In our work with women in transition, we all too frequently encounter the attitudes that feed into the tired stereotypes of women and their relationship to personal finance:
- Women don’t know enough about investing
- Women are too conservative
- Investing and finance are “a man’s job”
- “I leave the money decisions to my husband/father/significant male person”
Such beliefs, while thankfully fading, are still much more prevalent than they should be. Sit across from any woman who has just lost her spouse of thirty or more years, listening to the anxiety and uncertainty in her voice, and it’s easy to understand why women of all types need to take a bigger stake in their own financial futures.
Here are some important facts to keep in mind:
- As of July 2020, women controlled about a third of household financial assets in the US, amounting to some $10 trillion (with a “t”!)
- The number of younger, affluent married women who are financial and investment decision makers increased 30% from 2015 to 2020
- The proportion of women in corporate leadership roles is expected to reach nearly 31% in the next eight years
With women constituting such a clear growth opportunity, it seems obvious that more remains to be done in promoting women’s understanding and control of their finance and investment decisions. Not only that, but there is more that women can do to help other women take their rightful place at the table where these important matters are concerned.
1. Invest in yourself. According to a 2021 report from Fidelity Investments, only 33% of women consider themselves investors, and 58% of women do not feel confident in their ability to make good investment decisions. But the flipside of this is that more women are taking an active role in their investments, with 67% of women reporting that they invest outside of retirement accounts, compared with only 44% in 2018. The more women who get actively involved in their investments, the better the climate becomes for all women investors.
2. Believe in yourself. While the majority of women do not view themselves as good investors, the statistics may not bear out that conclusion. According to that same Fidelity study, women investors, on average, outperform their male counterparts by 0.4%. Research indicates that women tend to do better at sticking to a well-thought-out investment strategy, as opposed to male investors, who are more likely to chase the latest “hot” stock or sector. Women investors also tend to be more interested in the “why” behind their investing, including the selection and allocation process. Finally, women tend to place more confidence in a trusted advisor, place a high value on collaboration, and are less likely to be distracted by “noise” in the financial media. All of these qualities position them for better achievement of their most important long-range financial goals.
3. Trust your team. For women in transition with more complicated financial planning needs, working with a professional, fiduciary advisor who understands the special needs of women investors can make a huge difference. According to the US Bureau of Labor Statistics (BLS), 31% of financial advisors are women. While this gender gap continues to close, it is indicative of how much progress still remains to be made, especially in view of the large and increasing share of US household wealth controlled by women. While a male advisor can certainly provide valuable and helpful financial guidance, many women feel more comfortable collaborating and consulting with a woman advisor who can “speak the same language” and communicate in terms that don’t require financial training for comprehension. Online search engines such as that offered by the XY Network and the network of Certified Financial Planners® (where you can screen for planners with a client focus on women) can help you find an advisor who is right for your needs.
At Empyrion Wealth Management, we specialize in helping women in transition and other investors create financial and investing strategies that are tailor-made for their individual needs and goals. To learn more, click here to read our white paper, “Suddenly Single: Financial Independence for Divorced Women.”