Despite the misconception that women are less interested in personal finances, they are thriving in the world of investing. But with fewer women than men investing, experts say there's still room for improvement.
The most noteworthy difference between men and women investors? Historically, women are more successful. On average, women investors perform better by nearly half a percent (0.4%). "The truth is, women have come a long way in the last 20 years, and more so in the last 10," said Vickie Sandve.
“This persistent narrative that women aren't as financially savvy as men is simply not true.”- Vickie Sandve, BOK Financial®; Private Wealth market executive for New Mexico and Arizona
And they’ll soon have plenty of money to prove it. By 2030, women are expected to control most of the $30 trillion in financial assets currently held by baby boomers—the majority of the wealth in America. This will result in a huge shift of wealth, according to McKinsey research.
Women more prone to worry about money
While research shows that women outperform men in investing, they also worry more than men about meeting their financial goals, with funding retirement and paying for long-term care at the top of their concerns, according to McKinsey. In their survey, 46.4% of women respondents reported worrying about outliving their assets in retirement versus 35.7% of men—a margin of almost 10 points.
"Of course, women want to increase their wealth. But in my experience, they also tend to invest in a way that aligns with their values," Sandve said. "Whether that's making sure they are financially independent, or their children have college funds, women more often choose investments that are tied to life goals."
Financial advisors will have to adjust to keep their women clients, Sandve and others in the industry believe. According to the McKinsey research, women use different criteria to choose an advisor and are much more likely than men to place a high value on establishing a personal relationship. This stronger preference for trust and connection could change the face of investing, the report suggests.
The non-financial spouse dilemma
Even with their proven ability, women don't invest at the same rate as men—66% of men currently invest in the stock market compared to 48% of women, according to a 2021 NerdWallet survey.
One reason women might not invest as much as men, despite their winning track record, is their more frequent status as the "non-financial spouse."
Defined as the client in a married couple who abdicates financial decisions to their partner, the non-financial spouse is a woman 75% of the time, says Sandve. The McKinsey report saw a similar trend, with many married women feeling shut out of investment decisions.
BOK Financial approached this issue by creating a deck of conversation cards that encourages couples to prioritize their investing goals and open the door to talking about money. "We have a fiduciary responsibility to both people," said Sandve. "They are both our clients and are invited to every meeting. We don't let anyone, man or woman, skip the check-ins. The deck of cards helps us open the door to a discussion about wealth and get the couple on the same page.”
Having a clear understanding of their financial status is especially important for women—who tend to outlive their partners. Sandve hopes tactics like the conversation cards help empower all of her clients to be more engaged in managing their money and planning for the future—no matter if they’re in a relationship or an individual making decisions on their own.
And for those women who don’t have a financial advisor? Sandve suggests finding an advisor and getting started investing now. "The way to grow wealth is to assume you will have money," she said. "Don't wait for a certain income level—start investing today."
She suggests women educate themselves by accessing free resources like financial media and then asking questions. There are also financial advisors that serve every level of wealth management—she suggests the best place to start is to be curious.
Bringing a more outcome-focused and relational approach to investing, women have proven they have the ability to be financial decision-makers. "Historically, there have been some barriers to women being financially independent, and we've still got a ways to go," said Sandve. "But we are narrowing the gap between men and women in investing and I’m looking forward to supporting even more women as they embrace the ownership of their financial journey."
. © 2024 BOKF, NA.