Women and Wealth Management

Women and wealth management

Women’s Approach to Wealth Management

When it comes to retirement planning and wealth management, it’s fair to say women have much more at stake than men do. Women typically live longer than men, earn less than men for similar work, and spend more time out of the work force. 

Identifying goals and planning for financial success and security throughout life is important for all of us, yet there are some distinct differences between men and women when it comes to risk tolerance, savings habits, and investment style. In many ways both genders can benefit from the characteristics shown through studies to be more typically a women’s approach to wealth management. Let’s explore some key trends and traits.

#1 Women Are More Likely to Stay the Course During Market Turbulence

Studies, like Millionaire Outlook: Women & Wealth by Fidelity Investments, show that women are less likely to veer from long term goals because of fluctuations in the market. And that they tend to keep long-term goals in focus rather than trying to “beat the market.”

According to What Women Investors Are Doing Right, women also tend to be more comprehensive in their financial planning, focusing more on how much they are saving, spending and investing. Men tend to focus more on investment performance and returns than their overall financial picture, which has the potential to leave them more vulnerable to market volatility.

#2 Women Save More of Their Income

While women typically earn two-thirds of what men do, and their retirement balances are smaller on average ($63,700 versus $95,800 for men), when adjusted for their compensation differences, women actually save more of their income. Total employee deferral levels for women are 8.3% versus 7.9% for men. This, combined with the average employer match of 4.4% gives women a total savings rate of almost 13%, versus 12% for men.

Women are also more likely to take advantage of the catch-up savings opportunity once they hit age 50. 23% of eligible women make catch-up contributions versus just 21% of men. These contributions are a good opportunity for anyone looking to grow their nest egg, but particularly for older women, as they are an opportunity to fill a gap that may have been created during time off from the workplace.

#3 Women Take on Less Risk

The goal for any investor is to achieve the highest rate of return while taking on the lowest amount of risk. Study after study shows women use this strategy.

On average, women hold more balanced portfolios than men, which is beneficial during times of extreme market volatility. And, women tend to hold more blended and balanced portfolios than men. A more diverse portfolio and investment strategy offers some security against the sort of market volatility that can wipe out a riskier, less diverse portfolio.

#4 Women Tend to Invest More Appropriately at Each Life Stage

Over time, one’s risk tolerance and goals shift from portfolio growth to asset protection. Fidelity analysis shows that women’s investment strategy overall is more appropriately aligned, which suggests they’re better prepared for their financial needs at each life stage.

#5 Women are More Likely to Work With a Financial Advisor

Not only are women more likely to work with and seek advice from financial professionals, women who work with an advisor are twice as likely to report that they feel on-track to meet their financial goals. They are also significantly more likely to take the appropriate amount of investment risk to increase their potential for investment return.

More than half of women who do not use an advisor state that they believe it’s too expensive to work with one or that they don’t have sufficient funds to work with an advisor. Overall, people who work with financial professionals are more on track to meet their saving, investing and retirement goals. And it’s never too early to start planning, saving and investing. In fact, you can request free no-obligation proposals through Wealthminder to find and connect with the right financial advisor for you and your unique situation.

Women and Wealth Management – Key Takeaways

While generalizations are just that, women and men can both benefit from a more goal-oriented, long-game approach to saving, investing and financial planning.

Find and connect with the right financial advisor for you to make sure you are on track to meet your goals. Get started today.