Can Women have it all?

Emerging investment patterns for
women clearly mirror their changing role in society. As the quintessential nest-makers of the past, they typically left financial matters to the male breadwinner. The home-maker persona typically ascribed to women of yesteryear had with it associated discriminations, and the financial arena was no exception.
Surprisingly, it’s only in the last two decades that women in many states in the US have been able to open bank account in their own name. But women’s liberation out of the kitchen and into the workforce has levelled the gender playing-field considerably. It’s now given that female executives are equal, and often better than their male counterparts.
Ironically though, when it comes to managing their own personal finances, many women remain laggards. Playing catch-up they might be. But the adeptness of women at making sound investment decisions is not keeping pace with their entree into the professional and senior business ranks. Financial advisers claim that many women clients fail to display the same professionalism to their own personal finances that they apply to their careers.
Despite major changes to women’s work and lifestyle patterns over recent years, few give their finance the attention it deserves says BT Funds Management (Australia) executive vice president Vivienne (Viv) James.
Author of the Woman’s Money Book, James says while women make up around 54.6% of the paid work force and run 35% of all small businesses, they still lack confidence in their financial decision making ability.
In fact, results of 1999 study that compared the wealth of Australian and New Zealand men with their women counterparts unearthed interesting revelations about female savings habits.
While both genders had similar work history the study concluded that women were still not as well off as men due to their risk-averse investing stance. In other words, women’s penchant for low-risk, fixed-interest term-deposits returned less than men who invest in more high-risk (potentially) high-return investment vehicles like shares.
“Women are still the gender with the greatest vulnerability to shift in financial circumstances caused by life experiences that they aren’t able to control. Divorce, retrenchment or death of spouse are powerful wake-up calls which actually make more women aware of their financial exposure.”
James attributes women’s growing financial awareness to shifting demographics, these include:
* 43 percent of marriages end in divorce (ABS)
* The number of women aged between 24-34 who have never married has tripled since 1970 (ABS)
* Women’s participation in the labour force reached 54.6 percent in October 1999 (ABS)
* Around half of lone mothers are currently in the labour force (ABS).
These trends have forced women to take control of their finances and seek access to practical and current information. In fact, Australian female share ownership has more than doubled to 36 percent in just six years.
“Attitudes to investing are changing. Women from all financial backgrounds, whether they’re high or low income earners have the capacity to grow their wealth.
“Nevertheless, many women still subscribe to the myth that you have to earn lot of money to build wealth. It’s simply not true. What’s equally important is setting goals, drawing up budget, organising debt management plan and having the discipline to save around 10 percent of your income,” says James.
The biggest downfall of working women? Not making the time to find out, let alone act on professional advice, says independent financial planner Irene Durham.
Last year’s New Zealand Business Women of the Year, Durham is the director of Whangarei-based company Finance-Plan of New Zealand. She’s bringing Viv James out to New Zealand later this year. As keynote speaker at the Business and Professional Women’s Association’s (BPW) annual conference (Whangarei 6 May). James will present paper on issues affecting women investors.
So why do investment issues drop off women’s priority list? Simple says Durham, it’s partly time-pressure thing. “Women still take significantly greater responsibility than men in maintaining the family environment. Many are so torn between balancing family commitments and furthering their careers, there’s no time left.”
But the end result is dangerous. She says women are more likely to take anecdotal investment tid-bits from people around them instead of seeking professional advice. Others believe their professional status qualifies them to make their own investment calls without professional input.
Higher income earners most professional women might be, but Durham says many women are living at such high levels that often little if any money is saved.
She adds, whether they’re professionals or on minimum wage, women are astounded when they add up what goes on miscellaneous purchases.
“For example, women are ‘gobstruck’ when they recognise that $50 week spent on cappuccinos, muffins, magazines and other incidentals could turn into $1 million nest-egg over working lifetime (10 percent over 40 years).”
An overarching driver of women’s investment habits, says veteran financial adviser Muriel Dunn, is their desire (and perceived need) for financial independence. Upping the ante on women’s investment issues is growing realisation that the state pension will be thing of the past. Fuelling this fear, says Dunn is the strong likelihood that many women will outlive their partners. And in many cases, the partner will die while still in the work force. In fact, one in every seven people die before their working lives are over.
The conclusion many women are left with? Dunn says it’s growing realisation they simply can’t afford to rely on men for financial security. “In other words, if the marriage does break up, or partner dies prematurely, it’s good idea to know how to be financially independent. When they’ve done this, growing number of women are protecting themselves against future relationship and business failure through estate planning.”
Many women in business who are in de facto relationships are now using family trusts as tool that protects assets from rose-tinted view of the world.
Not only do they want to protect what they’ve got now, but assets they’ll acquire in the future, says Dunn.
Also driving women towards estate planning says Durham are New Zealand’s matrimonial property laws. “Unlike married partners, de facto partners are not automatic beneficiaries to will unless they’re specifically mentioned. The trouble is, many people don’t have wills to update. Gay women also lack similar rights.
“The more women realise that family trusts don’t mean losing control of their assets, the greater the uptake is likely to be.”
Beyond estate planning, Dunn has also noticed significant uptake in the amount of life cover single women with dependants are taking out. “This is to ensure that estates are left debt-free to their children, should anything happen to them. We’re also seeing corresponding uplift in income protection and critical illness insurance.”
Interestingly enough, it’s the mistakes of women in their 40s-plus that are driving the investment savvy of women 15 to 20 years their junior. “These young girls are becoming financially smart. They’re seeing how broken marriages have affected their senior colleagues and are becoming lot more financially shrewd.
“Unlike the generation before them, they’re less likely to wait for partner before entering the residential property market.”
The end result? The emerging army of professional business women entering the workforce with higher qualifications are now being revalued by the investment community for their confidence and greater maturity than their male counterparts, says Dunn.
So what professional groups are the biggest casualties of investment ineptitude? Dunn’s experience suggests it’s women from the medical, university teaching and ironically accountancy ranks who have