Financial Advice for Women
Did you know a woman's financial planning needs are likely to be quite different from a man's? In this video, I share what I have learned are the specific needs of women clients.
Transcript:
Introduction
Did you know a woman's financial planning needs are likely to be quite different to a man's? Let's talk about that.
I’m Cleona Lira, Founder of Conscious Money. Chartered Financial Planner and an Independent Financial Adviser with over 14 years of experience. I’m passionate about helping people have freedom and clarity with money and life.
What women want
I’ll start with what, in my experience, women specifically want from their financial adviser.
Let’s say everyone wants a financial adviser that’s competent, well qualified, has integrity, is trustworthy and has their best interests at heart - so let’s take that as a basic given.
Women specifically? They want to be spoken to in a way that they can better fully engage with the financial planning process, in simple, jargon-free terms, so they can feel more confident and competent about their financial decisions. They want an environment where they feel comfortable learning
I usually check what would be helpful before offering explanations, the level of detail required or learning resource recommendations such as books. Information overwhelm is a real thing so it helps to provide information in digestible chunks.
I’ve worked with a wide range of men and women clients over the years including finance professionals in Canary Wharf, London; whilst highly financially literate that did not necessarily translate to being competent at personal finance. One can be an expert in one’s own field like convertible bonds trading but be quite unclear about the in’s and out’s of stocks and shares ISAs. So, in my opinion, we all need greater financial literacy.
Successful investing behaviours
In terms of investing, studies show that women can actually be better at it than men. Women tend to avoid “lottery style” trading and don’t suffer as much from investing flaws like overtrading that overconfidence brings. Women behave more like ‘buy and hold’ investors sticking to their long term goals.
Most successful investing is really about managing emotions, habits and reactions around money. That’s why behavioural coaching, I believe, is a big part of a financial advisor role. Being disciplined around investing and not reacting to fears, the economy, markets and news are important. In my experience, women are quite open to receiving guidance and behavioural coaching.
Unconscious Bias
Unconscious bias plays a part in how women are sometimes treated when it comes to managing their financial decisions. Often when a man is present, it is assumed that he is in charge of the financial decisions within a household or is more knowledgeable.
I have heard some stories of women clients feeling patronised - the adviser may speak at them about irrelevant things, or unconsciously ignore the woman and only make eye contact with their partner. I've heard of examples like a woman being asked to run the decision first past her husband.
I can also speak from my own experience about these gender biases and assumptions...when I hire people to work in my own home and my husband is present, the person may assume he is the sole decision-maker when clearly we both are. Even when I ask the question, he may answer and not realise he isn’t still looking at me - this is all unconscious and I don’t wish to blame or complain but by talking about these issues and confronting it with care for the other, we can also help social change happen in small ways, in our circles of influence.
The good news is we are all becoming more aware of our biases. We all have them. The key is adapting ourselves to ensure we’re more inclusive & empathic; really listening for what is important, for values and goals, with money and life...is essential to being an effective adviser.
If we had more women in leadership positions like finance, politics and managing businesses, the world would look very different and in my opinion, more balance would work better for the needs of all beings.
Preference for gender or agnostic
Also, some women have a gender preference. As an adviser, I work with all genders but I definitely adapt how I communicate. And of course, some women may prefer a man too or have no preference. And it is okay to have whatever preference you have.
Often the financial paperwork that we use within the industry such as key feature documents for a pension can be written in language that is alienating and frankly, challenging for anyone to read. The industry is changing slowly; meanwhile, being aware of this issue and providing support is important.
Are women savers, not investors?
There are often misconceptions about women not being as interested in investing...being savers rather than investors...or being risk-averse or being less knowledgeable about investing. In my experience, when women understand how risk, reward and investing work & are conceptually clear, they are comfortable investing whilst adopting a risk profile that suits their goals and time horizon.
Fidelity UK study: Systemic issues
A Fidelity UK study states ‘the majority of women don’t invest in the stock market’,’ and ‘women favour the perceived caution of cash.’
Women face penalties that affect their career progression and earning potential titled in the study as ‘The Motherhood Penalty’, ‘The Childcare Penalty’ and ‘The Good Daughter Penalty’ - namely, opting out of careers to have children, paying for childcare and caring for elderly relatives. The word 'penalties' is cringe-worthy to hear as it implies being punished for contributing to caring for life itself. And yet the reality is that our economic systems do not recognize women (or men) or for making choices for ‘unpaid’ yet hard work.
Women have a smaller pension pot size than men at all ages, tend to have more money in cash ISAs and less money in Stocks & Share ISAs overall. While it is important to have adequate cash savings in an emergency fund, having cash in a savings account earning very low-interest rates can be “recklessly cautious”. As women live longer, women are then also exposed to longevity risk, which is the risk of outliving personal assets. Assets need to grow higher than inflation to counter this risk - with this longevity risk in mind, being too cautious and not investing enough can be risky.
The needs of childless women are different too; the emotional security needed around financial planning is different. So, each client has to be looked at with fresh eyes, freed of assumptions.
Empathic, non-judgemental adviser
The importance of having a financial adviser that understands the systemic factors affecting women is vital in order to plan even smarter and strategically, to overcome the obstacles.
If you do work with a financial adviser, there are times when you get personal with conversations. Money is personal. You might lose a close family member or get divorced - these can be very painful experiences.
You want to choose someone that won’t make you feel judged for your decisions or emotions. Make your needs known to your adviser, advocate for what you want.
Financial advisers are open to adapting how they work with clients. If you know what works best for you, ask for what you need. For example, if you want to learn more about investing, ask for book recommendations, if you enjoy reading.
Final 3 tips
I have 3 more tips to feel more powerful around money:
First, empower yourself with financial literacy skills. Read your pension valuation statements, Google any terms you don’t understand, read some personal finance blogs, listen to personal finance podcasts, call the pension providers help-desk at work and ask them to explain or help you with reading material to help you understand what you are reading- be persistent with this. And google Trustnet and the names of the funds you are invested in and train your eyes to visually read the information- information is so easily available and you can train yourself to read this if you are willing to persist through some initial discomfort...we all dislike feeling incompetent but do persist. Oh, I have a little plug - my monthly conscious money newsletter with honest, helpful resources.
Speak to someone you know who is financially more literate than you and willing to help or mentor you. I encourage you to advocate for your own needs - for financial literacy and healthy financial choices.
Second, let’s break this taboo around money talk. Let’s try to move away from this social conditioning we have and move towards feeling comfortable and confident speaking about money.
And lastly, act soon. Compounding & longevity can work in your favour. Good luck and happy financial planning!
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