Help your female clients take control of their financial destinies

Momentum Corporate reveals how women fare when it comes to employer-sponsored insurance and retirement benefits and how tailored advice has a role to play

In a recent study of their client base, Momentum Corporate revealed that almost half of the employees on the FundsAtWork Umbrella Funds are women. With an almost 50/50 gender split across the client base, a one-size fits all approach to advice on employee benefits simply won’t cut it.

This is according to Shaeera Essop, Strategic Client Engagement Manager at Momentum Corporate, who says that women deserve unique attention from financial advisers when it comes to building a financial future that is right for them.

“When assessing which employee benefits are right for a specific company, it is important to understand the balance of men and women making up the employee base, the unique challenges they face as well as the industries that they work in,” says Essop.

Ability to retire is a concern
As the current COVID-19 situation has forced many working women to reassess their retirement plans, Essop says the situation is worse than many advisers may think, especially for women.
Out of the female retirement members, 88% are in the danger zone with an average retirement replacement ratio of 21%. “This means almost all female members would receive around only 20% of their current salary in retirement,” says Essop.

“When we start to look at things like longevity – and that women generally outlive men – the risk of female employees one day outlasting their money is a reality,” says Essop.
The truth is that few women take the necessary actions needed to improve their situation. Momentum Corporate’s data shows only 7% of women made additional voluntary contributions to their retirement fund in June 2020.

During the COVID-19 lockdowns, women made up around 40% of employees whose retirement savings contributions were temporarily postponed or their pensionable salaries were reduced by their employers as part of the COVID-19 relief programme. This means that many women have even more reason to play catch up, especially considering so few of them make additional voluntary contributions.

Women are underinsured and need advice on cover levels
Even though women earn less, many of them are breadwinners in their households. “In these unpredictable times, replacing their income is critical for all professional women, so death, disability and critical illness products are essential,” says Essop.

The data highlights high levels of underinsurance across women in their base, with 78% of females having an average life cover replacement ratio of only 24.16% and in the danger zone. “Without life cover from other sources, the families of these breadwinners are likely to face serious financial challenges should they pass away,” says Essop.

At Momentum Corporate, the top five causes of female disability include cancer (22%), neurological (14%), psychiatric (14%), medical issues (11%), and acute musculoskeletal (8%). Essop says it is interesting to note that women claim disability twice as much as men for cancer-related claims and are three times more likely than men to suffer psychiatric conditions such as depression, yet they remain vastly underinsured.

Essop says there is a role for advisers to play here in order to close this cover gap. “With the right adviser by their side, women stand a much better chance at falling on the right side of these statistics.”

Age is more than just a number
Momentum Corporate’s numbers show that Millennials make up over half of all women on their funds. Millennials, or Generation Y, is defined as anyone born between 1980 and 1996, which is arguably the largest chunk of working professionals in any market.

“Millennials, and female millennials specifically, may have different views on employee benefits to other generations. In addition to this – they have more time to save and – generally speaking – would have youth and health on their side so this needs to be factored into investment choices, medical aid options and rewards programmes for female employees,” says Essop.

The power of statistical analysis is key – especially when cost cutting
While the pressures on employers to cut costs will likely only increase as the knock-on effects of an extended lockdown start to unfold, it’s crucial that every effort is made to keep cover in place to protect both female and male employees on their journey’s to success.

“Working with an insurer that uses data driven insights to adapt cover levels for different types of businesses, industries and member bases is key to getting value in terms of the right cover in the right places,” says Essop.

Understanding how their group benefits fit into their broader financial plan – and making the most of them – is critical for women. “As an adviser, you have the ability to ensure that women take the right steps to secure their financial futures,” concludes Essop.