Traditionally, women have faced some significant challenges in building wealth.
They continue to lag behind men in pay. Their earning power is decreased when taking time off from a career to raise children and care for a family. Becoming single again—either through divorce or the death of a spouse—can significantly alter women’s financial stability.
As Business Report details in a feature from the current issue, a new study from Regions Bank indicates those factors all affect the manner in which females invest.
In conjunction with the launch of the Regions Women and Wealth Initiative, a program to help educate and encourage women to embrace making financial decisions, a study was conducted this summer to examine how women approach money management and how their confidence levels and behaviors differ from those of men.
The findings show that more women than men (44% vs. 35%) say they are solely responsible for making financial decisions for their households; however, women express lower levels of financial confidence and optimism than men, especially women under age 50.
Craig Kliebert, certified financial planner and vice president of The Shobe Financial Group, works primarily with a female client base. He says he finds that confidence has more to do with cultural influence.
“Historically, people have always left their finances up to the men of the house … and the women haven’t been expected to take on that responsibility,” he says.
But he sees that changing.
“To be perfectly honest, I don’t know how much of that gap is reality or how much of it is men overstating their confidence level from a masculine standpoint,” Kliebert says. “Men have a bit of a harder time working with a professional because they maybe find it a little bit emasculating to say ‘I don’t know’ or ‘Hey, I need help with these decisions,’ whereas women tend to be a little bit quicker to admit that they don’t know and could use some professional guidance and advice.”
The issue with confidence also affects risk tolerance. The study indicates that females are more conservative than males (41% vs. 24%) in investing.
Private Wealth Executive Missy Epperson with Regions is not surprised, but she is concerned about the impact it will have over time on retirement dollars.
“The deliberate nature of holding back will be a double whammy for women in trying to preserve their financial security,” she notes. “It is irrespective of income level. It has to do with an innate conservative philosophy that probably is a lack of understanding of risk because the more time you have in the market, the more time you have to absorb the market volatility. So it’s fine in your younger years to assume a more aggressive portfolio within your risk tolerance. But if you go way conservative, you are leaving money on the table for your future.”
Read the full feature and check out a related story from the current issue in which Epperson talks about how she works to instill confidence and dispel any mystery when it comes to women and their finances via Regions’ Women and Wealth program. Send your comments to editors@businessreport.com.
