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What Women Want (and Need) When Financial Planning Thumbnail

What Women Want (and Need) When Financial Planning

When it comes to financial planning, women have too often been sidelined—their voices muted, their counsel ignored, and their goals overlooked. For too long, financial planning and long-term investing have been a man’s game.

Women in this country have a unique set of financial challenges. As a result, their financial perspectives and goals often differ from those typified by men. As women’s wealth accelerates at a rapid pace—indeed, Credit Suisse’s 2018 Global Wealth Report found that women held 40% of global wealth, and that sum is expected to reach $93 trillion by 2023, according to BCG—it’s essential that financial advisors treat them as the central players they are.

Despite decades of being overlooked, women are in fact excellent candidates for financial planning assistance. Men and women begin their working lives on roughly equal financial footing, but their paths often diverge in significant ways over the years.

The State of Women’s Finances

The World Economic Forum’s 2021 Gender Gap Report predicts that it will take over 135 years to close the global gender gap. According to the report: “The slow progress in closing the Economic Participation and Opportunity gap is the result of two opposing trends. On one hand, the proportion of women among skilled professionals continues to increase, as does progress towards wage equality, albeit at a slower pace. On the other hand, overall income disparities are still only part-way towards being bridged and there is a persistent lack of women in leadership positions, with women representing just 27% of all manager positions.”

These disparities are not new. According to Pew research, “the gender gap in pay has remained relatively stable in the United States over the past 15 years or so. In 2020, women earned 84% of what men earned.” What’s more, 42% of women reported experiencing gender discrimination at work, compared to 22% of men, and a quarter of surveyed women said they had earned less than their male counterparts, compared to just 5% of men. Bearing children negatively affects women’s finances more than men’s; women experience a wage penalty of 4% per child—and the penalty suffered by women of color balloons to 10% per child.

The COVID-19 pandemic has only widened the gap. According to MoneyGeek, more than 2.3 million women have left the labor force during the pandemic, compared to 1.8 million men.

Over the course of their lives, these factors converge to yield women who, on average, have less money than men. Ironically, though, women typically outlive men—in developed countries, women’s average life expectancy is 79 years, vs. 72 years for men. Women thus need to make smaller average sums last longer.

Women, then, are excellent candidates for financial planning—but not the kind of cookie-cutter planning that fails to identify the unique combination of opportunities and challenges they face. According to BCG, “Too many banks and firms rely on broad assumptions about what women are looking for, resulting in products, services, and messaging that can feel superficial at best and condescending at worst.”

Instead, women need financial advisors who understand their circumstances and goals and can help them prepare for a secure and prosperous future.

Women’s financial situations are as unique and varied as they are, and their financial planning should reflect that. As they prepare to take control of their financial futures, women need the following.

1. Confidence

According to data from Stash, men are about three times more likely to invest money in the stock market than women will, and they’re twice as likely to have used crypto currency. A 2017 Fidelity survey revealed that just 9 percent of women thought they would outperform men as investors. Only 14% of women reported knowing a lot about saving and investing, and a minority (33%) reported confidence in their investment decision-making.

And yet when they do invest, women actually tend to outperform men’s investment returns. In 2021, Fidelity released a report stating that its female customers earned, on average, 0.4% more per year than their male customers. “The source of women’s superior returns is the way they trade. Or, rather, how they don’t,” stated the report. “Female Fidelity customers bought and sold half as much as male customers.”

Likewise, Wells Fargo found that its female-led accounts achieved higher absolute returns than male-led accounts between 2016 and 2020. As noted by the conductors of the study, “Women’s greater willingness to develop a financial plan, adhere to that plan, and work with an advisor are among the factors we believe led to attractive investment results.” Female investors outperformed male investors on a risk-adjusted basis, indicating that “women achieved higher returns on their investments while taking on less risk than men.”

Rather than doubt their investing prowess, women should lean into their instincts and feel confident in their ability to be savvy and strategic investors—and they should find financial advisors who have commensurate confidence in them.

2. Clear, Comprehensive Goals

In order to develop confidence in their financial plans, women first need to identify their financial goals—which may differ from typical male-oriented objectives. Women may want to retire earlier, for example, or save money to care for an ailing loved one. Younger women may want more liquid assets to help them bridge periods of unemployment during their childbearing years, and having children may change how women form goals altogether.

“Women tend to be more likely to be Commitment and Happiness Money Minds,” says K&B Partner Yasmeen Mock. “Moms are almost always Commitment-focused, which means they’re focused on protecting their assets—for both themselves and their loved ones.”

Women may find it helpful to work with an advisor who takes the time to help them articulate their financial goals, and who then uses the insights gleaned from their conversations to develop a targeted financial planning strategy for each individual woman.

3. A Personalized Plan

Women benefit from personalized financial plans that consider their unique financial circumstances, investment preferences, risk tolerance, and goals. Traditional financial planners may not always offer this level of personalization, and women’s unique needs may suffer as a result.

For example, as discussed in a 2020 US News article, “Traditional wealth-planning strategies assume your income will steadily increase over the years but this is less common for women, who take more career breaks, than for men.” The article goes on to note that “We often see that advisors employ similar messaging for all women regardless of their financial and personal circumstances…The expectations of professional women are quite different than a woman managing legacy wealth or one that has inherited wealth through a transfer.”

Women need advisors who embrace personalization as a fundamental part of their process, and who take the time to learn each client’s unique needs, circumstances, and plans. They need advisors who can calibrate their advice based both on the client’s investment personality and their ultimate goals. They need advisors who celebrate them as individuals and understand that money is truly personal.

4. The Right Team

In pursuing long-term financial advice, women need to consider the type of advisor that will align with their expectations and mindsets. While every individual has distinct preferences, K&B’s Mock notes, women generally appreciate concrete evidence and science-based advice. “Women are often very thorough—they come prepared to delineate what they have and what they’ve been doing. They want to know if they’re on the right track; if they’ve prepared enough, if they’ve saved enough, etc.”

For something as personal as financial planning, it’s essential that women find a team that works for them and their personal preferences—a team that can provide that science-based advice, for example, if that’s what they’re looking for.

And often, women appreciate the perspective of other women. Women are still far underrepresented in the financial services industry and represent just 15% of financial advisors. Women may consider seeking an investment firm that advocates for diversity of thought and includes a female perspective.

Get Started with K&B

At K&B, our process is anything but cookie-cutter. We meet individually with each client to listen and learn about their finances, their families, their lifestyles, and the legacies they hope to leave. Our diverse team tailors our approach for each client in the service of aiming to help them live their best financial lives.

If you’re interested in exploring how K&B can help you achieve your financial goals, reach out for an initial conversation today.


The content and views expressed in this communication has been prepared for informational purposes only. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. Investing involves risk including the possible loss of principle. Past performance is not a guarantee of future results or success. Links to third-party websites are provided for your convenience and information purposes only. K&B has no control over the accuracy or content of these other websites.

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