The incoming generation of investors will be younger and much more diverse, with women now partaking of an increasingly prominent role in building and growing family and personal wealth. This includes millennial women, single mothers, and entrepreneurial women owning or leading a business.1 Many women realize that they cannot be separated from the financial decision-making process or they would be ill-prepared to manage critical life-changes such as divorce or death of their partner. There is a changing mindset among women— 74% of widowed or divorced women surveyed by UBS Group AG, reported: “discovering negative financial surprises after a divorce or death of their spouse.”
Financial advisors helping women invest take a solution-driven advisory role. Together they clarify women’s financial planning goals. We herein present how women are progressing rapidly in the investment world as we assist in planning areas of their financial independence.
Canadian women control $2.2 trillion of financial assets, and that number is expected to “rise quickly” to just under $3.8 trillion over the next decade. This figure represents 33% of all financial assets in the Canadian economy. We recognise the need for specialised planning and advice for women whose financial journeys often vary from those of men. Women aged 25 and older lead the increase in full-time jobs at 52% since 2008; whereas job placements for women over age 55 increased by twice as much as men. Also, women’s earnings now account for a record-high 47% of family income.
Why Women Excel at Investing
Working women with families who are increasingly becoming independent now implement financial choices jointly with their spouse. With a vital role in the decision-making process for themselves and their families, women excel at understanding personal financial planning. Whether a woman decides to pursue her career in the corporate world, work as an entrepreneur, take a leap from her career to pursue a talent, take a break and raise her family, or do more than one of these things simultaneously, it is essential that she enjoys financial independence to secure herself as well as the dependent family members.2
Financial investments empower the ability to realise both long- and short-term goals. Money leverages decisions that impact how to meet daily near-term budgetary objectives:
- expenses such as groceries;
- whether children will attend college or university;
- annual vacations;
- buying a home or moving to a larger house.
For long-term goals, statistics show that women are investing now to ensure they have adequate funds to achieve their future goals, such as:
- travelling, retiring with sufficient income;
- ongoing socialising with family or friends;
- maximising retirement income providing the desired lifestyle that meets future inflation;
- to achieve women’s potential longevity to age 85 or more, which generally exceeds men’s average lifespan.
To achieve these goals, it is imperative that women select excellent investments now, with proper investment performance track-record benchmarks.
Insights for Women Investors
Women like to Invest in what they know Women make roughly 70% of household purchases, putting them in a great position to benefit from the strategy that once made Peter Lynch a well-known strategic investor. He wrote, in his book One Up on Wall Street that his wife was responsible for turning him on to one of his best investment picks ever because she used the firm’s products. 3
Women mitigate risk Women approach investment risk differently than men do. Studies show that men are more inclined to behave like baseball sluggers, who swing for the fences, even if it means running the risk of striking out far more often.4
Women’s more calculated tendencies allow for more patience over the long-term while selecting great investments. A risk profile can help both men and women determine where each investor’s risk acceptance level is. A large selection of investments is available to balance the risk options.
Ensuring Asset Protection Strategies Women are often the first to understand the need to purchase life insurance which can help create financial security for loved ones while living and at death. Life insurance offers:
- Lifestyle protection for family
- Mortgage and debt protection
- Education funding
- Leaving assets behind for heirs
- Business continuation
- Charitable legacy
- Funeral costs
- Access to immediate cash when needed
1 CIBC Capital Markets; Advisor’s Edge
2 Entrepreneur Magazine