Financial professionals, especially those who have been planners for a long time, may be accustomed to working with traditional couples—a husband and wife, where the male is the breadwinner. This dynamic is no longer the norm. A recent study by Allianz¹ shows that today more women are either single or divorced than married.

Financial professionals have to adapt to better serve their female clients who have distinct financial circumstances and to be more inclusive in their practices. We must recognize that women of all walks of life are in need of financial planning, and it’s our duty to make financial advice accessible.

Women Want to Be Involved in Financial Planning—But They’re Not

In the Allianz study, nearly 62 percent of women expressed strong interest in learning more about finances and retirement planning. For example, 84 percent of widows said the loss of their spouse made them aware of how important it was to be financially independent.¹

Bringing women into the financial planning conversation is harder than it looks, however. Most women feel they don’t meet financial planning criteria—or that the fees are too high.

Sixty-two percent of women don’t have a financial professional. What’s more, 69 percent of those who have one don’t view them as their go-to source for financial information.¹

So, what can financial planners do to earn the trust of female clients? They first need to examine the financial barriers women face that can get in the way of having productive conversations about saving, investing, and planning for retirement.

Financial Barriers for Women Today

There are a number of financial barriers for women in today’s society. Understanding these barriers is an essential part of engaging more women in financial planning and improving their personal relationship with money.

Gender Pay Gap

The gender pay gap must be taken into consideration when looking at financial planning. The 2021 PayScale Gender Pay Gap report shows that women earn 82 cents per dollar earned by men. Working women of color tend to have an even bigger gap in pay, even though they are more frequently the sole contributors to their household incomes.²

The COVID-19 “Shecession”

With the recent COVID-19 pandemic, women were some of the hardest hit in what journalists called the “shecession.” Women saw unemployment rates in the double digits often due to childcare responsibilities or reduced hours at work. Female-dominated jobs like hospitality or childcare were dramatically impacted, again disproportionately stranding women without employment.

Higher Rates of Working Poor

More women than men live below the official poverty level, contributing to higher working-poor rates for women. This is especially true for women of color, with working-poor rates for Black and Hispanic women at 9.7 percent and 8.7 percent respectively.³

Increased Caregiving Responsibilities

Women are more often the primary caregivers not only to young children but aging parents or grandparents. When taking on these caregiving responsibilities, most women may take a leave of absence or leave the workforce entirely, creating a gap in their earnings, impacting not only their personal social security benefits but also their retirement savings. Research has shown that as many as 62 percent of women aren’t sure if they’ll have enough saved for retirement.⁴

More Risk-averse Investing

Lastly, another barrier to consider that may not be commonly discussed is that most women are more risk-averse than men. Studies have shown that women with low-risk tolerance are significantly less likely to save regularly.⁵ With U.S. inflation at over 7.5 percent, keeping funds in cash will slowly eat away their purchasing power over time.

Delving into the State of Finances for Women

Women on average live longer, get paid less, may have employment gaps due to caregiving, are more vulnerable to economic downturns, and are often deeply impacted by divorce or widowhood. Having a good grasp of these concepts can build a bridge to having more thoughtful discussions with women about what matters to them most.

Continue learning more on this topic by registering for our upcoming CE webinar, Building the Future of Advice to Meet the Needs of Female Clients, where we’ll host a panel discussion regarding better serving women with planning by understanding their financial circumstances.

Sources:

1.“The Allianz Women, Money and Power Study: Empowered and Underserved.” Allianz n.d. https://www.allianzlife.com/-/media/files/allianz/documents/ent_1462_n.pdf.

2.“The State of the Gender and Racial Pay Gap in 2021.” Payscale.comn.d. https://www.payscale.com/content/infographics/2021-Gender-and-Racial-Pay-Gap-Infographic.pdf.

3.U.S. Bureau of Labor Statistics. (2021, April 1). Women in the labor force: A databook : BLS reports. U.S. Bureau of Labor Statistics. Retrieved February 22, 2022, from https://www.bls.gov/opub/reports/womens-databook/2020/home.htm

4.Orel, N. A., Ford, R. A., & Brock, C. (2004). Women’s Financial Planning for retirement: The impact of Disruptive Life Events. Journal of Women & Aging, 16(3-4), 39–53. https://doi.org/10.1300/j074v16n03_04

5.Fisher, P. J. (2010). Gender differences in personal saving behaviors. Journal of Financial Counseling and Planning, 21(1), 14–24.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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