Five Reasons Women Are Taking the Lead In Financial Planning

When I began my career, I was an executive leader in the uber-competitive world of financial services. During those formative years, I had the pleasure of leading some top women advisors. In the three major metropolitan areas I led, women consistently rose to the top of the rankings for client acquisition, satisfaction, retention and overall productivity during a 15-year span.

I don’t believe I was a primary catalyst of this success among women in those organizations. They were highly talented and driven individuals, many of whom just needed a platform to do their thing. As a third-party observer, watching them do just that has led me to a conclusion: women are taking over the lead role with regards to financial decisions.

When I was affiliated with successful women advisors early in my career, I was invited on several occasions to take part in conferences and speaking panels around why women had growth trajectories accelerating more quickly than their male counterparts. Stereotypically and historically, finances -- in terms of planning for and providing money -- had been the job of the man. Well, data shows that this trend is not just reversing -- the pendulum has actually swung the other way, and it’s happening very quickly. Now, as a private client wealth manager, I'm noticing more than ever the need to plan specifically for women.

The idea that men are the breadwinners is outdated, as 38% of women out-earn their husbands and according to an expert from FiveThirtyEight.com, in one in three of those cases, the husband isn’t earning anything at all. Additionally, the trend of women making financial decisions goes beyond just the earning power. I’ve identified five reasons why this upward trend continues to grow.

Reason One: According to a LIMRA study, women are strategically more decisive with financial choices, specifically with regards to:

• • Election of Social Security benefits
• • Understanding their retirement expenses
• • Estimating the health care coverage they will need in retirement
• • Determining how long their funds will last
• • Designing a cash flow strategy during retirement

Reason Two: Women have become significant household earners and more often become the key decision makers. One Wall Street Journal article (paywall) posits that, by 2022, women will control over 60% of the wealth in the United States.

• • As of 2012, women controlled 51.3% of personal wealth in the United States (with these assets set to increase from $8 trillion to $22 trillion by 2020).
• • 48% of estates worth more than $5 million are controlled by women, compared to 35% controlled by men.
• • Over the next 40 years, women are expected to inherit $28.7 trillion in intergenerational wealth transfers.
• • 90% of all women will be solely responsible for their own or their family’s finances at some point in their lives.

Reason Three: Women are getting more engaged in their financial decisions. A study done by Artemis Strategy Group shows that only 4% of women are not involved in financial decisions, with the remaining 96% either sharing in, or primarily in charge of, financial decisions. Baby boomer women are extremely focused on having a plan for the long run (76 %) and understanding their financial situation (91%).

Meanwhile, Generation X women are dealing with life events that potentially cause financial hardship, like divorce, losing a job or making a mistake with their investment assets, long-term care for aging parents, or grown children returning to the household. Gen X women are more likely to face a life challenge (51%) than Gen X men (43%).

Reason Four: Women are more willing to be educated. The same Artemis Strategy Group study showed that younger women feel strongly that they have received more financial education and are more attuned to financial decisions than their mothers were. Websites, podcasts and financial tools that provide information are being utilized more by women. Married millennial women who are the primary financial decision-makers say they take on this role because they are more knowledgeable than their partners (66%) or because they enjoy making financial decisions (49%).

Reason Five: There is a strong underlying emotional component to money decisions, and women are often more in tune to this. The video ,“It’s Not About the Nail” is a light-hearted take on the typical key differences in communication and emotional intelligence between men and women. One of the reasons there has been a boom in women advisors and their success is that women reach other women in different ways. Trust is the foundation for everything when it comes to women dealing with women.

In my observations and participation in over 2,900 meetings in my career with families, business owners and executives, I have noticed that men tend to lean toward being more analytic, choosing to look at numbers to make decisions. There is an emphasis with men on getting to a "yes" or "no" decision and an idea that financial choices should be clear-cut. In reality, financial decisions involve a lot of gray areas, because life is constantly changing and evolving. This means that not only should plans be fluid and adjusting to the present moment, but emotions must be considered.

I’ve seen that women tend to look at the bigger picture. Women advisors are more intuitive to pace and tone, and they can read emotional cues in meetings much more adeptly than men advisors.

Personal finances can be very intimate. When you do lose a job, face a major illness, or lose a loved one, there are certainly emotional clouds that affect decision-making. Women are generally better able to recognize these emotions, while men can tend to ignore or be unaware of them altogether.

The need for financial education and professionals who can relate and build ongoing relationships is crucial for this growing segment of women in the world of finance. Is your advisory relationship attuned to this trend in women and financial decision-making? If not, it may be time to reassess whether you’re receiving the appropriate education and empowerment.

My philosophy is to make sure that decisions are made not just on sound logic and numerical analysis but, more importantly, on intangible information and intuitive insight. Those intangibles are what now put women at the head of the table when it comes to their success and the planning I do for them.