It wasn’t so long ago that men handled all of a family’s money matters, from being the sole breadwinner to deciding where to open a checking account. Now, women are the ones in charge of the family’s financial decisions. Today, 95% of women claim to be the financial decision-makers in their households, and 84% of married women say they are either solely or jointly responsible for household financial decisions, according to Prudential Financial.
57% Of Women Are More Cautious About Money
In light of the economy, both men and women are feeling more anxious about their financial portfolios, but that’s about the only emotion shared by both genders. Women are much more pragmatic and less risk averse across all financial planning components, whereas men are much more confident, says JWT’s Ann Mack. In fact, the market crisis has led to 57% of women saying they are now even more cautious about money.
A family member or spouse (64%) is the first resource women turn to in making investment product decisions, followed by printed materials (62%), the Internet (42%), provider/employer plan website (42%), co-workers (34%), seminars/meetings (30%), and a financial advisor (29%). That said, 35% feel the most important source of financial education and advice comes from a financial advisor.
Despite women’s increased involvement in handling financial matters, many are still intimidated by money talk. Fewer than two in 10 (18%) feel “very prepared” to make financial decisions, according to Prudential. More than four in 10 women (44%) feel financial information is overwhelming, 36% feel it’s complicated and hard to understand, and 26% don’t understand the terminology, reports the Allianz Life Insurance Company.
A large number of women admit to being baffled by specific concepts: Four in 10 (43%) don’t understand what a mutual fund is, 25% don’t understand IRAs, and 16% don’t understand life insurance, according to the Prudential survey.
Retirement, Kids’ Future Are Key Priorities
Planning for a comfortable retirement and providing for their families’ future are women’s top priorities, says Prudential. The number of women who feel it’s important to pay for their kid’s college tuition has nearly doubled from 2004 to 2010 (23% vs. 44%). However, their confidence in their ability to pay for college has dropped from 26% in 2006 to 21% in 2010. While accumulating assets is also a top priority, women are equally focused on protecting their wealth through financial security planning.
Other key areas of financial planning depend on a woman’s life stage. Single women with children, for instance, are most interested in planning for retirement, reports Allianz. Single women and divorced women are particularly interested in financial planning. Working women tend to be most educated about financial planning, as well as more active in investment strategies. Women also become more knowledgeable about long-term care costs and generating retirement income as they age.
JWT’s Mack recommends the financial services industry factor in these women-specific issues when crafting messages and programs:
Channel humility. Women take more time than men to research before making financial decisions so it’s important to help them feel confident. It’s best to provide as much data as possible to let women come to the final decision rather than telling them what to do.
Multi-channel access. Women live in a multi-platform world so it’s critical the financial industry address their needs, whether in person, via mobile, or online.
Link to real life. Women are better able to grasp retirement planning when it’s based on real life scenarios. For instance, advise women to invest X amount of dollars in order to afford that beach house or to take a vacation. Being too abstract won’t work, says Mack. “It needs to be explicit about how she leads her real life.”
Make it simple. Women prefer simple terms and materials that are clear. While it’s important that information does not “talk down to women,” it does need to be easily understood and digestible. That said, women are much more likely than men to say they don’t understand a concept or to seek advice.
Money clubs. Encourage women to openly discuss financial matters with their friends by hosting or facilitating finance clubs. Financial services companies can provide materials or discussion topics, similar to what publishing houses provide for book clubs. It’s important to keep the clubs fun and lighthearted. [Finance]
Contacts and Connections: Allianz Life Insurance Company, Sherri DuMond, VP Marketing Solutions, 5701 Golden Hills Dr., Minneapolis, MN 55406; 800-950-5872; sherri_dumond@allianzlife.com; www.allianzlife.com.
“Financial Experience & Behaviors Among Women,” Prudential Financial, Judy Rice, President Investments, 100 Mulberry St., Newark, NJ 07102; 973-802-2991; judy.rice@prudential.com; www.prudential.com.
JWT, Ann Mack, Director of Trendspotting, 466 Lexington Ave., 3rd Fl., New York, NY 10017; 212-210-7378; ann.mack@jwt.com; www.jwt.com.
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