Women's Experience in a Decidedly Male-Tailored Financial Landscape
Kathy Longo, CFP®, CAP®, CDFA Wednesday, 20 June 2018
The recent and sudden passing of Kate Spade due to suicide has raised awareness about mental illness and the challenges women face in middle age. Based on my experience working with women of all ages, I know that the stress of life can lead to mental illness and long-term health problems if not addressed proactively. Although I’m not a mental health professional, I felt compelled to write an article about those challenges with an emphasis on ways in which we can help one another to find a greater peace, a space where we are heard and understood, and a place where we are empowered to take control of our financial and personal lives.
Since the year 2000, suicide is up nearly 30% in the United States. For women between 45 and 64, however, the suicide rate increased by 60% and suicide has now become one of the top ten leading causes of death among middle-aged women.[i] While there are many opinions about why we are seeing this alarming trend, one theory that resonated with me was the amount of pressure women have on them from their jobs and families as well as maintaining an image of having it “all together”.
Challenges We Face
Women now make up nearly half of the workforce and the expectation and desire to succeed in our careers has grown drastically in recent years.[iii] But still, statistically, women take on the majority of domestic and family responsibilities as well as working full time and what’s left over is not a lot of time for women to take care of themselves, seek help when they need it or simply take a moment to regroup.[iv] According to a recent survey by the Working Mother Research Institute, even mothers who are the primary breadwinners for their families take on the bulk of the household chores.[v]
With the pay gap narrowing, women do have small victories to celebrate. Unfortunately, life for women in many cases is not much different from forty years ago, except for the fact that we are doing twice the work, only getting paid for half of it, and the half that we are paid for still doesn’t match up to our male counterparts. On top of that, women are twice as likely to take time off to care for an ailing loved one or children and that makes the pay gap larger. The impact of this pay gap doesn’t just impact the here and now, because it’s the money women need in the future that suffers as well.
The Retirement Savings Crisis is a Women’s Crisis
Retirement income often relies upon three main conduits: Social Security, pensions, and personal retirement savings. According to a recent study from the National Institute on Retirement Security, women are 80 percent more likely than men to be impoverished at age 65 and older.[vi] Financial inequality in retirement is driven by socioeconomic inequality throughout their lifetime and career. This inequality is largely due to the fact that women are twice as likely as men to reduce their employment or leave the workforce altogether to care for loved ones and children. In doing so, they miss opportunities for promotion and pay raises. They also lose the ability, during those times, to invest in their retirement savings accounts and contribute to Social Security. Additional factors of a longer lifespan and the high likelihood of outliving your spouse leads us to the crisis in which we currently find ourselves.
The Challenges Women Face Prior to and in the Aftermath of Losing a Spouse
Building upon the existing challenge that women have in retirement income disparity, we must then look at what challenges many women face when it comes to losing their spouse. According to the last census, 45.2% of women aged 65 and above were widowed compared to 14.9% for men.[vii]
With the average age of widows being 59, it is more difficult to manage the financial strain caused by the death of a spouse on top of the grieving process, with the added emotional strain of helping your children and loved ones through the grieving process as well. The household income for widows typically declines by 37% after a spouse dies. Sadly, in most cases, the expenses stay the same and this often results in women selling off assets and adjusting their lifestyle habits to offset or reduce the costs.
Research suggests that most couples are ill-prepared for the loss of a loved one, both emotionally and financially. While preparing yourself emotionally for the potential loss of a spouse may be nearly impossible, being financially prepared is possible.
The antiquated traditions of the financial services industry are rampant with sexist undertones. For a very long time, women were only considered “the spouses” and were only contacted by their financial advisor once the husband passed away. This is probably why it is so common for widows to leave their advisors within two years of their spouse dying.[viii]
Male financial leaders have even had the audacity to argue that women aren’t cut out for investing because of their inability to understand complex math and due to their “weaker natures”. Even the President of Harvard University, in 2005, argued that men outperform women in math and sciences because of biological differences and that discrimination is no longer a career barrier for female academics. A male colleague and economist at Harvard and the London School of Economics agreed.[ix]
While these relics are scoffed at in polite conversation, the standard practices of inclusion suggest that, while it may not be a conscious thing, women are still not considered equals when it comes to planning and investing. This stereotype persists despite the statistical evidence that women are more successful investors than men[x] and with the knowledge that women often make choices to benefit themselves as well as the common good of their families and society writ large.[xi]
What We Can Do: Refitting the Advisory Industry to Fit Women’s Needs
In recent years, we have seen drastic changes in the advisory industry’s approach to cultivating relationships with women. However, we still have a long way to go. The fact that the industry is severely male-dominated and that the culture within the industry remains pretty misogynistic does not support the efforts that many advisors are making to improve the way in which they are speaking to female investors from all stages and walks of life.
