November 23 2023 | Team nudge
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A global warning on financial exclusion
Welcome to the next edition of The global financial wellbeing forum and today we’re exploring - ‘a global warning on financial exclusion’, that will replay Victoria Mallinckrodt’s keynote on female financial inequality. Financial inclusion is an incredibly important topic that we, as an industry, need to continue to progress.
How? By ensuring that financial literacy is a human right, not a birthright.
Victoria is the procurement development and financial wellbeing lead at the World Economic Forum, and she'll be focusing on gender, along with her work with the World Economic Forum, Victoria is also Co-founder of the Finance Sisters, which is a social enterprise that helps women take control of their finances. She’s also written a book called, Your Financial World. We also had Wade Davis delivering one of our keynotes - read his story here.
Victoria Mallinckrodt, on ‘female financial inequality’ in her own words:
“I'll be talking today about the female financial inequality and the way I sum it up, is that women earn less money, our money earns less money, and we live longer. Starting with the gender income gap, the World Economic Forum - my employer, release a gender gap report every year. This year they found that the gender gap increased by a generation, from about 100 years to 135 years. If you look at the income gap in the WEF report, even in the best performing country, Iceland, a woman still earns 86 cents to a man's dollar.
We earn less money, we are more likely to take career breaks, we are more likely to work part time, and this also explains things like the fact that in the US, two thirds of the student loan is held by women, because we are unable to pay it off as quickly.
There’s also the investing gap that is universal. In all countries there is a gender financial literacy gap. Researchers can't quite figure out why this financial literacy gap exists. It starts at about 15 years of age. They've even shown that girls even earn less pocket money than boys.
Financial literacy is really important because it improves your financial stability and it also improves stock market participation. We can put it in a different way, your ability to optimize your investments for your retirement. Research published this year found that a third of the financial literacy gap can be explained by a lack of confidence. Researchers are now calling for women to be more fearless. The other point is that women tend to keep more money in savings and not optimize our portfolio, which can cost us around 7% per year.
The wealth gap
The income gap and the investing gap, lead to, and or contribute to, the wealth gap. Today we are more in charge of our retirement savings than ever before. Money is a major cause of stress for women. I was shocked to find out that in Germany, they estimate that 75% of women between 35 and 50 are at risk of poverty in old age. Financial dependence is common for many women and it’s not a great position to be in.
In terms of salary, women earn 32 cents to a man's dollar, and that can drop to as little as one cent for women of color, this data is from the US.
Where are some initiatives to consider for closing the wealth gap:
Financial wellbeing programs designed specifically for women
The research points to this direction. Specifically designed programs give women a safe space to speak, and I certainly found that also in my workshops with men and women. We run with both men and women but the female only has a much higher engagement throughout the session. We have discussion, more questions, and it just feels like much more of a safe space without intimidating questions being asked by certain people.
Leverage female role models and influences
For example, there’s the financial feminist. This is a podcast that's been out for just a few months, and it's ranked the top business podcast on Apple podcasts after only two weeks of being launched. In two months it has had over a million downloads. There's really a lot of appetite for these female role models and financial feminists, and there's also plenty of engaging, role models and fin-fluencers on Instagram, tick tock, etc.
Increase hands-on experience with financial decision making
Experience begets experience. This is just something to bear in mind during your discussions.
Leverage interest in climate change
A recent survey by UBS found that women are more interested in climate change than they are in investing. Perhaps there's some synergies that we can leverage, for example, investing pensions into green plans or ESG investing in general."
Breakout sessions, find the key takeaways here
Here’s the forum Q&A
Q1. Wade, how applicable is what you spoke about in your presentation to other countries?
Wade’s Answer: “I think it's pretty applicable. Every country has what I would like to call the status quo. They have a dominant group. Think about who are the people in positions of power and start to interrogate where that power sits, and how it engages with individuals who have less power.
I want to use this opportunity to challenge something shared, this is my attempt to push our thinking. The idea of gender neutral policies. What if we shifted that to gender positive policies? There is nothing in this world that is ever neutral. We are always acting on something because there’s always a historical lens.
If we have gender neutral policies, that can’t account for the past harm that was done. So, if we know that there's historical harm that women have experienced because they were in an absence of power.
To create a gender neutral policy doesn't repair the past harm, so how do we think about gender positive policies? Gender inclusive policies on the other hand, recognizes that there is always a status quo. That there is always some power, working to marginalize some groups, so to think about it through a neutral lens doesn't recognize that that power currently exists and it's acting upon people actively.”
Q2. Victoria, can you give some examples of financial wellbeing programs for women?
What should people be thinking about if they're looking to deliver a financial wellbeing programme for females in their organization?
Victoria’s answer: “We need to challenge some of the terminology that we use and make it as accessible as possible for women to understand because the financial system was built by men, arguably for men. We need to break out of those patterns of thinking and terminology.
We need to make it more fun and engaging for women. In our workshops we have lots of games and we make it kind of less dry.”
Q3. Wade, how do you use this information to shape your business plans?
Wade’s answer: “One of the ways that you can use this information to shape your business plan is to make the connection. So if your organization has a goal, you need to figure out how inclusion sits within that goal.
At Netflix for example, our goal is to entertain the world, and that means that the people who are telling our stories, who are writing our stories, who are creating our stories actually need to be from the actual world. If we're going to truly entertain the world we can't have the majority of people who are from one group, who are all male, who are all educated be the sole keepers of how these stories are being told.
What you all have to do is look at the overall mission of your organization, and establish how the work of inclusion will support it. Then figure out the story that you're going to tell over and over and over again, that is both quantitative and qualitative.”
Q4. Victoria, do you think that women are more, or less, open about their finances, the men?
Victoria's answer: “Women are less open about their finances. This is anecdotal but I think we are taught to succeed on our own and it's not ladylike to talk about money with others. Whereas, men have a men's club where they're all promoting each other. Generally, I think women feel very uncomfortable talking about their finances.”
Q5. Wade, for HR leaders here today who want to build a business case for their CEO or CFO. Where would you get them to start?
Wade's answer: “I would get them to start by figuring out how the CEO will be the primary driver of their inclusion efforts. In practical terms, I want you all to imagine your company is acquiring another organization. The CEO would be actively a part of that merger and acquisition, he, she or they would not let someone in finance or someone else be the only person who was managing that. The reason is, if the acquisition did not go well, the CEO would be held accountable. The same thing has to happen for inclusion.
If your inclusion practices don't go well, the CEO needs to be held accountable, and they have to be able to articulate, not just why inclusion matters, but what it’s going to do to better their organization. And hold all of the leaders accountable.
I would start with the CEO, and that individual (like we do and Netflix) needs a diversity and inclusion coach. Most leaders have an executive coach and most people don't have the proximity to difference enough to be able to understand, how do I actually do this work?
Always start with the people in power, and if you can get them to figure out ways to hold themselves accountable, like they would for any other business outcome, then you have their skin in the game. If their skin is not in the game, it is always going to feel like an add on, or a nice to have.”
We hope you enjoyed reading this as much as we enjoyed hearing from Victoria and Wade. What’s your next step after reading this article: