Financial Finesse’s latest report focuses on the gap in financial wellness between men and women. Women significantly lag men in basic money management and investing, the report found. Not only that, but the gender gap is actually widening in some areas.
Financial Finesse analyzed questions that employees put to the firm’s financial hotline from January through March, and broke down the data into seven topics: investing, money management, tax planning, college planning, insurance, retirement planning and estate planning.
Nearly 90% of men claim to have general investment knowledge, but only 66% of women could agree. While men reported relatively low levels of confidence in their allocations (45%), it far exceeded the 29% of women who said they felt confident.
Furthermore, it seems very few women have reviewed their plans to make sure everything is in order. Just 37% said they had taken a risk assessment and were aware of where they sat on the risk tolerance spectrum, a full 20 percentage points less than men who have done the same. While 38% of men have reviewed their assets and created a master plan to avoid overweighting certain asset classes or overlapping investments, just 16% of women have, and only 10% of women have done a fee analysis on their portfolio. Twenty-eight percent of men have done a fee analysis.
The gap between men and women with a general knowledge of investment products is noticeably growing, the report found. In 2010, the gap was 33 percentage points, a gap that more than halved in 2011. This year, though, the gap increased to 23 percentage points.
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In money management, the gap between men and women was also significant. Debt is clearly a problem for women. Fifty-two percent say they are comfortable with the amount of non-mortgage debt they have, and only 45% regularly pay their full credit card balance. Less than half check their credit report on a regular basis, compared with 58% of men.
“It seems like men and women have taken a step backward,” Diane Winland, resident financial planner at Financial Finesse, told AdvisorOne on Thursday. “Generally, men are pulling back across the board, and women are pulling back in certain areas like money management and investing. We’re seeing a bigger pullback in the day-to-day, but none in retirement.”
The report notes that between 2009 and 2011, women made “steady progress” in paying off credit card debt in full, before reversing course in the first quarter. “This, coupled with the steady decline in the percentage of women that report feeling comfortable with their level of non-mortgage debt, may be cause for concern and is something worth watching in the future,” according to the report.
Regarding taxes, women are struggling to understand the implications of their investments and retirement accounts. Just 34% said they understand the subject, compared with 56% of men.