Over the coming years, advisors need to change our rhetoric and practices, not just on the retail side (the clients we serve) but also on the institutional side (the foundation of how we serve you). We can do this by including more women in managerial positions in investing and planning, not just in HR or marketing, and empowering advisors of both sexes to tailor their services to male and female investors. Women have controlled more than half of the nation’s wealth since 2014 but the financial industry didn’t start to take notice and do something about their relationship with women until very recently.[xii] We need to learn how to listen better and keep our finger on the pulse of our changing society.
What You Can Do:
Nearing or In Retirement
If you are nearing or in retirement, the best thing you can do is educate yourself on what you have, what you need, and empower yourself to consider what you truly want. Those tools combined with a relationship with an advisor who truly listens to you and has your best interests at the forefront of their process will help you make the most of what you have right now.
For those women who have lost their spouse and lack confidence in their current financial situation, or don’t have a strong relationship with their current advisor, we are sorry for this difficult and emotional transition. Navigating through your benefits and your documents and the planning necessary to ensure you are making the best decisions for your future is doubly challenging in these times. Seeking guidance from family, friends, and professionals who you trust can help you gain clarity and still have some time to take care of yourself.
The most important guidance I can provide is to put yourself before others. As women, it is in our nature to nurture and to put others before ourselves. When it comes to your retirement savings and your financial well-being, it is critical to ensure that you have “put your mask on before helping others”. You cannot do for others until there is a solid foundation to protect your well-being and financial security. Start by developing a plan that provides a high level of security for your retirement years, and then you can begin incorporating others’ needs into your objectives.
More Time to Plan
If you are still in the throes of your accumulation phase and you have some more time to build a long-term plan, our advice is different. Unfortunately, the equity in financial security is not going to right itself overnight, so the best thing to do is take actions that will mitigate the impact on your personal situation.
Start planning early. Considering your estate and your advanced aging plan is not just for those who have passed middle age. It is important to lay the groundwork for that as early as you can, especially if you may decide to take time off to raise your children or if you might need to care for a parent. Advanced investment planning can help offset the loss of income with strategies that will build your wealth when you aren’t working. This way, if your Social Security is lower when you retire, or if you didn’t stash quite enough away in your company retirement plan, or if you weren’t fortunate enough to work at a company with a pension plan, there are other resources for you to pull from.
Communication and education are paramount to successful long-term planning. Talk with your loved ones and spouse or significant other about the balance of domestic responsibilities, child care, and other non-work-related responsibilities so you have more opportunities for financial accumulation over time. Educate yourself on what your opportunities are and find resources to help you invest wisely and plan strategically for you, not everyone else.
Equity for women in career, pay, civil rights, and domestic life has come a long way from where it was sixty years ago, but there is still a long way to go. In the absence of perfect equality, it is our job to continue to demand it and to empower ourselves to take it when the opportunity arises. It is often said that money rules the world, and while I like to think less cynically than that, wealth has a great deal of power. Women who are educated about what they deserve, what they need, and what they want are formidable when equipped with the wealth to be able to fulfill their goals and aspirations. At Flourish, we understand the unique challenges that women face and we provide guidance toward the opportunities that are available to overcome those challenges.
We are grateful for all of our loyal clients, both women, and men, and we encourage those who aren’t our clients to contact us for an initial consultation to discuss your unique wealth objectives. Life is full of positive moments, painful transitions, and personal triumphs, so our team strives to understand how we can design a long-term plan customized to the characteristics of each client.
In the process of writing this article, the world lost another icon, Anthony Bourdain. He was a fascinating and thoughtful man who dedicated much of his time in recent years to stand with the #metoo movement and defend women’s rights. Please know that the subject matter of this article in no way intends to diminish the suffering of all people, men and women, who struggle with depression, suicidal thoughts or other mental illnesses.
The National Suicide Prevention Line provides free and confidential support for people in distress. If you or someone you know is in need of their services, call them at 1-800-273-8255 or visit their website to chat.
About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.