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Industry Spotlight > Women in Wealth

Financial Vigilance Boosts Women's Security: Study

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Owning a life insurance policy improves a woman’s confidence in the future, according to a new report.

The study, undertaken for Penn Mutual Life Insurance Co. by the Cicero Group, Salt Lake City, Utah, explores how women’s dreams, self-perceptions and plans relate to their financial preparedness. Cicero Group polled 600 women nationwide in May 2009 to determine whether financial preparedness improved their well-being.

Women who plan for their financial future are happier and more confident than those who don’t, the survey concludes.

In addition, the survey found, women who own life insurance have the following qualities:

? Are more confident they will achieve their goals (43% of insured women are confident of this, vs. 34% of uninsured women;

? Are more confident in their decision making (42% vs. 34%);

? Look forward to retirement (78% vs. 68%);

? Believe their opinion is important (86% vs. 80%);

? Look forward to new challenges (86% vs. 79%); and

? Enjoy taking charge of situations (56% vs. 49%)

“Women are more confident that they’ll achieve their goals when they are insured,” said Eileen McDonnell, the executive vice president and chief marketing officer at Penn Mutual Life, Horsham, Pa. “Women who take an active role in the planning of their financial future actually are able to enjoy their life more than those who don’t.”

Industry efforts to raise awareness among women of the need to prepare financially have so far failed to close a gender gap. McDonnell says that women today are still underinsured compared to their male counterparts, despite the fact that many of them–including 60% of women with an MBA–earn more than their husbands. Greater than 50% of women undervalue their contributions at home and work by at least $10,000.

Why should this be?

“Women, because they’re wired by nature to nurture, tend to take a back seat [to men] when planning for their financial needs,” say McDonnell. “And so they don’t accurately translate the value of their economic contributions at both home and work.”

The lack of planning represents a big opportunity for producers–most of whom of men. But McDonnell observes that 70% of women are “gender-neutral” about whom they engage as their advisor. While many insurers are intensifying efforts to hire more female advisors, most women simply want an advisor who is professionally qualified and understands their unique financial needs, given their life stage and values.

Conversely, those advisors who fail to acknowledge women’s financial needs and concerns stand to lose business, particularly in cases involving surviving spouses of male clients who pass away, says McDonnell,.

“Some 70% of widows change their advisors within the first 3 years of their husband’s death,” says McDonnell. “So from a pure retention standpoint, it’s important for male advisors to learn the financial concerns of women and, more specifically their clients, to ensure they don’t lose a big part of their book of business.”

Women who own life insurance are half as likely as those who don’t to believe their standard of living will be substantially lower in retirement than it was while they were working (9% vs. 18%), the study notes. Almost half as many expect to work half-time or more in retirement (8% vs. 15%). And 94% of women who own life insurance rate their happiness a 5, 6, or 7 (on a 1 to 7 scale), compared to 83% of women who do not own life insurance.

“Because most women perceive that their worth is not that of the male counterparts and because many advisors working with these women don’t accurately assess what women’s activities equate to economically, we’ve underinsured women,” McDonnell says. “So you may have a client base that is 50% female today and thinking that you’re doing a good job. But when compared to their male counterparts, these women don’t have the same level of insurance.”