Professional women face unique financial challenges in America. But perhaps the biggest obstacle to overcome is the mistaken fear that women are not good enough to handle the finances. A 2021 Fidelity report found that women investors outperform men by 40 basis points (0.4%) — translating into tens of thousands of dollars over time. What’s more, 67% of women surveyed saved beyond their retirement accounts (up from 44% in 2018), and 20% have over $100,000 saved. Despite these successes, only one-third of women see themselves as investors.
So, if you’re a professional woman in America, the first step toward overcoming the myriad of financial challenges you face is to first understand that women have a place at the table. They need to sit at the table when it comes to financial decision-making, and they need to take up space.
Now, let’s examine some of the other barriers women face when it comes to investment management and consider what we can do to gain the financial security we I deserve.
Unfortunately, the wage gap is still a genuine phenomenon:
Without paid parental and caregiving leaves or work schedule flexibility, women are forced to cut back. And here’s the real problem: women are the sole or primary breadwinner in 41% of American households with children, according to the Center for American Progress.
When it comes to investing, fear is one of the biggest challenges. Men may tend to look for “the next hottest stock,” while women are likelier to set it and forget it.
Studies show women trade less often—though it’s not because they statistically take fewer risks than men. Instead, women simply require more information before taking action. And they’re more likely to seek the help of an independent advisor to guide their trading decisions.
As a result, women hold 23% more assets in balanced funds, 12% more assets in target-date funds, and they’re up to 50% less digitally active on the trade markets.
These strategies tend to work out quite well for women. Once they have the confidence that they can be invested in the market, they can go in, make good choices, and stay the course for the long term.
Often after a divorce, women who had taken a backseat on finances now find themselves in the driver’s seat wondering, “How do I build confidence? How do I build my knowledge base? How do I get to a situation where I understand what I’m doing and feel in control?”
Here at EP Wealth, we have financial planners who are experts in divorce transitions. We can run through a financial plan, separate and sort assets, and look at the potential long-term impact.
One common mistake is that women automatically say, “I want the house” because they have kids to raise or feel attached to the home—and leave the 401(k) untouched. But a U.S. Government Accountability Office study found that women’s household income tends to fall 41% after a divorce or separation over 50, whereas men’s household income only drops 23%.
So, it’s always best to conduct the analysis, model out different scenarios, and walk through your choices. Sometimes it makes more sense to take some of those tax-preferred dollars we can’t access now because it may pay more down the road.
Often EP Wealth advisors meet with women professionals who reach a stage where they’re unhappy with their jobs and want to transition into something less stressful or take a few years off. In 2021, 48% of women were contemplating a career change—particularly one with greater flexibility to work from home. We can help you navigate the whole financial planning process before you take the leap.
Another fear women have is this vision of running out of money after retirement and becoming the stereotype of a penniless old lady. The reality is that women tend to live at least some of their lives alone. On average, U.S. women tend to live 5.7 years past men. So if your husband dies first, what will you do? While it can seem morbid to dwell on the possibility, this type of financial planning is too vital to overlook.
Working with an advisor, you can build a plan with cash flow to age 100, including what your taxes, medical care, and other expenses are likely to cost.
Factors can change and financial plans are never a “one and done” type deal, so it’s always good to have someone in your life who can remind you to take regular financial health assessments, help you develop a plan for consistent long-term savings, and can give you the confidence to stay the course when necessary.
Here are a few additional financial education tips to consider if you’re a professional working woman:
Despite all the obstacles professional women may have to face, understanding and taking charge of personal finances doesn’t have to be one of them. By simplifying complex ideas, educating you on your financial planning choices and empowering you to make the best decisions possible, they help create a light at the end of the tunnel and peace of mind when it comes to your financial future. As social psychologist Amy Caddy puts it, your body language shapes who you are -- if you’re ready to take a seat at the table (and take up space when you get there), contact an EP Wealth Advisor today – because you’ve earned it, and you’re worth it.
Disclosures:
EP Wealth Advisors, LLC (“EP Wealth”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented in this report. EP Wealth has used its best efforts to verify the data included in this report. The information presented was obtained from sources deemed to be reliable. However, EP Wealth cannot guarantee the accuracy or completeness of the information offered. All expressions of opinion are subject to change without notice.
The content of this report is believed to be accurate as of the date of publication and cannot and does not accurately forecast future economic, market, or financial conditions; including changes to retirement benefits, social security, and/ or Medicare. For this reason, any subsequent changes, and/or that occur after the publication of this presentation may cause the analysis encompassed herein to become inaccurate. Any references to future market or economic forecasts are based on hypothetical assumptions that may never come to pass.
The information presented here is not intended to be regarded as a comprehensive list of considerations, including but not limited to, categories, services, or qualifications that a client or prospective client should consider when assessing or comparing Financial Advisors and/or Firms. As the author of this piece, EP Wealth Advisors, LLC (“EPWA”) has tailored the messaging of this article to align with the categories, services, qualifications, capabilities and services that it offers. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.
There is no guarantee nor is the intention of this publication to establish any sense of assurance, that, if followed, the strategies referenced here will produce a positive or desired outcome. In fact, there is no guarantee that any of the steps detailed will enable the ability to generate successful or appropriate strategy or approach. The intent of this article is strictly for educational purposes.
The need for a financial advisor or financial planner and/or the type of services required are specific to the uniqueness of each individual’s circumstances. The referenced material identified herein is limited in nature and specific to what is offered by EPWA. There is no guarantee or warrantee that the services offered by EPWA will satisfy your financial services requirements. Services offered by other advisors may be more suitable to your specific needs.
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