Financial Planning Needs Of Women Differ From Those Of Men

Men and women are different.

That’s not exactly earth-shattering news to most people, although many may not realize this also applies when it comes to financial planning, as pointed out in a recent article in Forbes magazine.

“Are women different when it comes to financial planning?” author Eve Kaplan asked. “The unequivocal answer is: Yes.

“Here are a few reasons why: Women tend to live longer than men, earn less, save less for retirement and they have different insurance needs. Women also tend to approach financial planning advice differently. The biggest single financial challenge Americans face is lack of retirement preparedness. These issues are especially acute for women.”

While women live an average of five years longer than men, they earn 23 percent less. The earnings gap is trimmed to 5 percent for men and women holding identical jobs, Kaplan wrote.

“As a result, they have less retirement assets and a higher risk of outliving them,” according to the article. “The difference is startling: women typically have one third less money set aside for retirement than men. To counteract this, women need to stay in the labor force longer, if possible, save more and keep their employment skills up-to-date if they exit the labor market.

Women have less for retirement for other reasons, too. Studies show women have lower 401(k) participation rates than men. Less than half of wage-earning women in the U.S. participate in retirement plans. Women, more often than men, interrupt their careers to care for children, aging parents and grandchildren. Being a caregiver can save money, but comes at a huge cost if care-giving displaces a stream of income a woman gave up.”

Kaplan also points out that even though their needs are different, too many women tend to defer all financial planning matters to the man in their life.

“When women absent themselves from financial decision-making, they suffer even more if their husbands predecease them. I often see women who don’t know where key financial accounts are held, or what kind of planning their husbands had in mind,” the article stated. “Newly widowed women are especially vulnerable to ‘advisors’ who live on commissions, and who don’t necessarily disclose a conflict of interest when giving advice.

“Women are more receptive to advice because they worry more. Since women are more insecure about financial matters, they tend to be more receptive to professional advice. It’s not surprise that women often worry more about financial issues because they are often are charged with the well being of their families, or themselves if they live alone. In the coming decades, experts say women will control more than 50% of the wealth in the US. By contract, only 25 percent of Certified Financial Planner Practitioners are female. This may produce a potential mismatch between the rising number of female clients and the number of female financial planners who personally understand the sometimes more intuitive approach women clients take.

“Regardless of gender, clients need a space to discuss emotional issues that revolve around money. Studies show that clients who are emotionally invested in a financial plan always have a higher success rate in terms of implementing their plan and realizing their goals. If you are female, and work with a financial advisor, make sure your voice is heard and your input is considered in your financial planning and investment process.”