A financial report on women and finance released by Prudential Financial, Inc. this year revealed that only a small percentage of women – 7 percent, to be exact - are confident about their ability to save and invest wisely.
The eighth biennial study, titled “Financial Experience & Behaviors Among Women,” was dissected and discussed at a July media briefing among journalists, editors and financial experts at the Four Seasons Hotel in NYC. Lori Fouche, CEO of Prudential Group Insurance; Lynnette Khalfani-Cox, The Money Coach, Personal Finance Expert; and Jean Setzfand, Vice President of Financial Security, AARP served as guest speakers.
“The economic volatility of 2008 shook the confidence of many women, as well as many seasoned investors and financial professionals,” said Lori Fouche. “Considering the strength of the financial markets over the past few years, it is understandable many women now feel a little more confident about their financial future. But just because women are less worried, doesn’t mean they feel ready to make important, long-term financial decisions. What is worrisome is they still aren’t seeking help from financial professionals to do so.”
According to the guest panel, the do-it-yourself (DIY) approach to personal finance has become part of the financial landscape for many women. They tend to be comfortable charting their own progress partly because they are suspect of financial planners. What becomes a question for some women is how much a financial planner should be paid…and, for example, is a fee-only adviser better than a commission-based one? They also have difficulty judging whether they’re getting their money’s worth; they want to understand what they’re paying for. Add to that the fact that the digital world provides numerous DIY options such as online financial planners that come complete with calculators, charts, equations and graphs.
The panel equated these findings with the preposterous idea of self-serving our healthcare or car repair needs, something many people wouldn’t even consider
Moreover, statistics show that only 1 out of 3 women employ the services of a financial adviser and geographically, NY women use advisers less frequently than women from other states, even though, ironically, this is the home of Wall Street and thus the mecca of the biggest financial companies in the nation.
Jean Setzfand furthered the discussion by sharing that, when it comes to saving, one has to understand the problem before trying to fix it. “The question is: do women recognize all of the parts of the equation?” she posed. Those parts, for example, can include the possibility of outliving one’s income. Then what?
Says Fouche, “Regarding the need to save, people are focused on what they need today…the here and now that’s required to survive and make ends meet. The level of comfort is around the day-to-day savings, mortgage payments, credit card payments etc. as opposed to longer-term products such as 529 college plans.”
A quick snapshot of the study reports:
- Women feel more confident about their ability to manage the day-to-day household finances, with nearly a third giving themselves an “A” for their knowledge of managing money (33%) and managing debt (29%).
- Some 75 percent of women believe having enough money to maintain their lifestyle in retirement is very important, but only 14 percent are very confident they will be able to do this. This gap is virtually unchanged from 10 years.
- Only 33 percent of women feel they are on track or ahead of schedule in planning for retirement, down from 47 percent in 2008.
- Many women, 66 percent, say it’s important to keep pace with rising health care costs, but only 9 percent are confident they will be able to do so.
A copy of the report in its entirety is available on Prudential’s website.
In closing, Lynette Khalfani said, “Preparation precedes confidence,” and likened the process to a college exam that you prepared for beforehand. “When you think back to a particular college exam that you stayed up all night studying for and perhaps you attended a study group and you read the book and did everything you could to be ready for that big exam, chances are, you were confident taking that exam and you probably did well. It’s the same thing with personal finance. We’re more confident when we prepare.”
Fouche suggested that women reflect and come to their own conclusions. “Our survey doesn’t necessarily offer solutions. Instead, we hope to stimulate the conversation, which hopefully leads to solutions and actions. But based on the survey, something we’re doing isn’t quite resonating. We need to be more thoughtful about improving outcomes associated with retirement.”