When it comes to a comfortable retirement, women in the U.S. have the cards stacked against them. New efforts to start changing this are laudable, and yet they’re still missing the mark because they’re being shaped by decades of misperceptions.
The inequities a woman faces throughout her working life — from earning less to shouldering the lion’s share of childcare responsibilities — add up over the years and take their toll. More than 80% of women don’t think they’ll be able to retire without running out of money compared with 65% of men, according to a recent TIAA study.
While much of the problem is rooted in culture and history — along with subpar US policies — the financial services industry bears its share of the blame. It’s long neglected women, alienating them with patronizing attitudes and outdated thinking, making wrong assumptions about what they care about, relying on technical jargon and telling them to spend less rather than invest.
Instead, they should be working with women to help them overcome the specific financial obstacles they face.
There seems to be a glimmer of awareness now, perhaps as banks realize the total pool of wealth controlled by women globally will rise to as much as $93 trillion by 2023, according to estimates by Boston Consulting Group.
There are mutual funds that only invest in companies that prioritize women’s advancement, banks conducting studies on women and their finances, and firms that are focused on making their wealth management teams more diverse.
Unfortunately, most of these efforts are woefully inadequate, unlikely to give women any kind of constructive assistance to reverse their disadvantages in retirement.
The latest attempt is from BlackRock Inc., which introduced a new set of model portfolios to help women have more money in retirement. The firm’s thinking is that since women live longer, earn less and may experience gaps in employment, they could benefit from gender-specific portfolios that put more of their cash in stocks.
It sounds nice on paper, and the firm seems to have put a lot of thought into it, but I’m still underwhelmed. It’s a set of products just for women, while most women don’t actually want products made exclusively for them.
A 2020 report from BCG that looked at wealth management and women highlights how firms too often treat women as a homogenous group, ignoring the varying needs and preferences of different clients.
“Women do not want or need products that are different from those offered to men. Rather, they want a personalized approach that is tailored to their financial objectives,” according to the report’s authors.
Debra Brede, a financial planner in Needham, Massachusetts, has the right idea: She constructs her clients’ portfolios, whether for men or women, as though they will live to 100, using investments from every asset class.
BlackRock’s model portfolios for women are based on the firm’s target date fund framework (but they’re sold through financial advisers rather than offered through 401(k)s for regulatory reasons). So there’s some customization that may be happening, but it still seems like the portfolios aren’t really that bespoke, or taking a woman’s individual preferences and needs into account.