Wealth planning issues of various kinds have been a real feature of our conversations with High Net Worth Individuals in recent weeks.
Women have made tremendous progress in the last fifty years, but there is still one topic that many still consider taboo: money.
Compared to men, women remain far more reluctant to talk about their finances. This inaction not only undermines their investment and savings potential, but it could trigger grave consequences in the long term. Indeed, studies from around the world show that women are more likely than men to suffer a massive pension fund shortfall as well as inadequate insurance coverage.
A study released by US-based Fidelity Investments earlier this year highlights that eight out of 10 women have refrained from discussing money with family and friends, partly because they felt it was “too personal” or “uncomfortable”. This hesitation to talk about money extends well beyond family and friends. In fact, the same study reports that while 77% of women are confident raising medical issues with a doctor on their own, only 47% would be comfortable talking about money and investing with a financial professional.
“From my personal experience, most women have fairly little knowledge about investment options or are overwhelmed by it. Consequently, many lack the confidence to take charge of their finances,” said Cindy Chang, vice president, Head of Marketing & Customer Centricity, Manulife Singapore. Indeed, Prudential ‘s 2014 report Financial Experiences & Behaviour Among Women showcased that only seven per cent of women gave themselves as “A” grade for their knowledge of investing. Men gave themselves higher marks, the study emphasised.
This lack of confidence may be a critical contributing factor to women’s reluctance to seek out information on investment options. According to Prudential, nearly half (45%) of men surveyed seek out market and financial information a few times a month or more, versus 26% of women.
Financial experts we spoke to assert that most women want more financial information but are put off by the jargon in the marketplace. “Essentially, women desire financial products that simple and easy to understand. Banks and investment firms need to articulate clearly what benefits their products bring and make it easier to compare against competitors’ products,” said Meghan Connolly, Managing Director and Head of Personal Loans & Revolving Credit, Standard Chartered Bank Singapore.
Nevertheless, there are slithers of hope lurking among the gloomy statistics. Some 38% of respondents in the Prudential study stated that knowing where to learn about investing would prompt them to work more on their finances. Furthermore, 35% mentioned that they would be more in tune with their finances if they had help from a financial expert.
Wealth management options can appear to be a challenging area to breach for many, but engaging a finance professional is essential for women working towards building a strong financial foundation for themselves. Wealth management might not be for you, but to help you find the perfect match, defining your financial objectives as well as the key characteristics you want in a financial advisor or wealth manage while assessing his or her local knowledge of finance laws and cultural idiosyncrasies.
Chang believes that retirement and investment planning should at the top of the mind for women.
“You cannot rely solely on your pension – it will be insufficient if you wish to maintain your current lifestyle. Women need to diversify their wealth portfolio – and this means increasing their knowledge of financial products no matter how reluctant or unsure they are, and seeking professional help, not only for information but to also help them manage their finances effectively,” she said.
The money conundrum women face today is huge. Thanks to the prevalence of divorce and women’s longer life expectancy, more women than ever will have to manage their finances on their own at some point in their lives. Hence, it is apparent women can no longer remain apathetic when it comes to managing their money and they need to take some considerable action today to secure a better financial future.
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