According to a report released in March by CIBC World Markets Inc., female investors control $2.2 trillion of personal financial assets. That number is expected to grow to $4 trillion within the next decade.
The report is titled “The Changing Landscape of Women’s Wealth”. The co-authors said for the wealth management profession, this won’t be business as usual.
According to CIBC research, there are both similarities and dissimilarities in the way men and women invest.
Both men and women prefer an investment approach that focuses on their personal financial planning needs, as opposed to a sole focus on investments. Two thirds of men prefer this approach and with women, that figure is close to 80 per cent.
However, there is a significant difference between men and women when it comes to work-life balance.
Women are more likely to reduce their working hours or leave the workforce entirely in order to care for children, a spouse, or aging parents. That career decision has financial implications.
The reduction or elimination of an income affects women’s ability to save for retirement. The significance of this is enhanced as women usually live longer than men.
A longer life means a longer time to be financially independent during retirement. Due to this, women should be saving more, not less, than men. Women who aren’t maximizing their earning potential are not able to maximize their savings.
In my opinion, financial planning for a couple should focus on the age of the woman. Women are often younger than their male partners and if you consider gender longevity, many women could survive their husband by 10 years.
If a couple begins to run out of money in the last decade of the man’s life, it could be the widow who lives her last years in financial difficulty.
Financial planners should stay away from gender bias, but instead, take into consideration the differing financial situations between men and women. Women’s financial planning and investing should account for all the realities of their lives.