As wealth increases, women need more financial knowledge

In spite of the fact they are controlling more wealth and playing a greater role in their personal and family’s finances, Canadian women still have a lower level of financial literacy and confidence than men.

Recent statistics from a study on women and wealth for IPC Private Wealth says that women in Canada will control close to half of all accumulated financial wealth in the country by 2026, up from about one third of all wealth only a decade ago. Over the course of this decade women in Canada ae expected to report total annual income of some $500 billion and will inherit some $900 billion in financial and real estate assets.

Not only are women in Canada managing significant wealth and cash flow, but at some point in their lives 90 per cent of all women will be required to play the role of sole financial decision maker of either their or their family’s finances.

In spite of these facts, women do not feel confident in their knowledge of finances. A Statistics Canada report in 2016 found that only 31 per cent of women felt they were financially knowledgeable compared to 43 per cent of men.

Research suggests women place a greater level of importance on financial affairs than men. While their financial needs and objectives, attitudes toward risk and willingness to plan and take professional advice all are different from men, women, particularly those over 65, display a lower level of financial literacy than men, and prior to a change in their circumstances such as the death of a spouse or partner or divorce, they are less likely than men to have an individualized financial plan.

As well, in general women have less money in retirement savings than men. Even though women tend to live longer than men, retirement and estate planning both are processes that generally are undertaken by husbands and male partners.

“One of the causes of this lack of preparedness among Canadian women may be a lower level of financial literacy, not only about various products and services but also about straightforward financial concepts such as inflation, diversification, registered- versus non-registered accounts, compound interest and annuities,” the IPC report says. “Whether single through death or divorce, many women are and will be faced with the need to re-think their financial priorities and develop plans and strategies that will provide financial security both for themselves and their dependents.”

Behind this lower level of financial literacy is the fact that there is only a passing effort in many families to educate women about investments and financial budgeting. A 2014 survey by U.S. bank Wells Fargo found that more than two thirds of female respondents said nobody had ever educated them about investing in the stock market.

As women become more financially literate and confident, they also have a responsibility to get their children involved in learning about finances, preferably as soon as they can.

“A good level of financial literacy can really contribute to the family’s happiness and good stewardship of money,” says Kathleen Peace, senior financial consultant with Woodgate Financial of IPC Securities Corp. “If parents don’t want to raise spoiled brats they will want their children to be coached and educated about financial matters so they will grow up to be responsible adults who can handle financial affairs.”

Besides financial issues such as running out of money, women have other non-financial concerns, primarily concerns about their health and facing the deterioration of their mental capacity.

Peace encourages parents to get their children involved in all aspects of financial and estate planning. “Bring them into the meetings so they understand what your wishes are in passing,” Peace says. “Lead by example and make sure the entire family is clear on what your values, concerns and wishes are.”

The overall message is that opportunity exists to improve women’s level of financial knowledge and confidence as they grow in wealth and financial responsibility.

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

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