LifeHealth.com
Women becoming financially empowered
by Lisa Resnick
Lisa Resnick is President, Life and Long Term Care Division of Allianz Life Insurance Company of North America. She can be reached at Lisa_Resnick@allianzlife.com.
Women today have more influence over the economy than at any time in history. In fact, according to Trendsight group, women are expected to control 60 percent of the wealth in the United States by the end of this decade, an unprecedented milestone in female empowerment. Other statistics add to the powerful picture of women's progress:
- The percentage of women in the workforce almost doubled in the second half of the 20th century, from 32 to 62 percent.
- Today, there are a third more women graduating from college than men.
- 60 percent of women with business degrees out-earn their husbands.
- The number of women earning $100,000 or more per year has quadrupled in just the last decade alone.
However, this empowerment also raises an intriguing question: with more women than ever getting involved in financial matters, why is it that the vast majority, 90 percent, feel anxious about money? In fact, nearly half of all women who earn a salary of six figures or more admit to having real fears of losing everything and ending up as a "bag lady."
Surprised? You're not alone. These and other key findings from a study developed to better understand women's attitudes toward money and investing are serving as a real wake-up call to the financial services industry.
Differences between Men and Women
Another major difference from men is that women attribute financial security and freedom as 15 to 20 times more important than money-related status and respect.
When it comes to investing, the study found that women view themselves as "worriers" while men view themselves as "warriors," as demonstrated by the fact that men were much more likely to describe themselves as being financially "aggressive." Women also said that they see themselves as carrying more responsibilities, and, as a result, are burdened with more worries. Men, on the other hand, see themselves as more analytical and open to taking risks.
Another major difference from men is that women attribute financial security and freedom as 15 to 20 times more important than money-related status and respect. In fact, nearly two-thirds say that the best reward to having money is feeling secure, not the ability to acquire the things that money can buy.
We've known for a long time now that financial issues are a major source of conflict among couples. According to the study, a lack of savings and too much debt (in that order) are the major arguments, not overspending or lacking enough income.
How Women Relate to Money: The Five Financial Personalities
The study used a novel approach to categorize the attitudes women have toward money and investing, through popular fictional female icons that were recognizable to all three generations of survey participants. Women were asked to self-identify with one of five distinct financial "personalities":
Cinderella, Alice in Wonderland, Wonder Woman, Belle, and Goldilocks.
Most women (35 percent) identified themselves as women who want to research options thoroughly before making financial decisions. They are confident, analytical, and highly knowledgeable about finances. These women were categorized as "Goldilocks" and like to consider all choices before selecting the one that is "just right." Still, these women also have nagging insecurities about their financial future.
The second most popular category (23 percent) is defined by women who like to handle things equally with their partners. They are responsible and financially secure, cooperative and happy with their marriage in terms of money and investing, fairly knowledgeable about their household finances, and have high levels of investable assets. These women, categorized as "Belles" after the main female character in "Beauty and the Beast," are moderately likely to have worked with a financial advisor.
The third ranking (18 percent) went to women who identified themselves as confident, secure, knowledgeable about money, and able to take charge of investments and savings. These "Wonder Women" feel like they can handle anything, have higher levels of investable assets, and are most likely to have worked with a financial advisor.
Fourth on the list (17 percent) are those who rated themselves as confused by all the choices in front of them and avoid financial responsibility. An "Alice" from "Alice in Wonderland" feels lost and disoriented about their household finances, has the lowest level of investable assets, and is less likely to have worked with a financial advisor.
Finally, the fewest number of women (eight percent) identified themselves as struggling financially and feeling helpless when it comes to investing. These "Cinderellas" believe they lack sufficient knowledge about money and are looking for a "Prince Charming" to make everything okay. They are the least likely among the five personas to have worked with a financial advisor.
Overall, the results of the self-identifying assessments are extremely encouraging. The majority of women want to understand their financial choices thoroughly and place a high priority on discussing long-term savings and investments with their spouses or partners. However, at the same time, they don't know where to turn for learning exactly what their options are.
Lessons for the Financial Community
Mature women who participated in the study stated that the advice they would give to younger women involves planning early for the future; gaining financial and investing knowledge; and not depending on others for financial security.
The study revealed that the biggest barrier for women to getting more involved in managing savings and investments is a lack of knowledge. In fact, more than 50 percent of women wish they had learned more in school about money and finance. Compounding this is the fact that only 18 percent of women and four percent of men say they have spent time teaching their daughters to be financially independent. Mature women who participated in the study stated that the advice they would give to younger women involves planning early for the future; gaining financial and investing knowledge; and not depending on others for financial security.
The message this study sends to the financial planning community is loud and clear: women place a high value on the opportunity to become better educated about financial planning. The good news is that despite the insecurities women feel about their financial futures, women who already work with a financial advisor told us they feel more financially secure, confident and optimistic. However, more can be done. The financial services industry can better position itself to work with women by:
- Recruiting more female advisors. Approximately 80 percent of all financial advisors are men. Yet women are twice as likely as men to choose to work with a female advisor.
- Having more of a presence in media that cater to women. There are huge opportunities to promote financial literacy in magazines that focus on women's issues. The study assessed the top 10 women's magazines and found that only one percent of the advertising is for finance-related products and services.
- Playing a more active role in making financial education more available in schools. This can be a real cause-of-choice for the industry.
- Understanding that more and more women are taking control of their families' finances.
The last point is perhaps the most important one. Despite decades of escalating education, income, and participation in the workplace, the vast majority of women still define their relationship with money as one based in anxiety. As an industry, we can do much more to address these fears through increasing our efforts to provide meaningful information to women and thinking about them as they really are: important financial decision-makers.