Post-COVID-19 wealth planning: how will COVID-19 affect women's financial prospects?

At Canaccord Genuity Wealth Management, we want to help make financial autonomy a reality for women – even more so in this post-COVID-19 new normal.

The coronavirus does not discriminate. It doesn't care how much wealth you have.

However, it does affect different parts of our society in different ways, and this includes its long-term impact on men and women. For example, in the US twice as many men as women have died from the virus, while 69% of all COVID-19 deaths across Western Europe have been males.

However, whilst there are differences in terms of health, there are also differences in terms of careers and wealth.

The pandemic has hit women hardest

Research suggests the economic impact of the coronavirus could disproportionately affect women’s careers – and so their longer-term financial wellbeing. COVID-19 has targeted sectors such as the leisure industry, hospitality and travel. These sectors are more inclined to employ women, including at senior management levels, and in many cases it is hard, if not impossible, to work from home.

Women have seen a 0.9% increase in unemployment compared to a 0.7% increase for men. This is unusual, as recessions normally hit certain structural sectors harder, such as manufacturing and builders, which employ more men on average.

International institutions like the United Nations and the World Economic Forum have issued dire warnings recently that the pandemic could set women’s economic progress back 50 years, certainly without a supportive childcare infrastructure.

Women undertake a disproportionate share of childcare and home schooling

During lockdown, an acute inequality has emerged between parents, with mothers putting in four more hours a day than fathers are in caring for children at home, no matter what level their job – including highflyers and top executives. Further, the Institute for Fiscal Studies recently interviewed 3,500 families in the UK and found that on average, women were able to undertake just one hour of uninterrupted work, while their male partner could do three.

The expectation that women will sacrifice their own economic viability to provide care at home is at the centre of women’s predicament. And as became evident during lockdown, it is impossible to balance full-time childcare while doing a full-time job at home. Even as nurseries and schools tentatively reopen, there will be knock-on effects for female workers.

Given that the gender pay gap already exists, this extra childcare responsibility could put women back further, and certainly risks impacting their pension planning.

Why are women lagging behind men in investment and pensions planning?

Even when women have savings and wealth, they lag behind men when it comes to investing in the markets. According to our recent survey about a quarter (24%) of high net worth (HNW) women do not have an investment portfolio, compared with 14% of HNW men[i]. Instead, HNW women rely on property investment for their investment needs, and also leave a high proportion of their money as cash savings.

HNW women also have fewer pension investments than men in similar positions. Women fall behind men in pensions saving, partly because of the gender pay gap, but also because they may take time out to bring up children and pause payments into their pension pots in the meantime. However, on average women live longer than men, so it's more important for them to build up pension investments.

According to researchers Kantar, the reasons why women don’t invest are complicated. While the ability to be financially independent is a core aspiration of all women surveyed, the barriers to investment are substantial – including rational and practical reasons but also complex and ingrained emotions. These issues are driving an investment engagement gap, and they found the majority of women have not engaged on the topic of investment in any depth.

At Canaccord Genuity Wealth Management, we find this alarming and want to do more to help. We are genuinely enthusiastic about investing and know the right wealth management plan will not only provide for your financial future but will also instil confidence through financial independence. We want to help make financial autonomy a reality for women – even more so in this post-COVID-19 new normal.

Are women relying too much on property as an investment right now?

Property has served women well for many years. However, as wealth managers, we have always cautioned against putting all one's investment eggs in one basket, and this may be particularly true in a post-COVID-19 world.

In the short term, we have just witnessed the first fall in house prices in the UK since 2012. The one-way bet on property, whilst not as volatile as other investments, is no way guaranteed to keep on rising. This short-term swing is due to the lack of people moving during lockdown – and may be alleviated in part by the Chancellor’s current stamp duty freeze.

However, we can also see COVID-19-induced longer-term trends that might cause property to continue losing value in certain areas. The pandemic may well bring about a shift in the way people work. People are less likely to commute in the same way as before and many may adopt a more local lifestyle. This may shift the high demand for city centre property, particularly highly priced properties in major cities such as London. Furthermore, this societal change could impact demand for commercial real estate, with many firms now reviewing their office capacity.

The risk is that this will disproportionately and detrimentally impact women, especially if they are investing primarily in property and lack a diversified wealth management plan.