More women venturing into investments, but challenges remain

Despite the notable gains made by women in the workforce in recent years, including growth in C-suite positions and average salaries, many women remain hesitant to dive into the unfamiliar waters of financial literacy and investing. Carrie Wagner, among others, wants to change all that. As chief development officer and a wealth advisor with United Iowa Financial, which has offices in Cedar Rapids and Iowa City, she’s working to lower the perceived barriers many women feel when exploring investment options. “Women in general have a lot of really great qualities that it takes to become a good investor,” Ms. Wagner said. “As a whole, we’re pretty patient and not prone to doing more speculative stuff. So, we’ve got the foundation there as a gender, but there’s a huge gap in the general literacy of investing, and it’s still really tilted toward that male voice, which has dissuaded women to get involved in investing.” A research study on women and finances by Swiss financial firm UBS Wealth Management concurs. According to the study, 58% of married women still defer to their spouses when it comes to long-term planning and investing – and that applies to women of all ages, education and income levels. The study also indicated single women feel less confident about making long-term financial decisions than single men. Women have also traditionally had less to invest over their careers. The estimated lifetime earnings of a woman with a bachelor’s degree are just 60% of the estimated lifetime earnings of her male counterpart, according to a March special report by Morningstar titled “Women and Investing.” Women also reach their wage-earning peak at an average age of 41, as compared to an average age of 52 for men, Ms. Wagner said. And as with nearly every aspect of modern life, COVID-19 has provided another setback. The Morningstar report revealed the pandemic has worsened the financial situation of many women, with 55% of job losses in 2020 experienced by women and 32% of woman aged 25-44 saying they’re not working because of childcare demands. “The industries that have been most affected, like hospitality, retail and travel, do fall into primarily being women,” Ms. Wagner said. “I don’t think anybody was prepared for this. Not only were they not prepared to lose their jobs, or be furloughed, or have to work from home, they didn’t have a financial advisor. They didn’t have a partner in their financial decision-making. So, a lot of times, because they didn’t have money coming in, they made careless decisions with their 401(k) or their IRAs without consulting people, which is going to set them back even further.” A number of cultural archetypes continue to impact women in the financial sphere, Ms. Wagner said, many centering around household roles in many marriages. Women tend to be responsible for routine family expenses, for example, while men focus on investments and long-term strategies. As a result, many women don’t gain the critical knowledge needed to feel confident in making larger investment decisions. “Financial literacy has really been a problem for a long time,” Ms. Wagner said. “As a female, money just wasn’t discussed openly when I was growing up. While we were very comfortable, I never learned how to balance a checkbook or use a credit card, so I didn’t have any of those role models to say, ‘OK, take your financial independence and make it your own.’ I think that that’s a barrier that’s very real for most people.” Surveys show many women would feel more comfortable discussing financial issues with a female advisor, but that can be a challenge. According to Ms. Wagner, an estimated 80% of financial advisors are men, and communication often fails to hit its mark. She recounted a recent Zoom discussion with a potential vendor for a new financial service. “The language and the references they used – of course, I’ve been in banking and finance forever, so I’m used to those,” she said. “But there were some sports references, one word in particular, and I thought, ‘I would never use that word.’ It wasn’t a bad word; it was just something that caught me off guard because it was pointed towards the male demographic. Of course, they didn’t pick it up, because it was just part of their dialect. But for me, that phrase sounded foreign in that reference. I pointed that out to him, and he said, ‘I would have never noticed that.’ It’s just so skewed toward males.” United Iowa Financial is fortunate, Ms. Wagner said, in that the firm has twice as many female financial advisers per capita as the national average, and two of the firm’s five C-suite members are women. The firm’s website actually includes a separate section on women and investing, with advice and resources to help open investment doors that have been closed for generations. It’s all part of a concerted effort to bring more women into the financial sphere. “I think it all comes back to that confidence and being able to ask the questions,” Ms. Wagner said. “Generally speaking, when you’re married and you’re sitting in a meeting with a financial advisor, eight out of 10 times it’s a male. And almost always, that financial advisor directs conversation toward the male. That’s just the way it has always been. We’re bringing that voice to women and opening it up, so they are comfortable to ask these questions, because they have to start somewhere.” It may seem obvious, but Ms. Wagner pointed out it can be helpful to enter the financial world gradually. “We actually don’t have account minimums, because we know for people to reach their financial goals and amass wealth, you have to start at zero,” she said. “You just have to have a plan in place and stick with it. And that plan starts from the first dollar you invest. “First and foremost, figure out what your savings plan is,” she noted. “Getting something on an automated plan is really important – just getting it off your plate, not having to think about it every month. And then, working together with a financial advisor about goals and talking through priorities, having someone to call when life doesn’t go your way, when a pandemic hits, or when your mother gets sick, someone to call to say, ‘what’s the best option for me, given this situation?’ You can’t control everything, but you can control some of these things.” Having that comfort level with an advisor, particularly a female advisor, can go a long way to bolster the confidence of a first-time female investor. “If women want to work with women advisors, seek out women advisors,” Ms. Wagner said. “Make that a coveted position. It’s hard for female advisors to take that first step and say, ‘OK, I’m going to take these security licensing tests and hope that I can make a living,’ because it’s not easy to start out as a financial adviser, especially as a woman. “Frankly, I had no intention of getting involved with finance when I was growing up, but I learned very young that the more knowledge I had in this space, the better I was equipped to do a lot more things,” she added. “So, just knowing the language, feeling comfortable asking the questions and having a foundation, and then having somebody hold your hand and say, ‘I know the market dropped 30% in March. It sucks. It’s scary for everybody. Stay the course. We’ve got your back; we know what we’re doing. We know this will come back; we know you have a long time before you retire.’ Having someone to bounce those fears off is almost as important as knowing it yourself.”