Women & Money

By MARGUERITA CHENG 
For AdvisorNews

Two decades after the Food & Drug Administration started receiving complaints that Ambien and other sleep aids made women taking them particularly groggy the next morning, and even might have been responsible for driving accidents, the agency accepted and responded to the scientific evidence behind the anecdotes. It turns out that women’s bodies simply metabolized the active ingredient zolpidem in all these sleep aids much more slowly than men did. In 2013, the FDA finally acted, slashing the recommended dosage of these medications in half for women.

Medicine isn’t the only field where attitudes that what is “good for the goose is good for the gander” still prevails. Equality is a wonderful goal, when we consider the kind of outcomes that we want, whether it’s a good night’s sleep or retirement security. How women reach those equal outcomes, however, may require taking a different pathway, whether it’s a question of medical or financial advice. Even the definition of what “financial success” and a good relationship with an investment advisor looks like can be very different for women than for men.

I’ve seen many of my clients come to understand what this means. One, a widowed woman in her 60s, began working with me after her husband’s death. The financial advisor they had consulted with previously saw her husband as the client, and rarely even looked her in the eyes when discussing what the couple themselves viewed as a joint financial plan. “I miss my husband, but I need someone who understands where I am, and who I can talk with,” she told me.

Let’s face reality. Even though women are increasingly financially independent, controlling or inheriting a growing share of the country’s wealth, the typical broker or financial advisor today gears his practice towards the way men think and behave. (And yes, the choice of pronoun is deliberate: only about 17% of financial advisors today are women, giving the industry one of the biggest gender gaps in corporate America.) His approach toward working with clients is likely to be shaped by how men define their needs and even their communication styles. Even in marketing campaigns, women clients are given roles that amplify or echo the concerns raised by their partners.

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The truth is that women’s perceptions, needs and objectives can vary as radically from those of men as those recommended Ambien dosages. They have distinctive life experiences, circumstances and goals. That doesn’t mean that as advisors, we should scramble to deliver something radically different, either. For instance, dismissing women as being invariably “risk averse” and devising an overly conservative asset allocation model, creates an entirely different kind of risk that is unique to women, who, because they still may end up with lower earnings and likely will live longer, lead their portfolios to work hard for them. I still see some financial advisors leap to the conclusion that being aware of risk is the same thing as being unwilling to incur risk.

Women still, however, have distinctive career paths and earnings patterns that affect their financial planning strategies in ways aren’t seen in men’s lives. They are likely to have taken far more professional risks, leaving the job market to give birth to and raise children and then retrain or upgrade their skills and leap back into new positions. I see my own grandmother’s experience as emblematic of this flexibility. A widow for 40 years, she became an Airbnb pioneer long before room rental apps – or the Internet itself – were a “thing”, renting out rooms in her home to those who needed a place to stay or live in exchange for the extra income she required.

A prescription for working with women clients starts with recognizing that there’s an average lifetime earnings gap of as much as $1 million between men and women. That’s partly because women live longer after retirement and partly because they spend more time (uncompensated) caring for elderly parents or children. Surveys also reveal that only about half of women feel confident when it comes to managing their finances, compared to nearly 70% of men.

“If the difference in men and women’s pay is a gap, then the wealth difference can only be described as a chasm,” wrote Kimberly Blanton of the Boston College Center for Retirement Research. If women aren’t transforming their earnings into wealth, the financial services industry has to shoulder part of the blame – and devise a solution.

 Let’s make the quest by women to find the right kind of financial guidance not just an objective, but a mission. Women now understand that their physical health depends on having relationships with physicians who understand that, for instance, heart attacks in women may have different symptoms than those seen in men. Now it’s time to empower them by acknowledging that their financial health may require an equally distinctive approach,  and ensure it’s easier to find someone who works with them, in a way that works best for them.

Marguerita M. Cheng is the Chief Executive Office at Blue Ocean Global Wealth. Prior to co-founding Blue Ocean Global Wealth, she was a financial advisor at Ameriprise Financial and an analyst and editor for Towa Securities in Tokyo, Japan.