Female Investors Become More Proactive in Financial Planning

The onset of the pandemic significantly influenced how women viewed their finances, according to a study released Thursday by Nationwide Retirement Institute.

The study found that 49% of women with investable assets of $100,000 or more who are primary or shared decision-makers regarding long-term financial planning for themselves or their family were optimistic about their financial outlook in 2021, up from 32% in 2020.

With more experience living in the “new normal” created by the pandemic, women have become more proactive with their finances, the study said.

Seventy-two percent of female investors reported that they have a strategy in place to protect themselves from outliving savings, 83% have a strategy to generate guaranteed income in retirement and 59% have one to help protect assets against market risk. 

Moreover, 68% of female respondents said they will revise their investing strategy more conservatively after having experienced how market volatility can significantly affect their portfolio, and 73% will revise their investing strategy to be more actively managed.

“Women investors are not taking their experiences living through the COVID-19 pandemic or other financial crises lightly,” Ann Bair, senior vice president of marketing for Nationwide Financial, said in a statement. 

“After experiencing the upheaval of these events, from market volatility to juggling childcare during remote learning, women are being more proactive in thinking about and planning for their futures.”

The Harris Poll conducted an online survey from July 22 to Aug. 16 in the U.S. among 1,632 advisors and financial professionals and 363 female and 475 male investors.

Taking Action, but Proceeding Cautiously

About half of women surveyed said the 2008 crash and the pandemic recession prompted them to think about their financial future and affected how they approach finances and investments. Twenty-three percent said they have started an emergency fund, and 21% have established and are following a budget.

Women have already demonstrated a stronger likelihood than men to make better long-term decisions when facing financial crises, according to the study. 

For example, 8% of female investors liquidated assets from qualified retirement savings plans to cover financial obligations in response to crises that had a profound effect on them, compared with 15% of male investors. 

Lessons learned from previous crises will help women face future events. Sixteen percent of women in the survey said they expect to live through two more financial crises in their lifetime. 

These lessons may benefit women in the near term as well. Seventy percent expressed concern about a recession in the next 12 months, and 56% anticipate that market volatility will increase over the next 12 months.

Solutions to Build Financial Confidence

Two-thirds of female investors reported that they work with an advisor, the main reason being to feel more confident in their financial future. 

Asked what would make them more likely to work with, or had influenced them to work with, an advisor or financial professional, 41% cited an advisor’s experience. 

Nine in 10 of those who work with an advisor or financial professional said doing so helps them feel more confident they can make the right investment decisions, even in an extreme financial crisis.

“Women have distinct needs and perspectives that may be different from the traditional male client base that makes up the bulk of many financial services practices,” Lori Hall, director of strategic accounts for Nationwide Financial, said in the statement. 

“When advisors recognize this and tailor their strategies to meet women where they are, they can build long-lasting, trusting relationships, and help their female clients achieve a more secure financial future.”  

To help protect themselves from outliving their savings, 64% of women surveyed said they rely on Social Security, 36% on dividend-yielding stocks and 33% on defined benefit plans/pensions. 

Hall said advisors and financial professionals can not only help women understand what to expect from strategies they have in place, but also think about factors that may affect retirement income, such as health care costs, inflation, market volatility and taxes.

“This can help identify gaps in their plan that may be addressed through new solutions,” she said.

As it stands, 41% of female investors are likely to choose an annuity to protect themselves against risks as part of their holistic financial plans, and 52% are likely to choose an annuity to protect against outliving savings.