Women still lag men as household financial decision-makers

In spite of the fact that women are controlling more wealth and the gap between them and men in terms of financial knowledge is closing, women still lag behind men when it comes to being the financial decision-maker in their households.

According to some recent reports, women in Canada are expected to control close to half of all accumulated financial wealth by 2026, a significant increase compared to a decade ago when that figure was about one third of all 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.

Women in Canada also appear to be closing the gap with men when it comes to their knowledge about financial matters, but they still have a way to go when it comes to their level of confidence about their knowledge. There is still a gap in how confident they are in that knowledge.

Now a poll by IPC Private Wealth Investment Planning among 400 affluent Canadians with at least $500,000 in investment assets reveals that 74 per cent of men say they are the lead financial and investment decision-makers in their household while 46 per cent of women say they are the lead decision makers, underscoring the need to involve women more in making decisions on money matters.

“Financial education is key to starting to reduce this gap,” said Midori Hillis, a certified financial planner with Investment Planning Counsel in Victoria, BC. “If both parties are available I try to insist they come to any meetings together so they are both involved and can ask questions if there are things they don’t understand. It’s also important for women to fill out their risk profile because they generally are not as confident as men and more conservative, primarily because they live longer than men and therefore need their money to last longer.”

There are many resources available to help women improve their knowledge and confidence in financial matters, including the websites of most major financial institutions.

But Hillis said the education process can start with something as simple as developing or reviewing the household budget, its expenses, income and investments. If necessary, consult an adviser for advice or information.

The poll discovered that one of the big financial concerns among women involves passing on their wealth to the next generation.

Women are more worried than men (23 per cent versus 17 per cent) that their children will not have anything to pass on to their children. Women are more open to discussing their inheritance plan with heirs at some point. Fifteen per cent of men said they don’t plan to discuss instructions at all with their heirs while only eight per cent among women said the same thing.

A lot of women are worried that if they die their husbands will remarry and leave their inheritance to the children of the second marriage.

“We get a lot of questions and concerns from retirees about what is going to happen to their children’s inheritances,” Hillis says. “There are ways to make sure the inheritances for children of the first marriage are protected.”

Women are more likely than men to end up living alone due to widowhood and/or divorce. Their income is likely to drop when they become single due to the fact that their income was lower, their careers were disrupted to look after children and their pensions may have a joint survivor provision, which often is 60 per cent of the full pension.

A home often is people’s largest asset. In a divorce, women may have to split the value 50/50. If their income goes down, they may not have enough money to get back into the real estate market.

“It is my hope that women start to turn this around, get more involved in their finances and those of their household, and start planning for possible changes in their circumstances,” Hillis 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.

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