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Women Need Financial Planning That Fits Their Unique Needs

Two decades after the U.S. Food and Drug Administration started receiving complaints that Ambien and other sleep aids made women taking them particularly groggy the next morning, and even might have been responsible for driving accidents, the agency accepted and responded to the scientific evidence behind the anecdotes.

It turns out that women’s bodies simply metabolized the active ingredient zolpidem in all these sleep aids much more slowly than men did. In 2013, the FDA finally acted, slashing the recommended dosage of these medications in half for women.
Medicine isn’t the only field where “what’s good for the goose is good for the gander” still prevails. Equality is a wonderful goal, when we consider the kind of outcomes that we want, whether it’s a good night’s sleep or retirement security.

How women reach those equal outcomes, however, may require taking a different pathway, whether it’s a question of medical or financial advice. Even the definition of what “financial success” and a good relationship with an investment advisor looks like can be very different for women than for men.

I’ve seen many of my clients come to understand what this means. For example, a widowed woman in her 60s, began working with me after her husband’s death. The financial advisor they had consulted with saw her husband as the client, and rarely even looked her in the eyes when discussing what the couple viewed as a joint financial plan.

“I miss my husband, but I need someone who understands where I am, and who I can talk with,” she told me.

Let’s face reality. Even though women are increasingly financially independent, controlling or inheriting a growing share of the country’s wealth, the typical broker or financial advisor today gears his practice toward the way men think and behave. (And yes, the choice of pronoun is deliberate — only about 17% of financial advisors today are women, giving the industry one of the biggest gender gaps in corporate America.) His approach toward working with clients is likely to be shaped by how men define their needs and even their communication styles. Even in marketing campaigns, female clients are given roles that amplify or echo the concerns raised by their partners.

The truth is that women’s perceptions, needs and objectives can vary as radically from those of men as those recommended Ambien dosages.

Women have distinctive life experiences, circumstances and goals. That doesn’t mean that as advisors, we should scramble to deliver something radically different, either. For instance, dismissing women as being invariably “risk averse” and devising an overly conservative asset allocation model creates an entirely different kind of risk that is unique to women, who, because they still may end up with lower earnings and likely will live longer, lead their portfolios to work hard for them. I still see some financial advisors leap to the conclusion that being aware of risk is the same thing as being unwilling to incur risk.

Most women, I’ve found, are aware of their unique needs and of the risk that those circumstances create. After all, many have been grappling with them throughout their lives, fighting for fair pay or an equitable share of household assets and child support in a divorce. Since the United Nations began celebrating International Women’s Day in 1975, women have made tremendous strides toward equality and financial independence, and continue to shatter glass ceilings.

Women still have distinctive career paths and earnings patterns that affect their financial planning strategies in ways aren’t seen in men’s lives. They are likely to have taken far more professional risks, leaving the job market to raise children and then retrain or upgrade their skills to leap back into new positions.

I see my own grandmother’s experience as emblematic of this flexibility. A widow for 40 years, she became an Airbnb pioneer long before room rental apps — or the internet itself — were a “thing.” She rented out rooms in her home to those who needed a place to stay or live in exchange for the extra income she required.

There are institutional barriers that can be tough to demolish. Women, as a group, are less likely to have access to traditional sources of capital if they want to start a business.

Catalyst, an advocate for women in the workplace, reports that while women make up 44% of the corporate workforce in S&P 500 companies, they are only 11% of the top earners, while fewer than 5% of those companies are led by female CEOs. It isn’t just about earnings: women are less likely than men to have access to traditional retirement plans, or even to be able to fund those 401(k) or individual retirement accounts smoothly and consistently, year after year.

Women Vs. Men At Work

  • Women make up 44% of the corporate workforce in S&P 500 companies.

  • Women comprise fewer than 5% of the CEOs of S&P 500 companies.

  • A lifetime earnings gap of as much as $1 million exists between men and women. That’s partly because women live longer after retirement and partly because they spend more time (uncompensated) caring for elderly parents or children.

  • Surveys show about half of women feel confident when it comes to managing their finances, compared to nearly 70% of men.

Perhaps that’s why traditional investment advisors — who still see retirement planning and financial planning in general through men’s eyes — too often don’t serve women well. They are well-prepared to give guidance on portfolio construction and provide insight into investment returns with many analytic tools.

What is often lacking, my own clients have helped me understand, is guidance on how to compensate for breaks in work history and smaller retirement nest eggs.

Women need, and deserve, something different. Not something better, but something that is in harmony with their needs, from asset allocation to the kind of communication about their objectives.

A prescription for working with women clients starts with recognizing that there’s an average lifetime earnings gap of as much as $1 million between men and women. That’s partly because women live longer after retirement and partly because they spend more time (uncompensated) caring for elderly parents or children. Surveys also reveal that only about half of women feel confident when it comes to managing their finances, compared to nearly 70% of men.

Then, too, women often link financial well-being to other life goals: securing their family’s health and education, or establishing a legacy or pursuing philanthropic goals. For them, money is less likely to be a way to keep score, as it can be with men.

“If the difference in men’s and women’s pay is a gap, then the wealth difference can only be described as a chasm,” wrote Kimberly Blanton of the Boston College Center for Retirement Research. If women aren’t transforming their earnings into wealth, the financial services industry has to shoulder part of the blame — and devise a solution.

Let’s make the quest by women to find the right kind of financial guidance not just an objective, but a mission.

Women now understand that their physical health depends on having relationships with physicians who understand that, for example, heart attacks in women may have different symptoms than those seen in men. Now it’s time to empower them by acknowledging that their financial health may require an equally distinctive approach, and ensure it’s easier to find someone who works with them, in a way that works best for them.

Marguerita Cheng is the CEO at Blue Ocean Global Wealth. Prior to co-founding Blue Ocean Global Wealth, she was a financial advisor at Ameriprise Financial and an analyst and editor for Towa Securities in Tokyo, Japan. She may be contacted at [email protected] [email protected].


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