At Magenta we have a lot of experience in working with women who want (or need) to get a better handle on their financial affairs to ensure that they have a secure and happy future which allows them to pursue their own individual passions.
We have written previously about how women are often disadvantaged financially and the statistics haven’t changed much over the years:
- Women are likely to have much less saved for retirement than men;
- they are less likely to have access to funding for new entrepreneurial ventures;
- are much more likely to look after sick children which impacts on their work and income prospects;
- and are more likely than men to take on work with greater working from home flexibility which can result in lower pay.
There is no shortage of statistics that depict the challenges or shortcomings that women face in managing their financial lives.
However, the great news is that women now control two thirds of consumer spending; hold 40% of total global wealth; account for 40% of all worldwide entrepreneurs and are breadwinners in nearly 50% of all households – AND these figures are on the rise.
Our experience (based on what we have been told by existing clients) is that women are less likely to seek advice about their financial affairs due to issues around knowledge; confidence; trust and relationships.
But the figures above indicate that this has to change – more women, with more money, but little money know-how or confidence has to change!
Financial knowledge and confidence
Few members of either gender say they are highly confident in making good financial decisions—but women always seem less confident than men even though studies show that they make more reasoned and conservative decisions. Women’s perceptions that they aren’t very financially literate or knowledgeable, may help to explain this confidence gap.
Research from Kantar, “Winning Over Women”, reports 70% of women lack financial confidence and lose nearly £1m across their lifetime as a result and are still under invested.
Taking advice from a professional about money is a big decision and requires a great deal of trust. After all, the success of the rest of one’s life is at stake!
Our female clients have told us some horror stories about their interactions with previous advisers (usually men) who have been condescending and patronising, often directing their conversations at male partners. They have described a lack of empathy; overwhelming technical detail and complexity as well as a complete misunderstanding of their priorities and goals in life.
A study undertaken by the Centre for Talent Innovation, found that 73 per cent of women felt their financial adviser misunderstood them.
Interestingly, although many women control family and household budgets very efficiently, many still defer to the traditional model of allowing the male partners control and manage the investments and pensions etc – this may sound like a sensible sharing of the financial responsibilities, but often leaves the woman in the dark about future plans and possibilities.
At Magenta, we believe that the 3 things that women want are as follows:
- More confidence. This doesn’t necessarily mean more technical financial knowledge – after all we don’t need to be electrical technicians to know how to boil a kettle for a cuppa!
But to feel confident in making important decisions and not worrying about them afterwards; feeling confident that you have enough knowledge to take the next steps and being confident in choosing the right partners to help and trust, is essential to future success and ultimately to feeling happy and in control.
- Better communication. Many women aren’t very comfortable discussing their finances with others, particularly strangers. Some will talk to entirely the wrong people – for example we know that some older women get their financial advice from their oldest son, even if their daughter is a financial adviser, but they rely more on their daughters for healthcare advice, even if their son is a doctor! These are unhelpful communication patterns as clearly the wrong people are being consulted on important topics.
Our female clients have told us that they don’t want long complex reports with graphs and charts and lots of numbers – they want someone who will explain things in simple terms, so that they can go away with a real understanding of their current financial situation and what this will mean for the future, and then they want to know what to do next.
They want to trust someone who will become their “go to person” when decisions about their life need to be made, because most life decisions go hand in hand with money decisions – “can I afford to …….?” “what if we…..?” “will we be able to……?” etc.
They say they value a trusted advisor who will, listen, counsel, explain, simplify, challenge, help them make time and take away stress.
- Better relationships. As mentioned above, there is often a disconnect between married couples regarding the management of their financial lives. But we have found that even when married couples split responsibilities for managing their finances, they often take on separate tasks—and one person often doesn’t know what the other is or isn’t doing.
We have also found that couples often haven’t spoken to one another about what they want their future lives to look like and what is really important, until they come into our office! Perhaps this might explain the high divorce rates once people retire.
Proper financial collaboration in relationships is key, and we encourage this at Magenta. We have certainly found that once couples can talk more openly with us and their loved one, about how they want to live in the future and how to sort out their finances to ensure they can reach their goals, they are generally happier, less stressed, more creative and imaginative, and feel more secure.
Conversations about money stories and money coaching can also facilitate a better relationship with money and often a greater understanding of why clients exhibit certain financial behaviours which may not be to their advantage. We will help clients to see how thinking and acting in certain ways around their money, can be destructive and jeopardise their future security.
In summary, providing good quality advice to women clients is one of Magenta’s missions and we know we can provide them with greater confidence, better communication and improve a myriad of financial relationships.