Closing the Financial Gender Gap: Exploring Salary Disparities, Single-Parent Families, and Financial Advisory
Access to financial advice plays a crucial role in combating financial inequalities. Many people unconsciously make poor financial decisions by relying on unqualified individuals or not seeking professional advice. This results in income loss, higher taxes, missed opportunities, and less savings.
For women, financial advice is even more important due to the gender pay gap, lower superannuation balances in Australia or retirement funds in France, and their overrepresentation in precarious jobs.
Improving women's access to financial advice requires addressing various challenges. This includes better education on financial advice, balanced regulation that protects consumers without burdening advisors, increasing the number of certified advisors, and combating financial abuse in situations of domestic violence. Individuals can take steps to seek financial advice, actively participate in household finances, prioritize value over cost, find trusted advisors, and seek specialized advice tailored to their needs. By addressing these issues and empowering individuals through sound financial advice, we can work towards reducing financial inequalities.
Gender Pay Gap:
France: In France, the gender pay gap remains an urgent issue. According to data from the National Institute of Statistics and Economic Studies (INSEE), women in France earned on average 15.5% less than men in 2018.
Australia: In Australia, according to the Workplace Gender Equality Agency (WGEA) report in 2021, women in Australia earned on average 13.4% less than men.
United States: In the United States, challenges related to the gender pay gap also persist. According to the U.S. Census Bureau in 2020, the median earnings for women were approximately 82% of men's median earnings, resulting in a gender pay gap of 18%.
Regarding France, here are the most recent figures:
In Australia, the WGEA has published several graphs:
Source : Age and the gender pay gap | WGEA
The highest pay gaps occur between 45 and 64 years old, with a difference of approximately 32% or $40,000 based on the average earnings of men and women in this age group. Obviously, this difference has a massive impact on women's long-term wealth, as shown in the graph below:
Single-Parent Families:
The gender pay gap and the prevalence of single-parent families led by single mothers are two interconnected issues.
France: In France, the number of single-parent families, including those led by single mothers, is increasing. According to data from the National Institute of Statistics and Economic Studies (INSEE) in 2019, there are approximately 1.7 million single-parent families in the country.
Australia: In Australia, the number of single-parent families, including those led by single mothers, is also on the rise. According to data from the Australian Bureau of Statistics (ABS) in 2020, there are approximately 959,000 single-parent families in Australia, with a significant majority led by single mothers.
United States: The United States has a significant number of single-parent families, many of which are led by single mothers. According to data from the U.S. Census Bureau in 2020, the estimated number of single-parent families in the country is around 10.7 million, with approximately 8.2 million being led by single mothers.
The interconnection between the gender pay gap and single-parent families led by single mothers is a problem that disproportionately affects these families. They often face financial challenges due to lower average incomes compared to two-parent households. The gender pay gap can hinder the economic stability of single mothers, making it more difficult to support their families. Additionally, the lack of affordable childcare options and limited access to flexible work conditions can further impede the professional advancement and earning potential of single mothers.
The Issue of Financial Advice:
In Australia, the financial advice industry has adopted a fee-for-service model over the years. The positive aspect of this model was that it prevented advisors engaging in predatory practices by pushing dubious financial products with high commissions. However, it has also increased the cost of financial advice (along with other factors - the Royal Banking Commission being a significant event in this regard), making it inaccessible for those who need it the most.
For financial advisors to cover various costs (licensing, software, employees, operational expenses, professional insurance, etc.), the minimum fee a financial advisor would charge is around AUD 4,000 (with a very slim profit margin, if any).
In France, although the fee-based model emerged years ago, however it has neither been widely adopted by clients, nor advisors because, in many cases, clients are not willing to pay fees. They prefer advisors to receive commissions while ensuring transparency regarding the advisors' compensation.
To simplify, in Australia, clients pay for knowledge, and operations are included in the price, while in France, clients "pay via commissions" through operations, and knowledge is included.
Due to this factor, some people seek free advice elsewhere, often turning to social media platforms such as TikTok, Instagram, or Facebook, where unqualified and unlicensed individuals promote products that often compensate them well, influencing people who have no choice but to turn to these social media platforms for advice.
Therefore, I recommend that individuals, especially women, who are interested in learning about products, investments, and overall wealth management should:
Establish a budget: It is the first and most important step. Saving an additional $100/€100 per month, which may seem relatively low, can have a very positive long-term effect.
Choose simple strategies and products as they are often the most effective.
Understand what you are investing in: If you have an advisor assisting you, ask questions to ensure that you understand the advantages and disadvantages of different products or strategies.
Do not listen to influencers, TikTokers, or other individuals who promise to make you rich in six months. Building wealth takes time, and patience is one of the most important virtues when investing.
Contact White Ribbon (https://www.whiteribbon.org.au/) if you are in a difficult situation in Australia. They work with financial advisors who provide pro bono advice.
Over 10 years ago, I decided to become a wealth manager to help people make better financial decisions, and assisting those in need, especially women, due to the factors mentioned in this article, and this has always been an additional motivation.
If you have any questions or need assistance, feel free to contact me.