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March 31, 2020 at 10:11 AM
At a time of economic, market and other turmoil tied to the coronavirus, many investors are in need of the help of an advisor.
Some investment specialists suggest advisors look closely at their approach when working with female vs. male investors and consider tweaking it as needed.
To better understand why this is the case, we turned to Lori Schock, director of the Securities and Exchange Commission’s Office of Investor Education and Advocacy for the past decade, and an attorney with a master’s degree in taxation.
Schock explains the precise steps advisors can take when working with female investors and how they can make their influence count at an unprecedented time.
What are the female investors’ top challenges?
Women have unique financial considerations when it comes to investing, and there are certain realities they must face.
Many studies show that women often make less money than men. Because of this, they have less money to invest.
As we know, compounding is our best friend in the investment world, so having less money to invest can have a significant impact over time on their earning potential when trying to build a nest egg.
It’s also important to note that statistically women live longer than men. Since that’s the situation, women have to address the challenge of making sure they have enough money to sustain a longer life.
They have to become familiar with long-term investment products and create a financial plan that will carry them into their later years.
Women tend to buy and hold their investments, an investing approach that is a good way to plan for the long-term. Women are great at asking questions and are less likely to become victims of investment fraud.
However, even though they ask questions, some women may still be risk averse. Every investor needs to determine their own risk tolerance when making decisions about investment opportunities and returns.
Families may experience life-changing challenges that can derail financial plans. For example, one parent who works outside the home may choose to leave the workforce for long periods of time to care for children or parents.
Divorce or the death of a spouse can also affect a family’s financial future. These are challenges that women need to take into account when creating a financial plan.
What can advisors do to help women overcome these challenges?
