Tips for meeting women’s financial needs

Women in Canada control about $2.2 trillion in personal assets, according to a report published last year by CIBC Economics, and this number is expected to grow by more than 70% in the next decade.

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A strategic approach is required to serve women’s unique financial needs, says Carissa Lucreziano, vice-president at CIBC Financial Planning and Advice.

Specifically, women commonly face three obstacles to wealth creation, she says.

• Longer life span

Women live more than five-and-a-half years longer than men, on average, leaving women “in control of a sizeable share of wealth,” Lucreziano says.

But some of the couple’s combined savings may first be depleted to afford healthcare for the ailing partner. Whatever savings are left must last longer to fund the woman’s retirement and long-term care needs.

“Having the responsibility of managing wealth and the day-to-day expenses in the absence of a supporting spouse or partner could bring on a sense of financial vulnerability, and be extremely overwhelming,” Lucreziano says.

That’s why advisors must engage women in conversation even if the male spouse or partner takes the lead. “This will positively impact a woman’s financial literacy and confidence overall,” Lucreziano says.

• Lower income

While the wage gap is shrinking, Lucreziano said women still earn less in 95% of occupations. Lower wages mean “less discretionary cash flow available for women to invest to fund future income requirements,” she says.

Further, women often take time off work to care for a child or elderly family member.

“This, too, has a direct impact on women’s earning power and savings,” she said. “In fact, almost one in three women say they’ve reduced or stopped saving as a consequence of childcare or eldercare,” putting them at a considerable disadvantage for retirement savings.

Lucreziano suggests framing questions around wealth management needs, not just investment strategy and returns. “Link the return needed in order to achieve the required short- to long-term goal,” she says.

Further, planning should reflect the client’s values and focus on outcomes to meet the family’s financial needs.

• Lower risk tolerance

Lucreziano said women generally have a more conservative approach to investing and a lower risk tolerance, potentially attributable to a lack of knowledge or investable assets.

To address a knowledge gap, she suggests advisors “tailor planning and investment seminars on topics that interest women, and provide resources that will aid in further education.”

If the client has relatively few assets and thus focuses on only conservative investments as a way to protect those assets, the advisor can consider investments that align with the client’s investing needs and goals, she said.

“A balanced and diversified approach to investing can help mitigate some of the risks associated with high-risk and high-volatile investments, and can help maximize the opportunities to invest in various types of investment vehicles and different asset classes,” she said.

She also noted that women may be interested in responsible investments, especially for “those looking to leave a lasting legacy for the next generation.”

This article is part of the AdvisorToGo program, powered by CIBC. It was written without input from the sponsor.