Women, Planning and Achieving

Stephen Parnell   |  Mon Mar 28 09:45:00 EDT 2016

Friendly smile of a beautiful businesswoman

My colleagues recently hosted a webinar called “Women Investors: The $22 Trillion Opportunity,” which brought to light a number of significant statistics with regards to women investors. The webinar revealed that women investors represent a substantial opportunity for financial advisors—not only do women currently control 51% of personal U.S. wealth (which amounts to $14 trillion)1, but that they will also inherit $42 - $110 trillion over the next 30 years.2 Moreover, it is expected that by 2020—just four years from now—women will control $22 trillion of personal U.S. wealth.3 This data, compounded by the trend that women generally outlive men, shows that financial advisors should be paying close attention to women clients, and finding ways to relate to and retain them.

Portrait of a senior woman.

We mentioned in a previous blog post that women face financial circumstances that differ from men, and that if financial advisors want to effectively reach and engage the women they advise, then those unique situations should be taken into account during the financial planning process.

To help women clients achieve their financial goals, I suggest taking them through the following scenarios, so that together you can develop a thoughtful, thorough and tailored plan:

Becoming a Caregiver
An estimated 66 percent of caregivers are women4, which shows that the likelihood of taking on costs associated with caring for others is higher for women than for men. Ask your female clients to consider whether there is the potential that they will wind up taking in her parents, in-laws or even adult children. If any one of those scenarios—or more than one—is even a remote possibility, then next you need to take them through what becoming a caregiver means from a financial standpoint. The financial impact of caregiving may be substantial and dramatic when time away from the workplace is considered, which could lead to a reduction of salary, smaller retirement plan accumulation, decreased Social Security benefit and potentially diminished role at work. The caregiving role will require a particular and as-yet unknown budget, and they need to be prepared to weather that burden, should this scenario become their reality.

The 30-Year Retirement
We’ve all heard that women live longer than men, and that women make less money than men, which essentially leads to the conclusion that women will need their money to go further and last longer. But that’s not the whole story. Women who reach the age of 65 have a 49% chance of going on to live to be 89, and a 23% chance of living to the age of 955. Those scenarios could translate into 30+ years of retirement. The women of today, therefore, need to be thinking long-term with their financial planning and budgeting, so that their funds don’t outpace their longevity.

The Under-Budget Budget
With potential changes being made to Social Security and pensions becoming a thing of the past, retirement savings have taken on an increasingly critical role in our future quality of life. It can no doubt be difficult to predict how much we actually need in retirement, and that could lead to an underestimation. Consider this: a retired couple eats three meals per day, and each meal costs just $5. After twenty years of that strict regimen and budget, that couple will have spent $219,000—and that is only on meals. Add in the cost of healthcare, home maintenance, clothing, transportation, hygiene, socialization, etc. and that number grows very quickly. Then, however, it’s also important to think about the unknowns—taxes, inflation, stock market volatility, interest rates. There are many factors that go into managing a home and a family, and all of that—and then some—needs to be factored into the financial planning process.

Before getting into all of these potentials with women clients, financial advisors need to first grab their attention and make them aware that you recognize their circumstances and the challenges they face, and that you can be a partner to them in preparing for any and all of the possibilities. I’d suggest hosting a client event for women only, and asking the invitees to bring along their female friends and/or family members. That way, not only will you establish an opening to speak with your women clients about—and help them work through— these scenarios, but you will also put yourself in the position to attract new women investors as clients. Considering the opportunity women present, doing so may be beneficial to both their future and yours.

1 Source: Business Insider, 4/7/15
2 Source: Administration on Aging, U.S. Department of Health and Human Services, A Profile of Older Americans: 2012
3 Source: Business Insider, 4/7/15
4 https://caregiver.org/women-and-caregiving-facts-and-figures
5 Source: Society of Actuaries Annuity 2000 Mortality

Stephen Parnell

Stephen Parnell  

Director, Strategic Markets

Stephen Parnell is a director of strategic markets for Hartford Funds. In this role, he presents timely and relevant content for the benefit of financial firms, advisors, and their clients, and works with the Massachusetts Institute of Technology AgeLab to build awareness and knowledge of aging and retirement challenges and life planning strategies.

Stephen originally joined the company in 2005, and rejoined the company in 2016. Prior to rejoining, he acted as retirement plan specialist and managing director for Parnell Retirement Plan Consulting. In his former position, Stephen worked with plan sponsors to help them better understand trends in qualified and non-qualified plans. With more than 30 years of experience in the industry, his expertise and focus included retirement plan design, IRS/DOL compliance solutions, participant/employee education, and distribution strategies.

Stephen has been a speaker and panelist at numerous regional and national events and conferences. He has conducted several hundred continuing professional education courses, as well as nationally televised education through National Registry of CPE Sponsors offered by National Association of State Boards of Accountancy.

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