Despite making major economic strides over the last seventy years, women continue to lag behind in generating long-term wealth opportunities by investing 40% less money than men. Debbie McGrath, Chief Marketing Officer & Chief Client Officer at Echelon Wealth Partners talks about why that’s a problem and what can be done about it.

Written by Debbie McGrath

While women are engaged as the CFOs of their households, they are less confidently in control when it comes to the creation and preservation of their personal wealth. Compounded lost income due to the gender pay gap and time off work represent additional challenges for women in laying the groundwork for their financial future.

From not properly saving for a rainy day to not starting a retirement fund, 51% of women say their biggest regret isn’t saving more and as a result, it has been identified as their greatest source of stress.

The urgency for Canadian women to become educated about managing money has reached a critical point with an unprecedented wealth transfer on the horizon and 90% of Canadian women expected to have complete control over their finances at some point in their lives due to lifecycle events.

To understand why this ‘gender investing gap’ exists, the financial industry must consider how self-image, circumstance and monetary priorities play into women’s financial worldview.

• Women are confidently in control of their household finances but don’t feel similarly self-assured when it comes to investing. Women are also more likely to label themselves as financial “beginners” compared to men.
• A majority of women view themselves as “savers” with just over half opting to leave most of their savings in cash or bank accounts rather than investing.
• Women score lower on financial literacy questions than men by a margin of 15% to 22%.
• The money women are missing out on due to pay discrepancies and time off work is translating to a wealth gap later in life.

• A majority of Canadian parents are lending financial support to their adult children which could be putting their own retirement savings at risk.

With Canadian women expected to control more than one-third in total wealth (approximately $3.8 trillion) by 2028, how can the financial industry do more to engage this powerful demographic? To develop a game plan, the industry must first understand the playing field and some of the barriers keeping women away from advisors:

• Cost is often cited as a reason that women do not seek the advice of a financial advisor. They also value transparency surrounding fees, including how the advisor gets paid and how much they charge.
• Just over half of women say they don’t have sufficient assets to warrant professional financial guidance.
• Women report feeling ignored by financial institutions.

Any strategy for further engaging women in the wealth-management process must take into consideration two very important points: women have strong values regarding their investments and specialized demands when it comes to choosing financial professionals and their financial path.

• Women value safety over opportunity and also take a more holistic approach to wealth-management that includes holding investments longer with the goal of building security for their families and preparing for lifecycle events.
• For women, investing is about more than making a profit, it’s about putting their money in organizations that align with their core beliefs.
• Women are looking for advisors they can trust and who make them feel heard.
• A critical part of making women feel more valued and understood by the investment sector lies in addressing the lack of females working as financial advisors, as a majority of women prefer working with female financial advisors.

With 35% of women who do not use a financial advisor saying they would consider working with a professional, the investment industry has a real opportunity to grow this underserved clientele.

It’s not just women who stand to miss out when they’re left out of the financial advisory equation, the investment industry as a whole will forego tremendous opportunity if it doesn’t quickly adapt to the needs of this increasingly powerful demographic.