Beth Sweeney | Mar 29, 2021

Education is a key component to helping women invest.

I will never forget the woman who approached me after a seminar I gave on financial planning. She was recently widowed, and she seemed lost and worried about the future. While she had always paid the bills and managed the household finances, she left the investment piece of their financial life to her husband. Her issues were more than I could tackle in that setting, so we scheduled a personal consultation. I went to her home and wound up sitting on the guest room floor with her, going through box after box of financial papers. Among old receipts and check stubs, there were account statements and stock certificates, including some that weren’t even registered properly—they were in the names of the deceased husband and his mother, who had been deceased even longer.

My new client literally had no idea what she was even worth, nor what she even had. After we went through all the paperwork and got everything properly titled, it turned out that she had assets worth about $5 million. She had no idea that they had built up so much wealth while she was managing the checking account and paying the bills. I spent a few weeks and countless hours going through all of the paperwork with her and educating her in the process. It really opened her eyes when she found out she could do a lot of things in her future life that had never even occurred to her before.

Her story is all too common for women I’ve encountered and worked with who have either split responsibilities in household finances or have been left out of them altogether. While we’re no longer in a time when men control the money solely, so many women who find themselves independent because of divorce or the death of a spouse find the task of financial management daunting, often because of a lack of confidence ora lack of transparency about financial details. It’s vital that a financial planning approach geared toward women starts with a conversation of empowerment and ownership. And it requires a detail-oriented approach to put them on the firmest educational footing that we can, so they have all the facts to make their own decisions for their futures.

This is especially true in divorces. I work a lot with divorce attorneys who will typically bring me in to help evaluate a client’s assets at the start of negotiations, because the attorney needs help identifying the right assets to split or retain. One particular case stands out. This woman had pretty much been kept in the dark regarding their financial situation, and, in this very tense and stressful time, we needed to take stock and educate her on each asset she had. It took considerable effort to just explain to her what kinds of accounts she had, the difference between tax-deferred and taxable accounts, and what was in her best interest from a settlement standpoint so she wouldn’t have huge tax liabilities.

It turned out there were tens of millions of dollars that she was going to be responsible for and she really needed a full-fledged financial education to be able to be comfortable with taking on these assets. She also needed confidence.

Working with her at that time of crisis was one of the most rewarding experiences I’ve had as an advisor. That was more than 15 years ago and she’s still a client, but much more astute and financially literate than she was at the start of that process.

Of course, both the women I’ve referenced here would have been much better off if they had been actively involved in managing their wealth from early on in their marriages, which is why when dealing with married couples, I go out of my way to make sure both parties are fully engaged.

Some women are reluctant to ask questions for fear of looking foolish. This even happens in intimate situations where it’s just the advisor and a husband and wife. Far too often, the wife will let the husband dominate the conversation, because she feels she hasn't been listened to in previous financial situations. I encourage women to speak their mind. Advisors across the industry need to know how on many occasions women avoid dealing with advisors because they feel unheard and disregarded. This is intolerable.

I always make it clear that in order to do the best job possible, I need to hear each of them articulate their goals and objectives. Want to know what I find? Very often, spouses have different ideas about what they want for the future, and, because they never talked about it, they never even knew. I explain there’s no reason why their goals have to be perfectly aligned and my job is to help them find an acceptable middle ground. When dealing with female clients, advisors need to let them ask as many questions as they need and listen carefully to their responses.

I’ve also found that it's important to keep women engaged in the process throughout the length of the relationship, not just at the initial planning session. Women need to be part of all our discussions because research shows that 90% of all women will be managing their finances at some point in their life by themselves. If women are not engaged and haven’t been privy to all the details of their financial situation, if they should become widowed or divorced, they will be totally unprepared and unlikely to even know where to begin.

Also, women need transparency, and that’s something advisors should provide. In dealing with married couples, the advisor should make sure that their financial file is up to date and that both partners know what the assets are, where the accounts are located, whether there’s a pension or 401(k) and what benefits have accrued. I feel that an important part of my role as an advisor is to make sure women are educated about these matters so that they do not become overwhelmed.

Education is also an important component of helping women to invest. Many individuals new to investing as well as female clients will often gravitate toward companies or brands with which they are familiar. If the company in question is one that they’re not familiar with, I try to explain why this particular name is important to the portfolio and what potential it has to increase returns over the next 12–24 months.

In my experience, the biggest challenges in working with female investors are in helping them overcome a lack of confidence and lack of financial transparency. But both of those problems can be overcome by careful listening, thoughtful counseland education about financial matters—all of which an attentive financial advisor should be able to provide to their female clients.

Beth Sweeney is a managing director at Steward Partners in Boston.

Any opinions are those of Beth Sweeney and not necessarily those of Raymond James.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.