Although most women do not see themselves this way individually, women as a group, are an economic powerhouse. Through increased earnings, a larger share of inherited wealth and greater longevity, the influence of women is on the rise. In fact, women are projected to control 2/3 of the nation’s wealth by 2030. Consider that:

  • Today, women are already the breadwinners or co-breadwinners in 2/3 of American families. Women earn more in 40% of couples, and an equal amount in another

  • A whopping 70% of baby boomers’ wealth is projected to transfer to daughters.

  • So women are earning more, inheriting more and it’s no secret that women are living longer – and outliving men.

However, regardless of the size of their pocketbooks, most women have a fear of ending up penniless later in life. So pronounced in women, this often irrational fear has been dubbed the “Bag Lady Syndrome”… Women want to be educated about finances… Women want straight-talk without industry jargon… Women are more interested in knowing they are on track to reaching their goals than trying to beat the market… With a projected 95% of women taking up the reins as primary financial decision-maker in their homes at some point in their lives, the influence of women is increasing – and so, therefore, is the need to understand women and their relationship with their money.

AICPA Podcast Transcript featuring Paula McMillan, CFP®, CPA/PFS, CGMA

(continued from above):

What does this increase in women’s influence mean? It means:

  • More Attention: The power of this segment cannot be ignored by those who provide her with services, such as us, her advisors.

  • Greater Understanding: We know more than ever about women as a segment (i.e. her strengths, challenges, issues, even how she likes to be advised when it comes managing and accounting for her money).

  • Better Service: Informed advisors will use the understanding to cater to her unique needs and preferences.

  • Heightened Self-Expectations: She directly or indirectly feels and sees these trends impacting her. She wonders. Do I know enough? Am I prepared? Am I doing the right things at the right time? Am I on sound footing – a secure financial path for the future?

While the often complex financial needs of women defy generalized segmentation, there are some notable consistencies among a great number of women. So, what are those common attributes we are seeing across a large cross section of women? If we were to develop a persona of the woman and her money as it relates to her goals and dreams, what might that look like?

Running out of money is her number one fear. This is such a common and deep-rooted concern among women, that it has been dubbed the Bag Lady Syndrome. What if I outlive my money, lose my home and end up destitute and alone? This is so prevalent that a quick Google search will lead you to pages of articles, books and other reference material on the “Bag Lady Syndrome”.

In my experience, every woman I have worked with has some form of this anxiety over ending up without resources later in life. I have clients who are multimillionaires who admit to staying awake at night with this worry over losing all of their money and spending the rest of their lives poor and alone. It does not matter how much money she has. It is more about the underlying fear of losing it all. One third of women with household incomes of $200,000 plus, often or sometimes fear losing all of their money and becoming homeless.

And what about men? Why do they not share this anxiety? According to Personal Finance Editor Richard Eisenberg, While some men do feel similar concerns, their needs and perspective can be quite different. Eisenberg says for the most part, there are three things says men don’t think they need help with: 1- directions on the road; 2- advice in the bedroom –  and 3- money. He says men think they can figure it out on our own. That confidence men have about figuring it out on their own as they go along is not shared by most women.

  • Most women feel the need to know more before making financial decisions which can lead to procrastination. This can really hurt their ultimate savings when you consider the delay many women have before investing with the loss of compounding power. 10 years Sallie | To help her attain the knowledge she needs to move forward, she wants:

    • customized planning, along with financial and investment education, tailored to her

    • good communication with you, as her advisor, with the confidence that you will coordinate with her other professional service providers on tax planning and other strategies

    • a thorough understanding of her company’s healthcare, insurance and retirement benefit plans

  • Women investors are more apt to focus on a family’s financial goals over their own absolute investment performance. While market performance is seen as the leading objective for men in measuring wealth, wealthy women’s focus is on achieving personal life goals. Men, at times, have been seen as viewing investing as a game, with a greater desire to beat or track the market. However, even if it means underperforming the market, women are more likely to be happy with either a small guaranteed rate of return or positive movement toward being able to achieve stated goals, like:

    • paying for child or elder care,

    • funding college for children and grandchildren,

    • starting a business,

    • saving money for long-term care and retirement

    • accomplishing charitable endeavors.

  • Women have a broad perspective about what being wealthy means throughout life. Most women feel there are other factors beyond finances go into determining one’s wealth.  They typically appreciate the complexities that come with life, family, careers and relationships more and more over time.  Over time, they become increasingly concerned about passing the right values on to their children and grandchildren. Many find great fulfilment in giving back to the community. They see it as more important to achieve goals like these than just adding to their bank account.  For women, the security and freedom money brings typically trumps the status and respect it affords. Only 10% of women say they feel extremely financially secure.

