Turning To Advisors

Planning & The New Demographics Of Gender

Opportunities for a knowledgeable women’s market

by Hilary Fiorella

Ms. Fiorella is Executive Director of The American College Center for Women in Financial Services. Please visit womenscenter.theamericancollege.edu.

Women constitute a major – and largely untapped – market for financial advice, and their appeal as clients, along with their need for advising services, is likely to grow rapidly over the next few decades.

The proportion of women in the workforce is higher than it was for older generations, and young women are more likely to hold college degrees than young men[1], suggesting robust earnings potential. Women in this age group are getting married later[2] and are buying more real estate on their own[3] as well.

This means that women need professional financial advice to ensure a secure retirement. Still, particularly in the case of many married couples, women remain largely secondary to their spouses and have been underserved as an individual client. And don’t just take my word for it – Merrill Lynch published a study this past summer that tracked eye contact between an advisor and a heterosexual couple, and found that 60% of the advisor’s eye contact was with the man[4].

The Results Are In

The American College Center for Women in Financial Services recently published the Women in Retirement Literacy Survey, which analyzed the gaps in women’s literacy around retirement planning. The research was compiled from the results of the 2020 Retirement Income Literacy Survey, the third iteration of The American College of Financial Services’ comprehensive consumer study, which found a wide knowledge gap in retirement income literacy, a struggle with awareness of basic investment management, and unpreparedness for long-term care needs.

Eighty-nine percent of women (versus 72% of men) failed the literacy quiz; if a woman is in a relationship and has relinquished the planning to her partner, chances are that he or she also failed the quiz, and for single women, the issue may be lack of financial education or awareness. The good news is that women willingly admit what they don’t know and are open to advice and education. For those that have an advisor, they believe that their advisor is knowledgeable about retirement planning and want their advisor to educate them. So advisors, start the conversation: women are open to it and they believe you have the answers.

Closing The Knowledge Gap

The single biggest gap is the absence of a retirement plan for pre-retirees and women of retirement age. Only one in three women report having a formal, comprehensive retirement plan, versus four in five who claimed to have a plan. The understanding that many women think they are doing the right things to plan for retirement, but aren’t, is what drives our work.

When we break down the components of a comprehensive retirement plan, we find additional areas for advisors to add value. Though six in 10 women (versus seven in 10 men) own life insurance policies, knowledge levels about using life insurance are relatively low. In families with children, we typically see more life insurance on the income-producing parent because of income-replacement calculations, but the costs of childcare and other household needs may call for a more suitable life insurance policy for the non-income producing parent. When you take into consideration how the COVID-19 pandemic has increased insurance policy sales as well, there are more reasons to have an informative conversation about insurance than ever before.

The single biggest gap is the absence of a retirement plan for pre-retirees and women of retirement age. Only one in three women report having a formal, comprehensive retirement plan, versus four in five who claimed to have a plan...

When it comes to investing, women are largely committed to long-term investing goals versus short-term gains. This trend has one important benefit – as a result, many women also believe it’s important not to overreact in down markets; however, this can also lead to an incomplete understanding of the role of diversification in a portfolio. Still, don’t make the mistake of assuming women lean risk-averse – although 50% of women say their risk tolerance is conservative (compared to 30% of men), that also means that another 50% of women are not.

The good news, though, is that women are open to education. Take the time to help female clients understand. Discussing risk management holistically to explore the benefits and drawbacks of each asset and how they function as a mosaic point in the larger long-term funding picture is crucial.

Long-Term Care Misconceptions

Another potential gap for women exists around longevity risk. Women are more concerned than men about running out of money; however, the conversations around long-term care insurance or other common insurance products used to protect against funding deficits often occur only when the need arises. There is a sizable gap that exists between believing care is likely and having a funding plan.

Our research found that most women believe they’ll need long-term care, but fewer than three in 10 women have a plan to fund it. What’s more, when it comes to guaranteed lifetime income, only one third of all women say they own an annuity with a guaranteed income source, and about one in three say they are interested in learning about guaranteed income products.

The research also found that most women do not feel knowledgeable about Social Security. Therefore, it’s critical to help your female clients understand all of the options for income in retirement available to them. While it can be hard to talk about the potential need for long-term care, it’s still a necessary conversation.

Be A Champion For A Sidelined Audience

The combination of decision-making power and openness to guidance indicates that women are a critical audience for financial advisors, and with increased education, greater income producing capabilities and lower financial literacy, women want – and need – strong financial advice.

At the end of the day, the cost of delaying women’s financial success is too great. Whether married or single, women are no more of a homogenous group than men are, and the first step to building a more women-friendly practice is to ensure that you treat each client as a unique individual. Although some advisors may not feel that they have the relationship to champion a woman’s position, it’s long past time that these relationships are built – and take the stage as a main priority. By doing so, advisors can build relationships that resonate with women; relationships based on trust, honesty and transparency, which will foster greater success – and security – for both sides of the advisory table.




[1] U.S. Census Bureau, Age of 1st marriage, by sex, November, 2019
[2] National Center for Education Statistics. Digest of Education Statistics, 2019.
[3] National Association of Realtors, 2019
[4] Seeing the Unseen, The role gender plays in wealth management, Bank of America, 2020


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