Asset managers of all shapes and sizes have spent years and millions of dollars studying women and investment. MetLife, Prudential, Wells Fargo, and ING, to name a few, have done multi-year studies and produced elegant research on “experience and behavior” and “finances and the female executive.” In a multi-trillion dollar financial industry targeting U.S. households, there are huge, reputable players in every part of the industry – retail and institutional, banks, mutual funds, 401(k) providers, investment banks, private banks – all of which have targeted women for future growth.
To date, none have met with much success. With all the attention it has given this issue, the industry has not been able to change the reality that women under-participate and underutilize the vast array of financial services available to them. For instance, women are still saving less for retirement than men:
- Women have lower participation rates in employer plans than men: 73% vs. 77%.
- Women also contribute less: 17% contribute the maximum allowed compared with 26% of men.
- Finally, total retirement savings is lower, with fewer women saving outside of employer plans than men: $108,000 vs. $149,000.
For providers of financial services, this reality represents a tremendous missed opportunity. But for women clients themselves, it is a far more serious issue, with far-reaching consequences fr their financial well-being.
At 65, a man will need ten years of retirement income from savings of $258,000. Invested in assets that keep up with inflation and taxes, he will have $25,800 per year for ten years. A woman, because of her additional life expectancy will have a sixteen year retirement with savings of $154,800. Invested in assets that keep up with inflation and taxes, she will have $9,675 per year.
What this means for us, as women, is that we simply cannot afford to “opt out” of financial planning altogether. No one will ever take more of an interest in your financial health than you yourself, and the potential cost of abdicating responsibility for your financial life is too great.
But women who have disengaged from the financial services industry have had real reasons for opting out. These reasons must no longer be ignored. At SUM180, we spent 18 months closely studying those reasons and working directly with our clients to understand, at the deepest level possible, how the financial services industry had failed them. With everything at stake, we wanted women who are not financial experts in their own right to want to re-engage with their own financial health, and to feel empowered to get the financial advice they need.
We realized that the challenge we faced at SUM180 was to build trust and communication with the people we wish to serve. Learnings from listening became the basis of a new approach to helping people overall, not just women, to deal with their money. Next: What we learned.