The future of women’s wealth: Insights for financial advisors

As we celebrate International Women’s Day, it’s essential to recognize the unique financial challenges and opportunities that women face.

Advisors play a crucial role in guiding women towards financial independence and security. This article explores key areas such as behavioral economics, women investors, retirement trends, and female advisors in Canada.

	Behavioral economics and women investors Behavioral economics provides valuable insights into how women make financial decisions. Many studies across different domains have shown that women tend to be more risk-averse than men.1 A recent study found that women are often less willing to take risks because they focus more on possible loss and anticipate the pain associated with it.1 Women are also significantly less optimistic than men1, which can influence their investment choices. This cautious approach may lead to more conservative portfolios or being more heavily invested in cash and fixed income, which may not always align with their long-term financial goals. Advisors can help by educating women investors about the benefits and risks of different investing styles and helping them determine a strategy that supports their goals and risk preferences.
	Women investors: Trends and statistics Women are increasingly becoming a significant force in the investment world. According to a report by Women of Influence+, women are expected to control nearly $4.0 trillion of assets by 2028 as compared to approximately $2.2 trillion today.2 An area in need of significant improvement is the way the financial industry uses certain language that may be perceived as unwelcoming to women. Excessive use of jargon for example, can come across as demeaning and unwelcoming.3
	Retirement trends among women Retirement planning is a critical area where women face unique challenges. Although the life expectancy gap between genders has been narrowing4, on average, women still live longer than men. This means that women need to save more for retirement; however, women often have lower lifetime earnings due to career breaks and wage gaps5. In Canada, the average retirement age for women is 63.6 years, slightly lower than the 65.5 years for men.4 Additionally, unretired women aged 55-64 are more likely to feel unprepared for retirement, 62 per cent of women compared with 48 percent of men.6 Advisors can play a pivotal role in helping women plan for a secure retirement by offering tailored advice and strategies.
	The role of female advisors The financial advisory industry is seeing a gradual increase in the number of female advisors. While exact statistics are hard to come by, some research has shown that women represent between 15-20 per cent of advisors overall.7 More women are entering the field and bringing valuable perspectives, and women advisors often excel in building strong client relationships and understanding the unique needs of female clients. This trend is crucial as it helps bridge the gender gap in wealth management and ensures that women’s financial needs are adequately addressed.

As we celebrate International Women’s Day, it’s important to acknowledge the progress made and the challenges that remain in empowering women financially. Advisors have a unique opportunity to support women by understanding their specific needs and providing tailored advice. By leveraging insights from behavioral economics and staying informed about retirement trends, advisors can help women achieve financial independence and security.

 

 

¹ Dawson, Chris. Women feel the pain of losses more than men when faced with risky choices – new research. University of Bath. June 9, 2023. https://www.bath.ac.uk/announcements/women-feel-the-pain-of-losses-more-than-men-when-faced-with-risky-choices-new-research/
² Women of Influence+ and CIBC. New survey findings reveal the financial priorities and challenges for Canadian women. WomenofInfluence.ca. October 23, 2024. https://www.womenofinfluence.ca/2024/10/23/women-money-and-wealth-mediarelease
³ Redmond, Ashley. Do female financial advisors give advice differently? Morningstar News. March 4, 2024. https://www.morningstar.ca/ca/news/245865/do-female-financial-advisors-give-advice-differently.aspx
⁴ Statistics Canada. Life expectancy, 1920-1922 to 2009-2011. Health Statistics Division. October 08, 2024. https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2016002-eng.htm
⁵ Peters, Diane. The gender pension gap: Even after work ends, women must make do with less. The Globe and Mail. July 30, 2024. https://www.theglobeandmail.com/business/article-the-gender-pension-gap-even-after-works-ends-women-must-make-do-with/
⁶ HOOPP and Abacus Data. 2024 Canadian retirement survey. Healthcare of Ontario Pension Plan. June 20, 2024. https://hoopp.com/news-and-insights/research-and-analysis/2024-canadian-retirement-survey
⁷ Wealth Professional Canada. Top female financial advisors and professionals in Canada | Top 50 leading women in wealth. Wealth Professional. 2024. https://www.wealthprofessional.ca/best-in-wealth/top-female-financial-advisors-and-professionals-in-canada-top-50-leading-women-in-wealth/387600

 

 

This material is for general and educational purposes only and is based on the perspectives and opinions of the owners and writers. It is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting, financial or other professional advice. Investors should always consult an appropriate professional regarding their particular circumstances before acting on any of the information here.

Worldsource Wealth Management (WWM) is a fully integrated wealth management company focused on supporting Financial Advisors and building financial prosperity for Canadians. WWM is a wholly owned subsidiary of Desjardins Group, the leading financial cooperative in North America with over 100 years of dedication to the people and communities they serve. WWM is comprised of: Worldsource Financial Management Inc. (WFM) and Worldsource Securities Inc. (WSI), which are Dealer Members regulated by the Canadian Investment Regulatory Organization (CIRO) and Members of the Canadian Investor Protection Fund (CIPF), as well as IDC Worldsource Insurance Network Inc. (IDC WIN), one of Canada’s largest life insurance managing general agencies.