Creating financially fearless female investors

Smiling, confident looking woman standing in front of men

By Susan Rupe

Women control more than one-third of total U.S. household financial assets – that’s more than $10 trillion dollars, according to the Alliance for Lifetime Income. Those assets represent an opportunity for advisors who want to serve female investors.

“But just because there’s money there doesn’t mean people will choose you to advise them,” said Suzanne Norman, education fellow with The Alliance for Lifetime Income, in a recent webinar.

Advisors must recognize the importance of women’s financial health if they are to help women become “financially fearless female investors,” Norman said.

Good news, bad news

When it comes to women’s overall financial picture, there is good news and bad news, she said.

The good news:

Women add $5 trillion to the global wealth pool each year.
$30 trillion is expected to U.S. women by 2030.
Women are responsible for $31.8 trillion in consumer spending.

The bad news:

Women earn 82 cents for every dollar their white male peers earn.
Only 54% of women have money saved for retirement, with $115,412 as the average retirement savings.
70% of women’s wealth is in cash.

Women also are challenged by health care costs, Norman said.

A 45-year-old woman retiring at age 65 can expect to spend $265,000 on out-of-pocket medical expenses in her retirement.
A woman has a 50% longer long-term care claim in assisted living or a nursing home and a 30% longer in-home long-term care claim than a man does.

Unique issues cited for female investors

On top of these challenges, women have some unique issues, she added.

Women are 80% more likely than men to be impoverished at age 65.
In the case of a “gray divorce” (a divorce that occurs after age 50), a woman’s standard of living declines by an average of 45% as opposed to an average 21% decline in a man’s standard of living.

But there are some bright signs regarding women’s financial futures, Norman said.

“When women are engaged, they do better with their money,” she said. “Women are saving and investing.”

She pointed to some findings from Fidelity that showed:

Women save more money than men do. Women save an average of 9% of their paychecks while their male counterparts save an average of 8.6% of their paychecks.
Women added more to their savings than men did. Women added an average of 12.4% to their individual retirement or brokerage accounts as opposed to 11.6% that men added to their accounts.
Women trade less than men do. Men are 35% more likely to make trades than woman are, and men who trade made an average of 55% more trades than women did.

The Alliance for Lifetime Income’s research showed that “having financial skills is a need and not a want,” Norman said. She noted that the study showed 60% of women between the ages of 25 and 74 believe their retirement savings and income sources will not last their lifetime.

'Bag lady syndrome'

“The bag lady syndrome is real,” she said.

Women want planning and protection, Norman said.

“The planning is a means to an end. What’s the money for?” she said. “Protection is the other part of the conversation we hope you’re having with clients. Protection answers the question, ‘What are you afraid of?’”

When helping women plan for retirement, Norman suggested advisors help women envision the type of lifestyle they want by asking them to describe how they view their retirement. Such envisioning questions include:

Where are you living?
What do you live in?
Who are you living with?
Describe the décor.
Are you working?
Are you volunteering?
What activities do you do?
Are you a member of a club?
Where do you eat?
Do you travel? Where?

Norman described serving female investors as “gratifying.”

“When they win, you win,” she said.

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.