As 2023 rolled over into 2024, we did some reflecting. Is it just us, or was 2023 quite a year? We’ve gathered some stats and suffice it to say, they tell an interesting story.

The financial and insurance services gender pay gap

The national average total remuneration gender pay gap at 28 November 2023, was 21.7 per cent according to the Workplace Gender Equality Agency (WGEA). This is 1.1% lower than the previous year and the lowest it’s ever been. So, while it’s still too high, it is headed in the right direction which is good news, right?

Well… let’s look at the financial and insurance services sector. Although it is also on a downward trend, the average total remuneration gender pay gap for the sector is 26.2%, which is above the national average .

We used the WGEA Data Explorer to try to understand more about the pay gap in our industry and what it means in dollar terms. We discovered, for example, that the gap for key management personnel in the ‘Finance’ subdivision of the sector is $219,000.

[Go to the WGEA Data Explorer, click on ‘Industry Results’, select division, ‘Financial and Insurance Services’, select subdivision ‘Finance’, view the graph ‘Average total remuneration GPG by occupation’.]

In late February 2024, WGEA will publish the employer GPG for every Australian employer with 100 or more employees. It should make for compelling reading.

Superannuation balances

By 2061, 20% or more of Australia’s population is projected to be over 65 (it’s already around 17%) and as women are likely to continue to outlive men, they will need their super to last longer. Logically, this means they need more than men in retirement savings. Unfortunately, currently they do not have it.

The ASFA Retirement Standard Explainer shows the lump sum needed to fund retirement at age 67. For a comfortable retirement, the magic numbers are $690,000 for couples and $595,000 for singles, assuming they will draw down all of the lump sum and receive a part pension.

However, according to various commentators quoting ATO statistics for 2020/21, average superannuation balances for people aged between 65 and 69 are only around $450,000 for men and $400,000 for women. Median balances are even lower. Add together the average balance for a man with that of a woman and a theoretical couple looks in good shape, but singles fall well short, especially women.

In 2024, the questions that need answering therefore remain the same: What would help improve superannuation balances for both sexes, but particularly women, and how quickly can it be done?

Underinsurance

The Mind the Gap Report, published by Deloitte Australia (the Deloitte Report) in August 2023, which built on their earlier 2020 report, suggests poor growth in the life insurance industry means Australians are still up to 60-80% underinsured and could have claimed $25b more for life insurance events in 2022, if they had not been. Deloitte also estimated that underinsurance is costing the Australian Government to the tune of $1.5b per annum in additional death, TPD and income protection social security costs, excluding indirect costs.

And… the Value of Life Insurance (VOLI) Report (the VOLI Report) published by MetLife in 2022 highlighted, you guessed it, a gender based insurance gap.

Within its retail business, 60% of MetLife’s policies were held by men, and only 40% by women. The VOLI Report also highlighted that as around 60% of Australian superannuation accounts are held by men and only around 40% by women, there is also a gender gap in access to insurance within super which, as MetLife pointed out, is ‘the predominant basis in which mass Australians can afford to hold insurance.’

The Deloitte Report concludes that underinsurance represents considerable growth opportunities for the life insurance industry which, ‘could grow to more than three times its current size by addressing the under-served and underinsured segments of the market, such as the middle-income segment’ and better serving that market through innovation in product, channel, network management and engagement. But it says this would depend on an industry-wide approach, that places ‘the social good agenda alongside their own growth ambitions.’

This suggests that there is a significant role for financial advisers to play. However, therein lies the other problem – not enough risk advisers remain in the industry.

According to Wealth Data, at 16 November 2023, we only had 15,700 or so advisers. In September 2023, Adviser Ratings reported that only 40% of advisers wrote a life insurance policy between January and June 2023.

‘Qualified’ financial advisers

One of the things that might help save the life insurance sector is to have more advisers… The number of financial advisers would likely skyrocket in coming years, if/when the government’s new class of ‘qualified financial advisers’ comes about, and their numbers are included for statistical purposes. There are people better ‘qualified’ than us to discuss whether a new class of advisers is appropriate and whether or not it would benefit everyday Australians.

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