More women than ever are investing their money. Sixty-seven percent of women are now investing outside of their retirement accounts, compared to 44% in 2018, according to research by Fidelity. And yet, there continues to be a real gender gap when it comes to women and wealth management. In spite of their increased participation in financial markets, only 33% of women actually consider themselves investors.
This month, in light of International Women’s Day, we’re exploring women’s experiences in investing. Our webinar, Women and Investing, features an accomplished panel of women in finance with expertise on everything from portfolio management to family wealth planning to business succession.
Julia Chung, a financial planner and family enterprise consultant with Spring Planning and Rose Shawlee, an estate planning and succession tax lawyer with Boughton Law, join our own Sue-May Talbot, Portfolio Manager and Partner at Genus, and Mary Lou Miles, Head of Wealth Management, to share their perspectives, explore solutions for women who are new to investing or who would like to do more with their investments, and offer a safe space for women to learn, ask questions and share their thoughts. Despite the increase in female participants, finance – and finances – still come with a significant gender equity gap. And we’re doing everything we can to help close it.
Women are the new face of wealth
It’s only in the last half century that women have gained the economic power to have personal finances to manage and, to a large extent, the legal freedom to do so. “Until the 1970s, a lot of women couldn’t have chequing accounts. It’s only recently that women have had their hands on money,” says Chung. “While our grandmothers and great-grandmothers may not have had much financial knowledge, young women today do have a great deal of financial knowledge, but they’re not always confident about it.”
Today women often work, earn their own money, share responsibility for managing the household finances, and outlive their male partners, which puts the responsibility for managing the family wealth on their shoulders in their later years. “I’m seeing more and more women taking charge of the household finances and they’re the ones leading the discussions and asking the questions,” Talbot says. “I’m also seeing more investors who are successful single women, and more women entrepreneurs in high-level professional positions as well.”
For all of these women, understanding and knowing how to manage their finances has become more important than ever. But it’s also often fraught with challenges.
The financial reality for women
Even as the new so-called face of wealth, women still face many financial challenges. Between the gender pay gap, which leaves them with less money than men, to the implicit motherhood career penalty, and the lack of financial confidence, women have to contend with numerous barriers when it comes to wealth management. “There is a known financial literacy gap between men and women, which usually stems from family upbringing as well as other things, like culture and marketing,” Talbot says.
Women are also living longer than men, which means they need more money to support a longer retirement period, but they tend to be “more risk averse than men, which could lead to more conservative investments that may not generate enough growth in their portfolios over the long term,” Talbot adds.
Fortunately, many of today’s younger generations of women are getting involved in managing the family finances as part of domestic labour sharing. “The longer we’re partnered, the more there is a division of labour,” Shawlee says, adding though, that those who don’t have financial management in their share of the domestic tasks might not be as engaged as they could be.
“If you’re the partner who is not engaged in the finances, and the other one becomes incapable or passes, you’ll be left in the wind,” she cautions.
On the plus side, Shawlee notes one of the biggest strengths she’s seen with her female clients is the ability to be proactive at dealing with financial issues – whether or not they feel comfortable doing it. “When something goes wrong, they’re able to jump in and put the pieces together.”
A better experience for women investors
In spite of an uptick in women’s participation in investing and finance, the reality is, the wealth management industry is still heavily male dominated, and female clients are often subjected to traditional stereotypes. “There remains a perception that women are not as investment savvy as men,” says Talbot. “That’s why one of my first questions to a potential client is ‘tell me about your investment knowledge and experience,’ which will shape my approach and the amount of investment terminology and detail I use. My ultimate goal is to empower women by providing education and knowledge, so they feel confident.”
Still, many women investors find that their unique needs, challenges and concerns are overlooked by advisors who aren’t customizing their approach. “My female clients often tell me that trust and a good fit are their top priorities,” Talbot says. “They’re looking for someone they can talk openly with about their lives. Investment returns are important but secondary in these cases.”
For Talbot, this translates into an approach that includes listening and learning, as well as collaborative decision-making. “It’s not just understanding their finances, it’s also about understanding their desired lifestyle and how we can leverage their investments to achieve that goal.”
Talbot adds that for many of her female clients, values alignment is extremely important. “It can even be a deal breaker. That’s why many of my female clients are invested in our socially responsible, fossil free and impact strategies.”
Approaching wealth management with expertise and compassion
The fact is, wealth management can be complicated, and finances can be confusing for women and men alike, Chung says. “There are too many products, too many systems and too many people purporting to be experts.”
The best approach, she says, is to get the basics covered, then bring in experts for the more complicated tasks. “Set up automated and easy systems for yourself, and one day a month, set aside an hour to look everything over,” Chung says. “Once you’ve got cash flow handled, then move on to the next level: tax planning, RRSP planning, etc.” And wherever you’re at with your finances, avoid the shame spiral, she adds. “Shame is a big problem – one of the biggest.”
Most of all, it’s critical to understand your own needs, and get the right help to ensure all your bases are covered. For example, “if you don’t have money but you have children, you still need a will,” Chung says. “If you save anything when you have young children, amazing – but don’t expect it. Cut yourself some slack,” she adds. “That shame spiral is the biggest barrier to feeling confident in finances, and women are more likely to feel ashamed. People are so hard on themselves when it comes to money. Let’s just not do that.”
Interested in diving deeper into women’s experience in investing? Register now to join our free webinar, Women in Investing, March 21 at 10 am PST.
References:
2021 women and investing study. Available at: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/FidelityInvestmentsWomen&InvestingStudy2021.pdf (Accessed: 04 March 2024).
