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Despite obvious macroeconomic headwinds in the forms of elevated interest rates and persistently high inflation, women are increasingly confident about their ability to handle personal finances and meet related challenges. The positive news for advisors is that women also want to bolster their knowledge bases and become more fluent in advanced topics, including investing and retirement planning.
Women are receptive to professional advice and there’s no denying they want to increase their financial education, confirming advisors should be upping their focus on female clients and prospects. Simple math confirms as much. It’s estimated that helped in part by the great wealth transfer, women will control $30 trillion in assets by 2030.
A variety of factors confirm the validity of working with female clients and, better yet, customizing plans and strategies specific to them. After all, women are making more money, delaying having families and live longer than men. Following the coronavirus pandemic, some women remain underemployed and some are working multiple jobs to contend with still persistent gender pay gaps. Those scenarios imply the focus of women in those groups might be more about simply making ends meet rather than planning for retirement.
Point is it’s not “a battle of the sexes” when it comes to client service, but advisors can be a force for good in women’s financial lives. A new survey shows how.
Examining How Women Think About Money
The 2024 Her Money Mindset Survey conducted by Investopedia and REAL SIMPLE is must-read material for advisors because it provides crucial insight regarding women’s financial concerns and goals. Currently, many women are highly focused on short-term financial issues.
“One thing that U.S. women have in common across generations and income levels is that the majority of monthly income (63%) is spent on necessities, including housing, transportation, healthcare, education, and child care. Another 20% goes to flexible spending, and approximately 17% helps fund their financial goals,” according to Investopedia.
The survey also indicates that budgeting/cost-cutting tips could be useful for many women because 64% said they have less than $500 left in their pockets at the end of the month after all mandatory obligations are taken care of 44% said that number is $250 or less.
While those dollar amounts and percentages are concerning, the silver lining is women aren’t wantonly disregarding improving their financial futures. In fact, they are exceptionally mindful of where their dollars are going.
“While stretching dollars, women are very aware of where their money is going, and have big short-term goals, too. More than ¾ of women (76%) keep an eye on where their money goes every month, while 72% are saving for short-term goals,” notes Investopedia.
Women Are Investing and Want to Invest More
Acknowledging that building budgets isn’t the most glamorous function carried out by an advisor, the good news is that many women are already investing and they want to do more of that. Close to a third are doing so for the purposes of retirement and that’s an important foundation.
However, advisors should also note that as women make more money and feel increasingly confident in their financial literacy, they are apt to continue investing for the purposes of wealth building and that compels them to want more asset class-level education. There are also important age and demographic considerations for advisors to take into account.
“Overall, 39% of women surveyed currently hold investments. When you break that down further, the rate of women investors is higher among those in Generation X or older (42% of which currently hold investments). Women who make more than $75,000 annually are also more invested (58%), and are more likely to hold multiple types of investments,” concludes Investopedia.
Related: Inflation Is Punishing Retirees, According to Schroders Study