The world has changed dramatically since the pandemic began, and according to new U.S. Bank research, so has the way women manage their money.
U.S. Bank first released its Women and Wealth Insights Study in March 2020, just as the pandemic began. While that survey showed that women were less confident and less engaged with managing money than men, generally started investing later than men, and tended to associate negative emotions with financial planning, the most recent survey conducted in March 2022 demonstrates that many of these gaps are shrinking:
• Women are more positive about managing their finances now: In 2020, women associated positive words like pride (35%), excitement (29%) and happiness (28%), and negative words like anxiety (33%), inadequacy (13%), fear (12%) and dread (9%) with financial planning. In the new survey, the number of women who associate positive words with their finances has jumped: pride (37%), excitement (34%) and happiness (31%).
• Women and men are more confident now in their ability to fund future financial needs: In 2020, 23% of women and 34% of men felt they were financially prepared enough to cover their future financial needs; in the new survey, both women and men are confident that they would be prepared: 36% of women and 37% of men said this. Not surprisingly, Generation Z and Millennial women and men were the most confident of any generation.
• Women and men are more confident they will be able to afford retirement. In 2020, 48% of women and 61% of men said they were confident that they would be able to retire when they are ready. This year, that gap has shrunk to 5 points, with 57% of women now confident about retirement.
• Women of all ages are more confident in their ability to manage their finances: In 2020, 56% of women under 35, 50% of women 35-54 and 41% of women 55+ said they were confident in their ability to manage their finances. In 2022, those numbers went up across all generations surveyed.
Digital Takes Center Stage
The survey also found that Gen Z/Millennial women and men are more likely to use online courses, podcasts and social media to enhance their financial literacy.
In fact, among this generation, 47% of women and 54% of men have made an investment based on something they saw on social media, 48% of women and 60% of men have made an investment based on information from an online influencer, and 57% of women and 66% of men have invested via a trading app.
In addition, according to the research, “digitally savvy” men and women (defined as those who use personal finance and/or trading apps) of all generations are significantly more confident than non-digitally savvy investors that they will be able to afford to retire when they are ready.
New Female Investor
The most significant survey finding is that in just two years, women have become more positive about their finances and are more prepared than ever about saving and investing, said Beth Lawlor, president of Private Wealth Management at U.S. Bank. They have more investable assets, thanks to the money they saved during the pandemic.
What is interesting about this new generation of investors is that they have spent their lives in front of a computer and are more likely to get their information from social media and to invest on social media, she added. This is in contrast to older women who did not grow up with technology and had to ask friends and family members for investing and financial information.
Financial advisors can take several steps to meet the needs of these confident and tech-savvy women, added Lawlor. First, they have to become more digitally savvy in order to serve them effectively. “They have to meet them where they are,” she said.
Advisors also need to listen closely to women, since, women, like most consumers, prefer to work with advisors who listen to them. Typically, upon the death of a husband, Lawlor explained, the widow would move the family assets to another advisor, because the advisor used by the husband never took the time to ask her about her thoughts.
“All of us want to feel that we are being heard,” Lawlor stressed. “To be a good advisor, you need to be a good listener and use what you are being told to help your clients follow their passion and realize their dreams. If you do not meet them where they are, you will lose out. Find out what is important to them and help them create a plan to achieve that objective. People just want to be heard–and they want to feel that they matter.”
The data are from a survey conducted online of 3,024 people – 1,517 women and 1,507 men – with at least $25,000 in investable assets.
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 amseka@INNfeedback.com.