By Karin Mizgala, Co-Founder and CEO Money Coaches Canada
On March 8th, we celebrated International Women’s Day (IWD), a global day recognizing the social, economic, cultural and political achievements of women. But IWD is about more than one day; the theme for the whole of 2018 is #PressforProgress.
In 2017 we saw unprecedented numbers of women stand up and give voice to abuse and inequities that have long been silenced. #PressforProgress is the logical next step, as women, and men, want more than the recognition of disparity; they want change.
One of the very real and important ways a woman can be empowered is through financial confidence and action. Regardless of age or income, a woman who controls her money, has the power to control her future.
But empowerment will require breaking old habits that even “modern” couples can fall into. Repeating the patterns of our childhood family in our adult family is common—parenting styles, the division of housework, and especially in money management.
Many of us grew up with mom handling the day-to-day budget, and dad in charge of investments and retirement planning. While for most couples today, it’s not black and white. Though many couples will discuss options together, it’s still not unusual for one person to take the lead in the big key financial decisions, and that is still, very often, the male in the relationship.
The wealth management industry has its own old habits to break as well. It has not been responsive to the interests and concerns of female investors. But I believe we will see an industry shift as more and more women claim their place at the financial table. And it won’t just be millennial women, but women of all ages.
The Growing Financial Power of Women over 55
Whether by choice or circumstance, more and more women are taking charge of their money. Research commissioned by Toronto Dominion Bank shows that Baby Boomer women will likely outlive their spouse by as many as 16 years. This is based on a longer predicted lifespan for women, coupled with their tendency to marry older men. As a result, more and more women will be responsible for ensuring their financial well-being during their retirement years.
And it isn’t just managing retirement savings; boomers are often working well into their 70s. Boomer women are starting businesses at a greater rate than any other time in history. According to Industry Canada 40 percent of male and female workers over 65 are self-employed.
The women moving into this demographic over the next decade are coming from careers of all stripes. Many of them have raised families with or without a partner. They are strong, experienced and won’t suffer fools who talk down to them, or marginalize their priorities and concerns.
Research out of Boston Consulting Group says that one third of all financial assets in the United States and Canada are controlled by women, an estimated $3.2-trillion and growing. The financial clout of baby boomer women will force the financial industry to change.
Younger Women Are Also Gaining Financial Strength
In 1976, the employment rate for women was 42 percent; in 2012 it was 58 percent and rising. Most colleges and universities are graduating more women than men each year, and one-third of all wives now out-earn their husbands.
A study on women and wealth for IPC Private Wealth says that by 2026, Canadian women will be reporting total annual income of an estimated $500 billion and will have inherited some $900 billion in financial and real estate assets. That will place them in control of almost half of all accumulated wealth in this country, up from about a third of all wealth a decade ago.
This next generation of women will be building wealth like never before and looking for financial advice tailored to their needs.
The Financial Services Industry Will Change to Meet the Needs of Women
The investment industry hasn’t done a very good job at engaging women. It’s been a male dominated industry with systems made by men for men.
Women with male partners often mention their frustration with financial advisors who focus the conversation and questions towards the man—instead of equally to the couple. Which could explain why research shows that after a spouse’s death, 75 percent of women will seek out a new financial advisor. But that isn’t always successful either. Research conducted by StrategyMarketing.ca revealed that 87 percent of women experienced a significant challenge when trying to find a compatible advisor.
But Canadian women are managing more and more wealth each year (currently close to 40 percent of investable assets in Canada), and as they step into the power that affords them, they are simply going to demand better service. It’s the companies that step up and meet their needs that are going to thrive.
Women Have a Unique Perspective on Money
The financial planning and investment landscape in Canada is still dominated by male advisors. It wouldn’t be a stretch to estimate that 75 percent of advisors working at the banks and wealth management firms are male. If this predominately male industry is going to serve their growing female clientele well, they will need to educate themselves on the priorities of this powerful and influential segment of the population.
A whitepaper by LPL Financial says we’re in a new era for women and financial planning. Their national survey (U.S.) found that; “For women, achieving financial peace of mind is over seven times more important than accumulating wealth.”
Many of the other characteristics they highlight from their research rang true to my own experience working with women in the financial industry.
- Women tend to be big picture investors. They want to build security for themselves and their family, and are less interested in quick returns on more risky investments.
- They are more likely to be savers, and sometimes overly cautious to invest. Being too risk adverse can be a detriment to their financial growth.
- In general, women ask more questions than men. They want an advisor who is willing to listen to them and understand their concerns and goals. They don’t want to be talked down to, talked over, or bombarded with jargon.
- Women take time to decide, and are interested in understanding potential risks. The LPL Financial whitepaper states: “Women see financial planning as a way to protect themselves against the unexpected, as opposed to simply growing assets.”
- Women often have a social conscience when it comes to investing. A company’s values can be very relevant to their investment decisions.
- Women tend to invest for the long term and are less likely to be frequent traders influenced by sudden market shifts.
- Women relate to financial planning in terms of how it impacts their life, their relationships and their goals, rather than just as numbers on paper and mathematical projections.
The Future Looks Promising
The financial industry needs to understand how to communicate better with women and make the entire investment experience more relatable. I reject the idea that it’s simply been a lack of financial literacy on the part of women that has kept them on the periphery of wealth management. It’s more of a systemic issue.
Traditional financial services have fallen short when it comes to engaging women, but things are starting to change. More and more advisors are recognizing the needs and interests of female investors. Indeed, more and more women are entering the advisor arena themselves, which will go a long way in changing the financial planning landscape.
But the biggest #PressforProgress needs to come from individual women themselves.
- Speak up or find an advocate if you feel dismissed or talked down to by your advisor.
- Don’t hesitate to ask any questions that will ease your mind.
- Use a financial services company that recognizes and respects the important role women play in the economy.
- Find an advisor, male or female, with a track record of understanding that all clients are individuals with unique goals.
But most importantly, don’t wait. Make 2018 the year you invest in your financial future.