This Is a Wake-Up Call

Given the increasing role women play in society as professionals, breadwinners and as the dominant gender in old age, women need to be more aware and active in their financial planning.

Women now make up the majority of college graduates, are nearly half of the labor force and are becoming the primary earners in many households. Yet most remain uneasy or uninvolved when it comes to talking about insurance and managing money.

Many women (single, married or with a partner) are the primary breadwinners in their homes, according to a 2012 study of 1,410 women and 604 men by Prudential. This study shows that among women who are married or living with a partner, 22% report making more money than their husband or partner, and their earning potential is growing. As of 2008, wives contributed to 36% of family earnings, vs. about 27% in 1970, according to a 2011 survey of more than 4,500 households by financial services research firm Hearts & Wallets.

A Changing Landscape

A high divorce rate, in addition to women outliving men, means that 80% to 90% of women will be solely responsible for their finances at some point in their lives.

The problem? Women’s financial responsibilities are growing faster than their knowledge, says Joan Cleveland, senior vice president of business development for individual life insurance at Prudential.

Many studies in the last decade have shown that women consistently feel less confident than men in their understanding of financial products, their ability to make financial decisions and their perception of their current economic standing, the Prudential and Hearts & Wallets studies among them.

Women are 42% more likely than men to be concerned about having enough money for retirement; 49% say they are “very inexperienced” with investing vs. 34% of men, and 42% say they are “very uncomfortable” taking on investment risk compared with 28% of men, the 2012 Hearts & Wallets survey of 5,460 households shows.

Some of it can be attributed to traditional gender roles, especially among Baby Boomers. They are still in the generation where it’s more accepted for a man to drive those decisions. Many lack the knowledge because they didn’t need to do it in the past.

But it may also be because of the financial services industry, which overwhelmingly caters to men in the way it presents and discusses information and products.

Women like to learn in groups and consult with their peers more than men do, and women find jargon more unwelcoming and tend to tune out when things are explained to them from a performance perspective. These kinds of details are important to recognize for women, as they often shape their financial priorities.

High Anxiety

The 2012 Hearts & Wallets study shows that having dependents increases financial stress for women more than it does for men. Of women with children, 39% reported having high or moderate anxiety about their financial situation in retirement vs. 29% of men with children.

Pershing recently released a guidebook outlining how catering to women is important to the future success of financial planning companies and advisors. It argues that financial advisers need to drop gender stereotypes and assumptions that women can’t or don’t want to understand investing, and need to take the time to develop deeper relationships with female clients.

Advisors need to pay attention, because women are 51% of the population, and the economic power that they wield is tremendous. Insurance agents and advisors need to become better listeners, be more empathetic and focus on financial education when working with women, but women also need to deal with their perceived inability to grasp financial concepts.

Women need to be more involved in handling their investments, protecting their income and human life value through insurance and planning for retirement.

by Marvin H. Feldman

Marvin H. Feldman, CLU, ChFC, RFC, is president of the Feldman Financial Group in Palm Harbor, Fla., and president and CEO of Life Happens. He is a 41-year Million Dollar Round Table member and was the 2002 president. He is a 33-year member of the MDRT Top of the Table and a past Top of the Table chairman. He also is the recipient of the 2011 John Newton Russell award, the highest honor bestowed on an individual by the insurance industry.

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