Women Are An Advisor’s ‘Dream Client,’ Survey Finds

On paper, women represent the archetypal dream client for advisors, according to new research out by MassMutual.

The research found that compared to men:

• Women are more likely to save because they participate and contribute at higher rates in workplace retirement plans.
• Women tend to “let things be” with fewer than half (48 percent) checking investment performance on a weekly basis, which makes women less prone to switching investments.
• Women are more likely to be working with a financial advisor (72 percent vs. 57 percent), a gap that continues into retirement.
• Women are more open to simple investing strategies (79 percent vs. 64 percent) interested in target date funds.

The findings were compiled in a white paper titled “Closing the Retirement Gender Gap: What Your Clients Need to Know About Women and Investing,” which is intended as a guide for advisors to help plan sponsors engage with female workers.

Data published in the white paper was collected from the 2018 MassMutual Women’s Retirement Risk Study.

Different approaches to investing based on gender is real, advisors say.

“It’s not unusual for me to have a couple where the man says 80 percent in stocks and the women says 50-50 (in stocks and bonds),” said Karen E. Van Voorhis, an advisor with Sapers & Wallack in Newton, Mass.

For married couples, “I do allow for gender-based disparity, so long as the roll-up to the investment allocation is appropriate,” she added.

Higher Barriers

Not only would women and their approach to investing seem to be the better prospects for advisors, but women are also in greater need of advice, said Teresa Hassara, head of MassMutual’s Workplace Solutions.

Barriers make it more challenging for women, she said.

The research found that compared to men:

• Women earn a smaller monthly paycheck and continue to suffer from a long-standing wage gap.
• Women have less time to save because of family obligations, such as unpaid family leave typically associated with childbirth.
• Women live longer in retirement. They plan on spending 25 years in retirement, but expect income will last only 20 years.

From a retirement-planning perspective, anticipating living less comfortably in retirement and running out of money five years too soon is a “stunning development,” Hassara said.

Women appear to present something of a contradiction, the survey found.

They are better investors than men, but face higher hurdles and often exhibit less investing confidence than men even though there is no reason for it.

Equal Yet at a Disadvantage

In the eyes of workplace retirement plans, women and men receive equal treatment. Both are eligible to invest in the same 401(k) investment options using whatever allocations or pre-tax deferral rates they choose.

But personal and professional hurdles make it more difficult for women to build themselves a future as secure as a man’s.

Women who leave the workforce temporarily to start a family and suspend 401(k) contributions and the match “walk away” from the principal and the compound interest over a decades-long period.

Over time, that can turn into a big number, said Los Angeles-based financial planner David Rae with DRM Wealth Management.

“Women are just at a disadvantage and it really does add up,” he said.

MassMutual’s survey results resonate “100 percent,” said United Capital advisor Cary Carbonaro, author of The Money Queens Guide: For Women Who Want to Build Wealth and Banish Fear.

“It’s so right and so true,” she said. “I would absolutely corroborate the study findings.”

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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