Is financial planning different for women? No…and also yes.
The financial industry is one that is still firmly dominated by male advisors, so as a female advisor, I’m often asked how financial planning differs for women. How are the needs of my clients who are women different from those of my clients who are men? The short answer is that the tools and work of creating and monitoring a financial plan are the same for all clients – but the experience of our women clients is likely to be vastly different. Why is that and how do we meet clients where they are in their financial journey?
Savers vs. Investors
Women we often see themselves as savers but not investors. More likely to perceive risk or lack of security, they can be more likely than men to put money away, but they are less likely to confidently take on longer term, bigger picture investment goals. Once our female clients have a better understanding of our goals and process as financial planners, they become more confident and at ease with playing an active role in their investment decisions.
Socialized roles
While this is less common than in previous decades, many women are still unaccustomed to working with money, and are less confident in setting and tackling more strategic goals for their wealth. In a married couple, financial “work” often falls on traditional gender roles. It can make sense to divvy up the chores of managing a household and have one person “in charge” of handling tasks like paying bills and filing taxes. However, it is important for both partners to understand their entire financial picture AND to be understood by their financial advisor. We cringe when we hear from women out in the world “oh well, our advisor is really my husband’s advisor, I don’t really have a relationship with them.” We also pride ourselves on seeking input and collaboration from both partners in a couple. If we aren’t addressing their needs on the whole, then we haven’t done our job.
Wage and Wealth Gaps
The wage gap and wealth gap between women and men has narrowed over time, but as recently as March, 2022, women still make only 82 cents for a dollar earned by men overall. This is the “uncontrolled” pay gap which does not account for the type of work being performed. In good news, though is that the “controlled” pay gap, where pay for the same job performed is compared, the gap has nearly disappeared. Women earn 99 cents for every dollar earned by men in the same position (source: Society for Human Resource Management).
A look at the gendered wealth gap is more bleak for women. Due to historical pay gaps, delayed career trajectories, and employment interruptions (for caring for children, or aging parents, for example), women enter retirement with 74% of the wealth that men have accumulated.
This gap is compounded by the fact that women, on average, live longer than men, so their retirement savings would be stretched even thinner over a longer period of time. Because they are likely to outlive their male counterparts, they are more likely to need to pay for care in their old age that they may have provided themselves for their partner. Women who were divorced may have an even larger disparity to deal with.
Growing share of wealth
While some personal measures of the wealth gap indicate that gap is getting wider, other indications show the reverse trend. As more women owned businesses are established and grow in value, and more women are taking their seats in corporate boardrooms, the playing field seems to be more level between men and women for attaining wealth. Cultural shifts and more intergenerational wealth being passed on to woman than before also play a part in this apparent trend (Forbes, 2022).
Purpose-driven
Women clients tend to interact with advisors differently than men clients traditionally have. They want less jargon, and they want their values and purpose to be part of the financial consideration. Women want their money to work for them, and sometimes that means they want to make an impact – whether that’s through their investment choices or through charitable giving.
Nothing could make us happier than seeing any client taking agency in their financial lives. We are here for all of it. Our goal is to get all clients to their financial goals in an optimized manner that speaks to their values. Bring us your dreams and even your fears, and we will provide clarity and peace of mind for the journey.