January 29, 2019

What role do women play in the world of investment? An ever increasing one. 

Over the years, I have noticed that more and more women are taking an interest in financial planning.  In fact, the majority of our clients are now women.  This trend reflects the reality that women are gaining higher levels of education and increased earnings at an advancing pace. 1 

But... An Investment Gap Persists.

That being said, our firm may be ahead of the curve.  Recent research shows that there remains a gap between men and women when it comes to taking part in long-term financial planning and investment.  As the graph below illustrates, among those surveyed in a 2017 study, a large majority of women (98%) are confident with day-to-day tasks such as bill paying and budgeting; however confidence lags when it comes to investment (52% of women v. 68% of men). 

Percentage Of Men And Women Who Are Confident In Financial Tasks


Source: Women And Wellness: Beyond The Bottom Line

In keeping with the above findings, a 2018 UBS survey reports that a majority of married women (56%) continue to defer to their partner for investment and retirement decisions; and of those that stay out of long-term financial decisions, 85% believe their spouses know more about financial matters.2

However, missing out on early investment decisions and long-term saving strategies contributes to women's “wealth accumulation gap."  

Around 41% of women report that their greatest financial regret is not investing more.1  Around 98% of divorced and widowed women regret not being more involved in long-term financial planning while married, and 97% would advise younger women to take and active role.2    We believe that creating a long-term, goal-based plan and revisiting that plan often, enables one to make better informed decisions about major life choices, including taking time out of the workforce or pursuing a promotion.

As discussed in prior blogs, we now understand that there are a number of factors that require women, married or not, to view their finances according to their own life path. Longer life spans, family demands that may interrupt career paths and promotions, and different risk tolerance are some of the factors to consider. The sobering fact that 80% of women are likely to end up on their own,2 demonstrates that women must have a vested interest in knowing what financial tools they have available to them and how to make the most of them. 

Women Invest With Values Through Sustainable and Responsible Investing.   

As women become more engaged in long-term financial planning, they are reshaping the investment world by investing with their values.  "About two thirds of women say they want to invest in causes that matter to them... and more than half of women investors are interested in or currently engaged in impact investing, generating financial returns along with social returns."1 Women and Millennial's are taking the lead in choosing investment portfolios that take an active role in improving outcomes in a variety of areas. Such portfolios take on issues such as income inequality, supply chain management, or a company's role in climate change. This is an exciting time to take a look at the investment options available that make a difference for both you and the the world around us.

Financial Fundamentals.

While there is no one-size fits all approach to financial planning for one gender or the other, here are some basic elements everyone should put into action when it comes to their finances:

1. Put money in your name: Even if you have joint accounts with your partner, you should consider keeping some financial accounts in your name only to maintain an individual credit history.

2. Confront the unknown: Is your money controlling you or are you controlling it?  As more women become wealthy and gender roles evolve, it is important to define your attitude toward money and take charge of your finances.

3. Share the decisions: If you share finances with someone else, keep the lines of communication open.  Disagreements are bound to happen, so be sure to discuss your goals and evaluate if you are on track to meet them.

4. Maintain access to all financial documents: Make sure you know where to find financial records, whose names are on each account and the most current computer passwords.

5. Pay yourself first: Be sure to fund your IRA, 401(K), or other retirement account to the maximum in order to reduce your taxable income and benefit from tax-deferred compounding.  Do not forsake your retirement when trying to provide for your family.

6. Have a plan in writing: Having a formal, written, long-term investment plan will provide the framework for shaping your asset management decisions and financial goals.  It will also help you to keep sight of your long-term goals and help you define what type of adjustments need to be made at different stages in your life.

7. Choose a financial advisor wisely: Find someone you trust.  Ask for referrals and interview several advisors to find the right rapport.  If the advisor doesn't listen to your needs and goals, look for another one.  The right financial advisor can help you look for the right solution at every stage of your life and help you build confidence in your ability to take control of your finances. 

8. Understand what you own: Take time to learn the composition of your investments and understand how fees affect your portfolio. Once again, your advisor should explain all fees and be transparent about costs.

9. Have a 'what if' plan: Don't let critical life events, such as marriage, divorce, widowhood or unexpected illness disrupt your financial goals.  Proper planning can protect you and your family.

10. Invest with your values:  When planning your estate and your investment portfolio, there are ways you can take care of your heirs while maximizing your investments and your impact on the world.  Your portfolio and estate plan should reflect your risk tolerance and provide you the comfort that you are providing for your loved ones, not promote anxiety or uncertainty.

Having a hold on your finances is important whether you are a man or a woman.  Whether you have many resources or few, a full accounting of what you have, how you spend, save, invest, and protect it can create a freedom and readiness for whatever life sends your way. We hope to encourage you to review these basic suggestions and consider whether you, your partner, or other loved ones would benefit from a financial plan.  If you have questions about your current investment or want to learn more about value investing, we encourage you to contact us

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1 Women And Financial Wellness: Beyond The Bottom Line, 2018

2 UBS Reveals Top Reason Married Women Step Aside In Long-Term Financial Decisions: They Believe Their Husbands Know More, 2018