Broker Check

Women Have Different Financial Planning Worries

| September 29, 2021
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Unique health and caregiving worries and an industry that doesn’t listen well

Women have special concerns about financial security that financial advisors need to address. For one thing, they tend to live longer than men, so they need to worry about paying for an extended old age. For another, women of all ages are an increasingly dominant part of the economy.

Pick up any newspaper, turn on the TV or tune into any radio program and you will notice the clout of women in the marketplace, community affairs, business, politics and finance.

The data is remarkable and underscores the need for conversations that financial advisors should have with their female clients, recognizing that the challenges women face are myriad.

  • Women comprise 51% of the U.S. population and roughly 65% of the workforce.
  • They are the sole heads of 32% of American households.
  • 60% of college students are female.
  • Women control 65% of global spending and more than 80% of U.S. spending.

Establishing Financial Security

A survey by Family Wealth Advisors Council indicates that 54% of women consider health a major risk to their financial future. They worry about their death and the death of their spouse as a major risk. So, is your disability insurance lacking or inadequate, and will your life insurance deliver sufficient financial horsepower if the breadwinner dies? Are you sure?

A surprising number of women, single and married, do not have wills and have not provided for their children. And the International Foundation for Retirement Education states that the number one retirement issue for women is the threat of poverty. Consider that of people age 85 and older:

  • 71% are woman;
  • The median income for older women is $15,248; and
  • The median income for older women is only 53% of that of older men.

Early in the planning game, women should focus on retirement income-building vehicles, insurance, Social Security strategies, estate planning and financial freedom. And caregiving is the number two issue.

Did you know that of unpaid caregivers, 57% are caring for parents, and over 70% of caregivers are women? When women assume caregiver roles, they are 2.5 times as likely to end up in poverty as non-caregivers single caregivers are four times more likely to end up in poverty than married women.

Families should discuss financial security, for both the baby boomers and their parents. Understanding the ins and outs of long-term care insurance is important in the planning process.

Women & Financial Planners

Right now in 2021, women are under–served by the financial services industry, because there is still a huge disconnect between the women who have a financial planner and the women who want one. Consider this: the Center for Talent Innovations reported that 75% of women under the age of 40 do not have a financial advisor.

Why is it that so few women get the advice that they need? It could be that the disconnect lies in the fact that between 15–20% all financial advisors are female, according to Barron's. And it’s safe to assume that more women want to work with a financial advisor, but are not connecting to those out there because the vast majority of them are males.

Now, this is not to say that women should only work with female advisors, but we all know that many men do not communicate with women effectively (of course it's true the other way too). And a survey by Boston Consulting Group found that 70% of women that do have financial advisors felt that their advisors were patronizing or disrespectful toward them. The study showed that these advisors (who statistically are mostly male) made assumptions about women's risk tolerance and therefore limited their clients' investment options.

These miscommunications are likely the main reasons there is still a giant gap between the women who have a financial advisor and those who do not. This is especially surprising because Fortune recently reported that women control about $14 trillion in the United States, the equivalent of the combined gross domestic product of China and India.

The good news is that the financial industry realizes that it ignores women, who are responsible for most financial household decisions, at its own peril. We are seeing a huge movement of professionals that want to be more responsive to their female clients. The industry finally realizes how much power women truly hold.

Women have the power and ability to effect a lot of change in the world, especially since they now control so much of America's wealth.

It's About You

If you are among the 75% of women who don't have a financial advisor, don't let your fears about feeling judged and misunderstood stop you from getting advice to create the financial life of your dreams.

You can seek out someone who does understand where you're coming from. You can find a financial planner you can relate to and feel comfortable with, and who doesn't make you feel stupid for asking too many questions about your financial goals and concerns.

Talk to your family, friends and colleagues. Get recommendations and then interview financial advisors until you find the right fit.

Your future-self will thank you.

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