Ample research has been done on the differences in financial behavior between men and women, and today, many financial advisors who are incorporating behavioral finance principles in their practices are taking note of these elements.
Now, though, more advisors are going to have to figure out the best ways to relate to women. According to the most recent “Financial Experience & Behaviors Among Women” study by Prudential Financial, a growing number of women are becoming the sole breadwinners for their families and are increasingly, if not wholly, responsible for their families’ financial futures.
More importantly, though, the study showed that women are less confident about their financial planning capabilities, admitting to a lack of knowledge about financial solutions that can help them.
Whether it’s because more women are reaching the top levels in their chosen profession, or because the economic downturn has resulted in their spouses losing their jobs, the increase in the number of women as primary breadwinners seems to have “an indirect correlation with a decline in confidence,” says Caroline Feeney, president of agency distribution at Prudential Financial. “Women can manage their households, they want to be able to ensure that any education plans that were started for their children continue and so on, but in facing these tougher economic times, women are also worrying more about what they should do. They’re not feeling confident enough to be able to maintain their lifestyles in retirement.”
In today’s unsure economy, where more women are going to be in charge of their families’ financial futures and many are feeling the pressure thereof, the challenge to financial advisors, Feeney says, is threefold: Understand women’s financial planning behavior, boost their confidence, and do so without being patronizing or condescending to them.
“As much as we as a company have found that women are less confident about their financial abilities and as much as we see there’s a need to educate more women about finance and financial planning, we feel it’s most important for an advisor to first listen to a female client,” Feeney says. “Advisors need to understand first what’s important to women, and they need to realize that they cannot push women to take decisions they are not comfortable with.”