Women remain one of the most underrepresented and underserved demographics in the investment market. They often struggle to find the right advice for them. Recently in the Wall Street Journal, I explained why we established the Singer Xenos Women’s Division to combat these exact issues.
Consider this: around 51% of American personal wealth, or $14 trillion, is now controlled by women, according to the Bank of Montreal’s Wealth Institute. This figure is expected to grow to $22 trillion by 2020. Today, women now account for more than 51% of the workforce and are starting businesses at twice the rate as men.
Yet despite these professional advancements, when it comes to financial and retirement planning, women still fall woefully behind. According to a recent Vanguard report, men’s retirement account balances are more than 50% higher than women’s – despite women living on average, more than 6 to 7 years longer than men.
The ‘investment gap’ is real. As women’s investment power continues to grow, the investment market has been notoriously slow to meet their needs. Women helping women grow their wealth are few and far between. Services catered to the unique needs of female investors are scarce. But the demand is clear – in fact, Singer Xenos’ Women’s Division has grown 10% annually through word of mouth alone. And people are starting to take notice. But in order to see a true balancing of the scales, a few notable items need to be highlighted, and this is what needs to happen:
1. Women are the new breadwinners. Over 40% of American households have a woman as the primary breadwinner, which is an almost four-fold increase since 1960, according to a recent BMO Report. The same investment strategies and relationship-building tactics we used in 1960 will simply not work anymore. The ‘alpha-male’ stereotype can mean a healthy dose of braggadocio – which may be great in the boardroom but can also lead to poor decisions in investments. Women have different needs when it comes to financial advice.
2. Retirement planning is not one size fits all. The harsh reality is that female employees still earn less than their male counterparts. According to Pew Research, women still earn only 83% of what men earn. Compounded over the course of a career, that can mean a big difference in the size of a 401k. Not to mention the fact that women tend to live longer than men (by about 5 years on average), outlive their partners and face financial penalties for being a mom, more conservative estimates need to be factored into a woman’s retirement planning.
3. Women are becoming more entrepreneurial. More female business owners is great news for the gender and the economy, but entrepreneurs are notorious for not saving properly for retirement. Many tend to reinvest most of their cash in their businesses, while neglecting retirement savings, which can be risky. With more and more female entrepreneurs starting their own businesses, the concern around women outliving their savings is amplified.
4. But, women are more rational investors than men. And they can capitalize on this. Men tend to be too confident, which can lead to poor decisions in investments. With the right plan and the right advisor, women can make up for years lesser pay, and come out well situated for a comfortable retirement.
5. Women are natural communicators and natural multitaskers – two essential skills for the savvy investor. They prefer a different amount of face time and require a unique balance between digital and human advice. Sound investment and adherence to a financial plan requires patience, analytical thought and diversification – traits that women champion.
Click here to read more of Faith’s feature in the Wall Street Journal.
Faith Read Xenos is Founding Partner, Chief Investment Officer, Chief Operating Officer, & Advisor at Singer Xenos Schechter Sosler Wealth Management. Faith has been designated as a Certified Financial Planner™ since 1989 and started the Women’s Financial Services division in 2002 to address specific wealth challenges that only women may encounter. Click here to contact Faith.