9 ways advisors can help women achieve a higher level of financial security

Many recent surveys have shown that women not only are less financially secure than many other demographic groups, but they most often tend to be a parent caregiver, further adding to their financial stress.

For example, New York Life’s latest Wealth Watch survey revealed that women and Gen Xers are feeling the current financial crunch more than other groups. They reported having a lower average amount of savings, and feeling less financially confident than other demographic groups.

“While financial health and confidence for Americans may differ for myriad factors, it’s worth noting that women and Gen Xers, or those within the “Sandwich Generation,” are likely parent caregivers, handling both parent or guardian and unpaid adult caregiving roles, often leading to greater levels of stress,” said Suzanne Schmitt, Head of Financial Wellness at New York Life.

“Of the 53 million Americans serving as caregivers, 61% of them are women as reported by AARP in 2020, and their financial needs and priorities, including saving, investing and protection, require a relevant strategy to adequately support those distinct needs," Schmitt said, adding, "This may include working with a trusted financial professional to understand those priorities, address barriers to equitable financial wellbeing, and to help improve confidence despite market uncertainty.”

To help women enhance their financial situation, advisors can take a variety of steps, advised Asalyn Coachman, with Financial Architects, Inc. According to Coachman, advisors need to educate women on their longer life expectancy compared to that of men, and the financial implication of living longer.

“This not only means their money must last longer, but they might incur additional expenses as they age, such as healthcare and long-term- care costs,” she said.

1. Women’s estate planning should also be done and reviewed regularly, added Coachman. They need to have powers of attorney for their financial and healthcare decisions, in addition to a will and possibly a trust. “Make sure their accounts, life insurance policies and other assets have a beneficiary named to avoid Probate Court,” she added.
2. In addition, when meeting with a couple, advisors must make sure to engage both spouses. “Many times women will defer to their partner, but do not let that happen during the meetings,” she said. “Ask them questions directly and listen to their concerns which may be very different from their partner’s.”
3. When it comes to income tax, single filers pay a higher percentage of their income than their married counterparts. Advisors need to educate single women clients to help them understand how much will be going to Uncle Sam.
4. Financial security is defined differently for each woman; so, advisors need to take time to ask questions to be clear on her goals.
5. Find out if the woman is a caretaker for anyone in her family or if she expects to be a caretaker. Since this family responsibility more often falls to the women in the family, it is important to understand these family obligations. She might take on additional financial expenses or need to take time away from work to care for others.
6. Teach women the difference between savings and investing. Set up and contribute to a savings account with periodic payments to themselves to grow a personal reserve fund. Even small amounts add up over time, she said.
7. Financial terms can be intimidating; so, make sure to explain concepts and tools without a lot of industry jargon. “She does not want to hear “markets are exhibiting bearish tendencies,” she advised.
8. Encourage women to use credit cards wisely. Credit cards are a tool to time when you pay for an item in full, not a tool to avoid paying for an item in full.
9. Women must protect their credit scores. “Caution them against co-signing for loans for family members by explaining that they become financially responsible for the debt and they put their credit score at risk,” she said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].