is for something big and important – debt has become such a way of life for many of us that we have forgotten the art of saving and waiting for something we want. In the finance advice industry we classify bad debt as when you borrow to fund an unsustainable lifestyle, such as for holidays or buying furniture you don’t really need. While good debt would be, for example, to buy a home. Stick to good debt, and otherwise save for what your heart desires. You will value it more for the wait and delayed gratification is good for the soul.
  3. Risk – the amount of risk you will take with investments is something so personal, it is quite difficult to talk about generically. But one thing is for sure – you should never be taking investment risks that stop you sleeping at night.

You can afford to take higher risks for longer-term savings such as pensions, because if things do not go your way then you will have enough time for markets to recover. But your short-term saving goals (such as your pot for a deposit on a new home) should not be risked.

  1. Insurance – home insurance is one thing, and car insurance is obligatory. But for many people that’s as far as they get when it comes to insuring their valued assets in life. Failing to insure your income, your life or your health could cost you a lot more than you expect if you become critically ill. Expand your thinking on insurance towards income protection and critical illness cover. You will be so thankful you had it if something unexpected happens, and it is likely to cost a lot less than you think.
  2. Write a will – Around two thirds of us do not have a will. By neglecting to make one, not only are we leaving behind a major headache for our loved ones, we are also potentially handing our worldly goods over to the Treasury which gains tens of millions of pounds each year from people dying intestate.

Writing a will does not have to be complicated (especially if your financial affairs are relatively simple), and it can save your estate a lot of money in inheritance tax if you fall into this bracket. Many people think only the very rich pay inheritance tax, but thanks to a combination of rising house prices and little movement in the IHT thresholds over the years, many people now become 40% taxpayers for the first time after they have died. It doesn’t have to be this way, so take the time to write that will.

Bear it in mind, it is certainly better to speak to a solicitor before doing so as homemade wills often cause more problems than they solve.

  1. Be happy – sounds obvious, right? Still, getting your finances in order is one of the best ways to relieve unnecessary stress you might be suffering from. Every problem has a solution – it might just take a little time and effort. So don’t lose heart, never bury your head in the sand, and get the help you need sooner rather than later. When you have everything as it should be, then that is the time to enjoy the fruits of your labour.

Happy planning!