Women get a raw deal financially
Women generally live longer than men. Women are often a few years younger than their spouses. Therefore, it is highly likely that most women will become widows at some point in their life. One recent article suggested that “85% of women will be left alone to fend for themselves by age 65”. This would be bad enough if it wasn’t for the fact that women still earn less than their male equivalents. They are more likely to take a career break to raise the family or look after elderly relatives. Taking a career break can have wider consequences than just having no income for a few years; it can significantly reduce career progression on return to work. Not only does this reduce career earning capacity, it also significantly reduces the ability to save for retirement.
Two thirds of women want to change financial adviser
The inspiration for this blog came from a recent article which stated that only one in four women have a financial adviser. Even more worryingly, of those that did, two out of three didn’t trust their adviser or were unhappy with the relationship and seeking to change advisers. This came as no surprise to me. I had a recent meeting with a couple who have used the same adviser for over 10 years. During our initial chat Fiona told me, “I think I am an intelligent person. I ask relevant questions but I don’t understand a word they are talking about.” We had a discussion about Forty Two’s investment strategy and she thanked me by saying “in all the years I have been coming to these investment meetings, this is the first time I have actually understood what an adviser was talking about.” While this was great feedback to hear it is also a pretty damning indictment of financial advice in general.
It is not surprising then that four out of five widows change financial adviser within the first year of losing their spouse because of the way they were treated when their husband was alive.
Who wears the trousers?
Women own 30% of all global wealth but although they may have less money than men, they typically control 80% of all household financial decisions!
This is something that has happened for generations and shows no sign of changing. My grandfather would bring his pay-packet home on Friday and give it to my gran who managed the household budget and still managed to save for a rainy day. Today my son spends his pocket money before he has it (in fact he has spent it several times over by the time he receives it) while his little sister can account for every penny and is capable of making informed financial decisions including which chocolate represents the best value for money in ASDA.
Women are better at investing than men
Research also suggests that women make better investors than men. A study of 38,000 investment accounts by the University of California found that women investors out performed men by 9% per year. David Bach summed it up in his book Smart Women Finish Rich, “As a rule, women make better investors than men. When women become investors, they generally devise a plan, and then stick to it.” Men on the other hand often suffer from a fear of commitment. Rather than stick with an agreed investment strategy they often get bored and led astray by the latest “hot thing”.
It is clear that many women will find themselves widowed at some point. Therefore, it is essential that they are fully aware of their overall financial position at all times to avoid even greater stress when the time comes to look after it alone. Financial planning and investment decisions should actively involve all parties affected by them and not be delegated to one spouse or the other. For those women who have been recently widowed, it is vitally important to find a trusted adviser that can help create a proper financial plan to ensure their continued security rather than some investment adviser who wants to talk jargon and discuss exciting investment opportunities.