Women, Money & Power
by Carolyn Ellis
Ms. Ellis is Features Editor for LIFE& Health Advisor. Connect with her through e-mail: cellis@lifehealth.com
As vice president for Consumer Insights for Allianz Life, Katie Libbe champions the life and annuity carrier’s efforts to make agents and advisors aware of the financial planning needs of women and same sex couples. Our conversation was supported by findings from the 2013 Allianz Life Women, Money & Power survey conducted in December 2012 by Larson Research + Strategy. The study surveyed 2,213 women ages 25-75 with household incomes of $30,000 a year or higher. Women participants were single, married, partnered, widowed, and divorced. Study findings show today’s non-traditional and blended families need and want well-informed financial professionals to assure their financial future.
L&HA: I’m impressed that Allianz has a department to track Consumer Insights. Have you been doing this for a while?
KL: We look at many consumer trends to support our advisors. We have looked at Baby Boomers, transition Boomers, elders, or younger Boomers with legacy issues. We call out consumer trends that relate to retirement or tax planning to our agents and advisors so they can improve their practices and serve more clients. In our 2013 Women, Money & Power study, we show some interesting findings about same sex couples that are also relevant to today’s blended families. I’ve been here four years. Prior to Allianz I worked as a CPA for many years and was in the 401k business for a financial planning company.
L&HA: Would you say same sex couples are an underserved market?
KL: I’m saying it’s a specialized market. Domestic partner relationships have been in place for a long, long time. If you are a financial advisor and you have a couple in this situation, they’ve got some specific needs when it comes to financial planning. You have to up your game because they don’t have the luxury of some things traditional couples have, such as joint filing, property ownership, and Social Security.
L&HA: Your 2013 Women, Money & Power survey shows clearly that women recognize this need.
KL: Yes, in our 2013 survey, women in same sex couples that answered our survey said they needed to really understand what they were doing because they were in this kind of a relationship versus a traditional couple. They believe they need to be smarter about finances. We also found that a greater percentage of women in same sex relationships use a financial advisor. Forty-two percent of same sex couples report they work with a financial professional versus 38 percent for traditional couples.
Rather than underserved, I would say same sex couples are seeking out financial advisors to help them set up their wills, estate planning, beneficiary designations, and all the things they have to be careful they do to avoid overpaying taxes.
L&HA: How does Allianz help agents who work or would like to work in this market segment?
KL: We offer specific seminars for advisors to understand better the needs of domestic partners and non-traditional families. Even blended families come with different needs. Advisors are realizing they need to become familiar with these different groups because it’s going to make them that much more attractive. Quite honestly, agents could have a traditional couple today that morphs into a blended family or a same sex couple. We all personally know people who have gone through this experience. Some advisors may find their client changing before their eyes. If they want to keep that client, they will become knowledgeable.
L&HA: It sounds like it’s not an area where you can be a generalist. How much training does Allianz offer?
KL: We’re a good place to get started. We raise the issue with our agents and advisors and we make them aware that they need to get more education and training. Organizations like the College of Financial Planning and The American College have certifications for domestic partner financial planning. These in-depth programs last several months.
L&HA: What are the key planning to-dos for advisors and agents to note?
KL: Start with something as simple as what you own, your financial assets, review beneficiary designations, set things up for estate planning purposes to avoid probate. Be careful about how you hold property (for example, as joint tenants with rights of survivorship) depending on where you want that property to go, to your partner or to your child. Along with those would be your health care directive and things like that.
L&HA: In June the Supreme Court ruled that Section 3 of the Defense of Marriage Act 1996 is unconstitutional. (Section 3 defines marriage as one man and one woman for federal government purposes.)
KL: What’s going to be interesting next is what happens to income tax filings and Social Security. A lot of avenues open for domestic partners if they can file jointly and if they can enjoy some of the benefits that traditional couples have had for taking Social Security based on their partner’s salary and work history.
L&HA: What about financial planning for non-traditional families with children?
KL: A lot of our education for advisors around children has to deal with the complexities of blended families. For example, couples need to work out if they are splitting college funding or if they want to give equal amounts to all their children if they know some are getting an inheritance from another biological parent.
L&HA: Children are a financial drag on family finances.
KL: In our 2013 Women, Money & Power survey, we found women in same sex couples tend to have a lot more money than traditional couples. We think this is because the children happen later if at all in a same sex couple. In our survey, the percentage of same sex couples with a household income greater than $100,000 was 38 percent while it was 17 percent for traditional couples. We attribute that to the fact that traditional couples get married and then about five years later have children. Same sex couples get married and have many years in which they accumulate money without the financial drain of raising children.
L&HA: This market speaks to the need for team planning.
KL: Team planning with a tax advisor and attorney is always good. So is going to your natural market. To illustrate, divorced women often choose a female financial advisor. They understand not only the financial planning needs when someone goes through a divorce but also the other support needs that an individual might have. In our study forty-eight percent of divorced respondents said divorce plunged them into a financial crisis.
L&HA: The 2013 study shows more and more women are engaged in financial matters.
KL: In our research in a higher level, we were feeling very positive about the fact that more women want to learn and more are seeking the help of a financial advisor. But women also have this fear that they could lose it all. We call it the “Bag Lady statistic.” Fifty percent feel they could end up a bag lady even if they have a good chunk of money saved up.
Now at Allianz I’m helping to educate advisors about how they want to approach their clients as they’re getting close to living in retirement. It’s not about accumulation any more, it’s about how can you live on your nest egg for the next 25-30 years.
L&HA: When you compare the 2006 survey results to 2013, what else have you found?
KL: More and more women claim themselves to be CFO of the household. I don’t think they are satisfied to delegate to their spouses or partners anymore. Maybe 2008 was a wakeup call.
