Are You Underserving Half Your Client Base?

Shelley Yates, Communications Senior Advisor
June 25, 2018

In America, women control 51 percent, or $14 trillion, of the personal wealth accumulated nationwide, and that figure is expected to increase to $22 trillion within two years. However, only 35 percent of college-educated women report feeling comfortable investing in self-directed retirement savings, compared to 60 percent of college-educated men and 41 percent of men holding a high school diploma or less.

No, confidence does not always indicate success, but it’s easy to see how a lack of the former could prevent the latter. When confidence is coupled other factors like the gender pay gap, it’s easy to see why women say the financial industry caters to men.

With women controlling a growing percentage of America’s overall assets, top performing financial advisors of the future will likely be those who recognize women may have inherently different financial needs than men and may, therefore, need a different approach. Here’s how to make sure female clients are getting a fair shake:

  1. Don’t let less income = savings shortfall. It’s no secret that women typically earn less than men – 20 percent less as of 2016. Women are also more likely to take career breaks for caregiving purposes (see below), either without pay or in the form of part-time work that does not allow them to contribute to retirement savings consistently throughout their careers. Current defined-contribution retirement plans, and the older corporate pension plans they replaced, are mostly designed to support long, uninterrupted working tenures. Perhaps this is why retirement plan calculators tend not to account for planned or unplanned breaks from working. For many women, investing in corporate 401(k)s during working years may not be enough; female investors may need to start earlier, work until an older age and invest outside workplace retirement plans to help to close the gap.
  1. Account for longer life expectancies and the longer retirement and larger medical bills that come with it. In addition to earning (and potentially saving) less, women tend to live longer than their male counterparts, which means many have to stretch less money over a longer time horizon. Living longer also means increased healthcare costs and an even greater need for long-term-care planning. Women don’t just need their retirement fund to last longer; they need it to go further.
  1. Factor caregiving costs into financial plans. A recent Transamerica study found that women are not only more likely to provide financial support with caregiving, they are also less likely to address or plan for caregiving costs in their financial plans. Likewise, some women delay retirement to help their children with college costs, only to later burden those children with their own caregiving costs because they did not save enough for retirement. As one advisor said, “To use the airline emergency analogy, put the oxygen mask on yourself first, then assist others.”

While these considerations may make it sound like women are more difficult to provide financial planning services for, it’s actually quite the opposite. The best part about working with female investors is that they’re better at investing, according to research from Fidelity. On average, female investors outperform men by 0.4 percent, save 0.4 percent more of their paychecks annually and contribute 0.8 percent more to non-workplace savings accounts the Fidelity research shows.

Furthermore, research has shown that women generate better returns long-term because they generally buy and hold investments, while men trade up to 45 percent more frequently, especially during times of market volatility.

Patience, goals-based versus performance-based and a long-term mindset – what more could you want from your clients?

 

 

Securities offered through 1st Global Capital Corp. Member FINRA, SIPC.  Investment advisory services offered through 1st Global Advisors, Inc.

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