By ABBY VICK
Attention Advisors: You are missing the boat, if you are not helping your female clients build wealth separate from their partner. I understand why you would put together one plan for a family and consider your job done. Frankly, it’s easier and that’s what they’re asking for, but as the expert in the field of finance, you should understand that women are at a disadvantage when you plan this way.
Here are 5 key reasons why:
- Divorce rate for ages 50 and under is 32%, 50 and over its 40%, according to the Institute for Divorce Financial Analysts.
- 87% of women die alone.
- Most widows choose a different financial planner after their spouse dies.
- Women are not prepared for retirement.
- Women who get divorced after 50 are 27% more likely to end up in poverty, according to IDFA.
In America, it’s a dirty word and something you wouldn’t wish on your enemy, but it’s a reality of modern society where the person living to 120 is already alive today. That means if you get married at 20, you could be married for almost 100 years! That’s a new societal concept that we have to deal with, but what it means for today is that gray divorce, or divorce that occurs after age 50, is becoming increasingly more common.
Currently, the percentage of divorces after age 50 is at 40%, but it’s steadily climbing. The reality of this decision is that the woman is 27% more likely to end up in poverty because they don’t have a solid financial plan of their own in place. Forty-five percent of divorced women over 50 are experiencing a decrease in their standard of living, while their male counterparts only experience a 15% decrease.
Women are less prepared to be separated financially from their partners and it’s leading to devastating results, such as poverty, and increasing a burden on the Sandwich Generation (the age of caring for both your children and your aging parents at the same time) to care for them. Note: Women of the Sandwich Generation are also more likely to be the caregiver for both the children and the parents in this generation, as well, which could potentially impact their financial outlook.
The Advisor Step Up Or Break up
Let’s consider another scenario, where an older couple manages to stay married for 50-60 years and does not get divorced. Even in this scenario, the woman is much more likely to outlive her spouse. From your perspective as the advisor, this is an opportunity to create a relationship with your female client because the research shows that 60% of widows change financial advisors after the death of their spouse.
So why is that?
These women are being ignored in meetings with the advisors and they are being treated as an associate of their husband instead of having their separate needs met. I know, because it’s happened to me in meetings. The end result is finding someone who speaks to both of us with respect and addresses both of our concerns, not someone who prioritizes my husband. If you want to continue serving your client’s family after the husband passes, put the needs of the woman on the top of your mind.
Pay Gap, Caregiving And Retirement Planning
The result of a male-dominated industry is that women’s needs and lifestyle are not specifically addressed in the planning cycle of most advisors. Understanding complex issues like the gender pay gap is important in retirement planning. Not only are women earning less over their lifetime compared to their spouses, they may step in-and-out of their careers several times to raise their families and care for aging parents. Add in that they will likely outlive their male counterparts and you begin to see that women really do require a financial plan designed to their unique needs.
Despite the obvious need for comprehensive retirement and financial planning, women aren’t saving or investing in themselves as readily or consistently as their male counterparts to prepare for retirement.
Women Of A Different Generation
As the boomers move into retirement, more boomer women are controlling the money, not by choice, but out of necessity. The younger generations, (gen X and millennials) are known for the women being the financial decision maker in the household. Gen X women are the CFOs of their household and are making money decisions for themselves, their children and, in many cases, their parents.
From an advisor perspective, I understand the tendency to go after big money first. Who is more likely to move over their money after only one conversation? It’s men. Who has a larger balance in their retirement account? Most likely, the man. Who appears to be more inclined toward risk taking and asks less questions about your overall strategy? The man.
Ask yourself: Are you serving gen x and millennial women as well as you could be?
Why Work With Women?
If you’re looking for a sustainable, holistic business, where your clients are loyal, educated and involved in the planning process with you, you need to be addressing the need of your female clients.
Women are loyal customers, desiring to keep their money with a trusted advisor instead of moving money to the hands of someone new. Another perk of working with women, is that they are more likely to engage in long-term investment strategies and are more patient with their investments, if they know you’re looking out for their best interest. Making an effort to take care of the women who come into your practice will help you build life-long client relationships.
Advisors have the opportunity to establish a lasting planning relationship with the women they serve. Female investors are savvy and want to be educated and want to work with someone who respects their opinions.
Abby Vick is an Investment Advisor, the owner of Paradigm Money Management and a leading expert in empowering women to awaken to their financial potential.