The subject of women and money is a hot button issue. Here are 2 things that emerged from a panel discussion I helped lead at a NOW Conference at Rutgers University:
1) the relative scarcity of female financial planners and
2) specific money issues that affect women more than men.
Let's take a quick look at the first issue: female financial planners and female clients. Only 25% of Certified Financial Planners are female but experts say women will control more than 50% of the wealth in the US in coming decades. Why? Women live longer than men and tend to marry older men. Studies show that women assume they know less about financial matters than men and seek more information from an advisor. Accordingly, there are potential mis-matches between the common needs of female clients and the approach taken by male financial planners.
What about the specific planning issues that affect women more than men?
Here are 3:
1. Women in the US live 5 years longer than men and earn/save less.
Women typically earn 23% less than men (5% less if it's an identical job) so they have a higher risk of outliving their assets. To counteract this, women need to stay in the labor force longer (if possible), save more and keep their employable skill set up-to-date. Because women earn less than men, they tend to save less in retirement plans (e.g. 401k plans). Studies show women have lower 401k participation rates than men.
2. Women often are more underinsured than men.
Women who don't officially work nonetheless have economic value (especially if they're caring for children at home). These women need sufficient life insurance to replace their homemaking services if they die prematurely. Further, women need long-term care insurance (and home health care coverage) more than men since they live longer than men and frequently outlive their spouses. A trip to any assisted living facility or nursing home will confirm that the majority of residents are women.
3. Women often are poorly informed about financial matters.
If married, women tend to delegate financial decision-making to their husbands (I'm not saying this happens all the time -- but it's common). When women absent themselves from financial decision-making, they suffer if their husbands die suddenly. Newly widowed women are especially vulnerable to sales techniques in the financial industry that prey on "fear" and other emotions to get women to buy into products and services they don't always need. Unfortunately, most of the financial services industry still revolves around products sales.Transaction-based advice-giving works like this: advisors who sell products identify the need, instill the fear, locate a product to sell and "close on the deal."
There are real financial planning issues that affect women more than men. If you're a woman and you don't work with a financial advisor, it's a good idea to bone up on some of the specific planning issues affecting women that we've mentioned here.