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Younger Women Want to Talk About More Than Money With Advisors: Wells Fargo

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What You Need to Know

  • There is a big generational difference in how women talk about money and seek advice.
  • More than half of partnered affluent women reported greater or equal earnings to their spouse.
  • Women with financial plans reported being much more at ease through the pandemic.

Women have made significant strides when it comes to earning money and investing, but more work needs to be done by women to educate themselves about finances and by advisors in how they communicate with their female clients, according to a new Wells Fargo study of affluent women released Monday.

The study polled 2,195 women in households with $250,000 or more in assets or $100,000 or more in annual income about how they were feeling, responding to, and leading through uncertainty and change.

The study showed that women are “earning more and are a vital component of the economic COVID recovery but continue to see roadblocks and challenges,” Beth Renner, head of Advice Center, Wells Fargo Wealth & Investment Management, said in an online briefing with reporters about the study’s findings.

Noting that the study addressed affluent women, she said that “while there are women that are advancing in the financial world … there’s also women that are struggling.” Many women took on more caretaking roles during the pandemic, for one thing. Overall, despite the advances that have been made by women, “there’s much more work to be done,” she said.

The Role of Advisors

Despite the increased barriers cited by younger women, most are eager to learn and grow, according to Wells Fargo. Nearly half (47%) of millennial and Gen X women reported needing financial advice now more than ever, it noted.

In fact, three-quarters said they believed it would be valuable to talk through their financial concerns with a financial advisor — a view shared among the older generations, according to Wells Fargo.

But millennial and Gen X women wanted a conversation with their financial advisors beyond the numbers. They wanted to talk about work (78%), family (71%) and health (60%), a sentiment not as highly ranked among the older generations, Wells Fargo pointed out.

“There is a clear message to financial advisors in this data. Women expect advisors to converse with them about the totality of their lives, as context for providing financial advice,” according to Heather Hunt-Ruddy, head of business development and growth for Wells Fargo Advisors.

“There is definitely a generational difference” in how much women are speaking with advisors about their finances also, Hunt-Ruddy said. “I think the pandemic has heightened this concept of needing community and people feeling alone.”

Affluent women are talking more about their money now than they did a year ago, the study found. Thirty percent reported actively talking about money, with 43% of millennials saying that versus only 17% of traditionalists, Hunt-Ruddy said.

But “there’s a disconnect between that talking about money and actually getting help with it,” she pointed out, noting the numbers nearly reversed completely when women reported actually seeking help with professional advice. Only 20% of millennial women through the pandemic sought professional advice, versus 47% of traditionalists — the study’s term for respondents born between 1928 and 1945 — she said.

“That’s something we have to work on,” she conceded.

Meanwhile, 20% of female respondents said they were following social media financial influencers, while 13% said they subscribed to a financial podcast.

Noting that her grandmother used to say, “Don’t talk about money, politics or religion,” she said: “On two of them she was right. But we have to demystify this concept of talking about money in families. And that’s something as an industry that we have to get better at.”

During the Q&A, ThinkAdvisor asked if the female respondents indicated if they felt more comfortable dealing with female financial advisors. Hunt-Ruddy replied that Wells Fargo didn’t break out that data. But she said: “We certainly understand that we need to be working on the population of advisors being more reflective of the communities that we live in.”

Although more than half of the U.S. population is female and women control one-third of household assets (more than $10 trillion), “only 18.1% of financial advisors are women,” Natalia Tchetchoulina, partner and client advisor at Cerity Partners, recently said, citing Cerulli data.

Other Findings

“Younger women are taking charge of their finances” now, according to Veronica Willis, investment strategy analyst at Wells Fargo Investment Institute. Almost one-third of millennial and Gen X women reported being the “primary breadwinner,” she told reporters, noting that was 1.5 times higher than the 20% of baby boomer and traditionalist-generation women.

Meanwhile, more than half of Gen X and millennial women reported they led their household finances versus 40% of women from the older two generations.

The pandemic, however, “had a disproportionate impact on women,” Willis said, noting women accounted for more than 50% of the employment in industries that provide discretionary services and almost 1 million more women lost jobs than men. And women 25 to 54 left the labor force at almost twice the rate of men, she said.

“Despite these headwinds over the last year, we learned in the survey that 54% of all partnered women reported greater or equal earnings to their spouse.”

Millennial women, meanwhile, are investing more, while “baby boomers are a little bit more cautious,” she said. Women have tended to invest more conservatively than men, but “it’s crucial to take the right amount of risk” when investing, especially when you are young and investing for retirement, she said. So it may be a good sign that younger women seem to be taking a little more investment risk now, she said.

Women are increasingly investing more based on their values and are also giving more to charity, she went on to say, noting that environmental, social and governance focused investing is becoming increasingly popular. In a 2020 Wells Fargo study, 78% of women said they would include ESG investments in their 401(k) plans if their employers offered them, she said.

The Importance of a Financial Plan

About 67% of women reported they had financial plans and nearly all of those respondents said it “really helped them weather recent uncertainty, put them more at ease with their financial future and gave them confidence that they could achieve their goals,” according to Nancy Amick, senior family dynamics consultant, Advice Center at Wells Fargo Wealth & Investment Management.

(Pictured: Beth Renner, head of Advice Center, Wells Fargo Wealth & Investment Management)