Women increasingly are controlling more wealth and their role in personal and family finances is changing, making their need for financial and retirement planning even more important.
By 2026 it is estimated that women in Canada will control close to half of all accumulated financial wealth, a significant increase compared to a decade ago when that figure was about one third of all wealth.
According to a study on women and wealth for IPC Private Wealth, this increase is being driven by a significant flow of some $900 billion in financial and real estate inheritance assets to women of all ages in the country over the next decade. As well, within the next few years Canadian women are expected to report total annual income of $500 billion.
Not only are women in Canada managing significant wealth and cash flow, at some point in their lives 90 per cent of all women will be required to play the role of sole financial decision maker.
Given all of the above, research suggests that women place a greater level of importance on financial affairs than men. Their financial needs and objectives, attitudes toward risk and willingness to plan and take professional advice, all are different from men. Canadian women, particularly those over 65, display a lower level of financial literacy than men and prior to a change in their circumstances they are less likely than men to have an individualized financial plan.
“Women live longer than men and generally are looking for reassurance that the future is OK,” Kathleen Peace, senior financial consultant with Woodgate Financial/IPC Securities, said in an interview. “Most women want security and are looking for that outcome from their investments as opposed to rates of return. They also are more focused on the elimination of debt and the reduction of risk than men.”
Women more than men want to feel that their needs are being heard and understood and that their entire life circumstances such as the raising of children are taken into account in their financial planning.
The fact that many women have interrupted their work by taking time off to raise their families means in general they have fewer savings than men. They therefore must be more disciplined when it comes to saving and they need to start saving earlier.
The study found that only 20 per cent of women feel that their needs are truly understood and that 73 per cent are unhappy with the financial services industry.
Women generally are less confident about their knowledge of finances and investing than men.
“Confidence is an issue with women,” Peace says. “Women tend to downplay their accomplishments and tend to underestimate what they know. With the difference in income and lifespan, women tend to stick to what they understand and avoid complicated financial products. Financial knowledge could definitely raise their level of confidence.”
Another interesting distinction between the sexes is that many women tend to avoid investments that may not be perceived to be socially responsible or produce products that are potentially harmful to society and are willing to take lesser returns from companies that are perceived to be more socially responsible.
“Given these facts and differences it is apparent that while fundamental issues such as the need for sustainable income may be the same, the planning and investment solutions presented to women must be distinct and fully personalized to their unique situation,” the report says.
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.