Women Have Specific Financial Needs That Advisors Overlook
Women have specific financial needs that financial advisors overlook in two ways: 1) Advisors don’t always acknowledge the different planning needs women have and 2) Advisors don’t always communicate well with female clients – especially if the client comes to a meeting with her husband. It’s very common for a male advisor to spend much or most of the face time in meetings talking to the husband and ignoring the wife. For these two reasons, women often receive the short end of the stick when it comes to financial planning and investment management.
How Women’s Financial Situation Differs From Men:
- Women may deplete their funds toward the end of their lives faster than men. Women typically earn less over their career lifetime because they tend to take more unpaid leave – than men – to raise children or care for family members (e.g. an aging parent).
- Women typically earn less than men overall since they hold more jobs in lower paying areas of the economy (e.g. retail and food service) and are less well represented in management positions.
- Women tend to earn less than men even if the job description and requirements are the same.
- Women live longer than men so they are more exposed to “longevity risk” (the risk of outliving one’s assets).
- Since women live longer and take more unpaid leave, they often have less saved in 401(k)/403(b)/457 defined contribution accounts. These same women also will have lower pension benefits because they’ve worked fewer years.
- Women often marry older men. If they retire the same year as their spouses, their Social Security benefit (based upon the highest 35 years of their wage history) often is lower.
A competent advisor will acknowledge these important financial planning differences between men and women; he or she will craft financial planning solutions that address the value of unpaid work and reduce the risk of women outliving their assets. For example, a stay-at-home mother has real economic value to her family and she should be insured at least until all her children are 21. Why? Apart from the emotional loss, a stay-at-home mother’s premature death means the family must pay someone to stay with children when they come home from school, and to drive them to after-school events.
As far as the risk of outliving assets is concerned, this is a more serious threat for women than men. If you visit a nursing home you can’t help but notice that most of the residents are women. A good advisor will address long-term care needs especially for all women – both single and married.
Advisors Are Guilty Of Talking to Women Differently From Men:
How can — and how should — advisors help women plan for their specific needs? Communicating with both male and female clients in a balanced fashion is key, but it doesn’t always happen that way. Approximately three-fourths of financial advisors in the U.S. are men, while at least half of their clients are women. When talking to mixed gender couples, male advisors can end up talking down to women, ignoring her concerns and communicating more with the husband than the wife — even when both husband and wife are fully present in a meeting. If women feel excluded or ignored, they respond by losing interest in what the advisor is saying. This creates a vicious circle. I admit I’m making sweeping generalizations about male vs. female advisors, and I’m assuming more husbands handle financial decision-making than wives. That said, I frequently hear complaints from women who say their previous advisor ignored them (and ignored their concerns), even if the client is a single woman.
A competent and helpful financial advisor (both male and female) will do the following:
- Include both husband and wife in discussions, even if one party (often the husband) naturally shoulders more of the financial decision-making in a relationship.
- Interact with clients so both men and women (married or single) feel included and informed — even if one person likes to go to a deeper level of detail.
- Give the same level of time and attention to women clients as male clients, and pay attention to varying levels of risk tolerance.
Studies show that women make better financial planning clients than men because they are more receptive to guidance and input from an advisor.
If you don’t feel like your advisor is listening to you because you’re a woman (or just not listening to your concerns, whatever your gender), get a new advisor! Fee-only advisors can be found on The National Association of Personal Financial Advisors www.napfa.org. The right advisor is available for every potential client.