  • Advisor relationships built on trust are paramount for women, demonstrated primarily through transparency and clarity. Female doctors, attorneys and other professionals very accomplished in their careers will often admit to feeling inept when it comes to financial matters. It is no wonder why when faced with so much confusing financial jargon by advisors, writers or broadcasters who do not take the time or care to communicate in an understandable, engaging way. I see many advisors still functioning under the old paradigm that using complex words or concepts will impress clients into seeing how valuable they are. Many advisors just do not realize or appreciate that their value as an advisor is tied to their ability to make the complex simple. This inability to connect with her in a way that makes her comfortable with her financial matters leaves her with no idea where to turn or who to trust. While men also experience these challenges with understanding advisors and their jargon, women are typically more honest than men about money matters and challenges.

  • Women are known to make less in the same role as a male counterpart. conference- waits to go for the job promotion We’ll talk more about this in a follow up podcast in this series, Breadwinner Women: Sandwiched Between Career, Children and Caregiver. Be sure to tune in!

  • Women going through divorce can be especially at risk for making emotional decisions that can have catastrophic effects on their long-term financial well-being. Mistakes smart divorcing women avoid will be featured in a follow up podcast in this series, Women Navigating Divorce, Independence and Finances. Don’t miss it!

  • Knowing they will likely live longer, women have to prepare to fund more years without income. We’ll talk more about the special nuances of working with widows in a follow up podcast in this series, Widow Can Feel Like a Four Letter Word. Tune into this one too!

Every client has expectations of they type of relationship they want with their advisors. With a woman, she must first know that you care about her before she even begins to care about what you know. Trust is paramount. Then, she will be looking at what level you can:

  • Build authentic and holistic relationships: Beyond understanding her financial needs and risks tolerance, what are her unique life concerns? What makes her happy? What are her values?

  • Communicate clearly and intelligently at the same level: Do you talk to her in a way she understands and finds engaging, without talking down to her? Are you helping her simplify her financial life and the way she thinks about it? Are you educating her in a way that imparts confidence in you – and more importantly herself – along the way? Are you organized and respectful of her time?

  • Be her go-to partner in life-planning: Do you help her identify and explore her options, leading discovery and resolution efforts with her other advisors? Are you long-term focused in helping her make financially savvy, informed decisions? Are you knowledgeable about planning strategies and tactics to help her through life concerns that often keep up at night like:

  • Effects of aging

  • Losing spouse

  • Dependency

  • Los or reduction of income

  • Health issues and cost of health care

Are you sensitive to and able to help her plan for potential life transitions that may happen to her and those she loves such as:

  • Maybe marriage… Maybe divorce. Maybe remarriage

  • A career change

  • Her aging parents

  • An empty nest

  • Retirement

  • A sizeable inheritance

  • The loss of a beloved spouse

  • Even, perhaps, incapacity

In summary, financial planning for both men and women is challenging and critical. There are many mutual concerns:

  • Procrastination when it comes to planning for retirement and other important life events

  • Failure to realize the impact of increased longevity and inflation

  • Difficulty planning for extreme, rare events with severe consequences like the 2008 financial crisis, dot-com bubble of 2001 and others

  • Tendency for 24/7 media to create hype that can lead to knee-jerk decisions and overall depression

  • Rapid change due to advances in technology, globalization, aging population and urbanization

  • Underestimating rising health care costs

  • Unsustainable spending habits

  • Difficulty managing risks

  • Confusion over investment options

  • Combatting tendencies toward fear and greed in investing

While these are challenges for both genders, I chose to highlight women, specifically, in this series, due to the added difficulty they often experience in navigating these challenges. Women often find themselves in a position where they have to plan for a longer life, with less cumulative resources, often among advisors that fail to understand their unique needs and preferences. I see that statistic of 95% of women becoming the primary financial decision-makers in their households play out. When it happens, and women are not prepared, particularly through death or divorce, it makes the cataclysmic event that much painful and protracted.

For this reason, I always encourage my male clients who tell me, “It’s okay Paula, she knows to call you if something happens” to include her.  No one wants to be learning about financial planning and investing for the first time when in the middle of an emotional maelstrom.

We all want to know we have enough to sustain ourselves throughout life’s ups and downs – and that knowledge is power. Encouraging that power is love.

Bio: Paula McMillan, CFP®, CPA/PFS, CGMA

Paula McMillan, CFP®, CPA/PFS, CGMA helps people answer the question “Do I Have Enough?” to achieve and maintain financial independence. She does this through creating detailed financial plans for people and managing their investments for growth. She is a Senior Financial Advisor with Stearns Financial Group.

Paula serves on the AICPA’s Personal Financial Specialist (PFS) Credential and Advanced Personal Financial Planning Conference Committees, the Society for Financial Service Professionals’ Foundation Board and founded and chairs the NCACPA Triad Women’s Initiatives Group and Plenteous Financial Forum. Paula is also an active member of the Greensboro Estate Planning Council and NAPFA.

Paula has been published and quoted in national and local publications, including AICPA’s The Tax Adviser, Kiplinger’s and The Business Journal. She created two national AICPA podcast series on retirement planning and women and wealth. She is a TEDx presenter on the topic of Retirement: Longevity and Security. Paula regularly delivers presentations to national, regional and local audiences on financial life planning related topics.