Women & Wealth

Some of you may be asking themselves why a man would write about women and their struggles with money, investing and financial planning. For me it comes down to experiences from three major influences; my grandmother, my mother and my spouse. Being surrounded by strong women throughout my life has given me a special perspective to the challenges women face and I’ve seen it in three different generations.

My grandmother was the last one-room school house teacher in southeastern Alberta, and was a true frontierswoman. She lived alone in an isolated area and was a professional at a time when so many women had little or no education. After marrying my grandfather she raised three children and was also a founding member of the Alberta Women’s Institute in her area. Although cancer took her far too early, she had created a nest egg apart from her husband that few women have even today. Truly a visionary, she saw a need to control her financial destiny when many women couldn’t or didn’t.

Secondly, my mother was a single parent and raised my sister and me on a relatively small income. Knowing what I was like as a kid, this wasn’t an easy task. An immigrant from New Zealand, mum had no family support and very little in the way of financial support as the rules then were less favourable to the custodial parent, which was (and still is) almost always the mother. Mum was a nurse, who worked at a clinic until my sister and I moved out, when she then transferred to the operating room from where she retired about 1½ years ago. Mum was fortunate in having a small pension, but she also managed a modest retirement savings and a home she owns. Pretty good considering she had essentially nothing after her divorce.

Finally my spouse is an inspiration to any woman who has been through the ugliest of divorces and the story is one of survival and strength. The law may be explicit in how assets are split in a divorce but the unfortunate truth is far greyer. The reality of divorce is usually the side that has the most money can essentially drain the other side into submission, something she experienced first-hand. Giving up her career as a chiropractor to raise her children led to having almost every financial disadvantage possible. However after a three-year divorce, she persevered. She re-educated herself, received her license as an optician and now owns her own optical boutique in Kelowna.

Talking about the most important women in my life, their experiences and struggles are to illustrate a key point; women are almost always put at a financial disadvantage compared to men. This is not to say that with some planning women can’t take control of their finances and put themselves in a better position. The proof is found in the women you have just read about.

Although women’s financial strength is slowly growing, inequity is still a major problem. Here are some facts:

In 1964, there were 1.8 million women in the Canadian work force; today there are 8.1 million.
The average annual income in Canada for women is $30,100 compared to $47,000 for men.
47% of RRSP contributions are from women.
Only 19% of these women use a financial planner.
72.9% of women with children under 16 years old are working.
10.6 million companies are at least 50% owned by a woman or group of women.
In 2009, nearly 1 million women (12% of those with jobs) were self-employed, up from 8.6% in 1976.
Two-parent families have average assets of $567,000; single-parent mothers have average total assets of $187,000.
According to The Guardian, more than a third of women in the UK do not have any pension savings for retirement
Two-parent families have average net worth of $442,000; single-parent mothers have average total net worth of $119,000.
The suggested savings rate for men is 10% of gross income; it is 12% for women.
Women are more likely to work in part-time jobs that don't qualify for a retirement plan.
Of the 62 million wage and salaried women (age 21 to 64) working in the United States, just 45% participated in a retirement plan.
There is no country in the world where women’s wages equal those of men.

The experience for women seeking advice can also be disheartening. I hear from my female clients that their experience dealing with previous advisors was like buying a car; the salesman shows the vanity mirror but never opens the hood and shows the engine. Or if they are with their husband or partner, the men end up speaking to each other and the woman is ignored. By educating yourself prior to meeting a financial planner you can come prepared with strong questions and avoid being taken advantage of. Regardless if you are single or have a partner, it’s important you have a good knowledge of household finances. If you are not sure where to start, here is some suggested reading:

Follow Aura Wealth Management on Facebook and you can find a series of articles called “Financial Success for Women through the Decades”; five articles for women in their 20s to their 60s. I also have recommended websites on the right column of this newsletter.

Within a relationship there can be one partner who takes the lead in looking after the household finances. This isn’t to imply a lack of trust in a relationship but women who don’t take an active role need to be prepared if something ever happens to their partner. It is not uncommon if the spouse who controls the money passes away and remaining spouse is left wondering what to do next. Make sure there is a list of accounts, assets and advisors if something were to happen.

For the men who are reading this, it is important that we understand the financial struggles of women. Empathy and awareness of these issues in making sure finances are looked after in a cooperative way. I would encourage men to read the books I recommended above, especially the ones by Beers and Sandberg.

I host Women & Wealth seminars and I’m happy to speak to you and your friends or colleagues. Not surprisingly in the years I’ve hosted this discussion I have only ever seen one man attend. To help make sure the other 48% of the population understands your struggles, invite the men in your life to attend; don’t exclude them. By being inclusive with your partner, men will be far more prepared when their wife becomes the major income earner and when a woman eventually becomes his boss.

Sources: Stats Canada, The Guardian, U.S. Department of Labour