Video: A woman's financial view


It's true, confidence can be an issue, as we see in our 2017 Heritage Planning survey,2 in which 41% of women say they don't feel they can adequately address their financial concerns. But what matters more are the consequences of that lack of confidence. One is the tendency for women to worry more about what they can't control. In our survey, 65% of women are concerned about rising health care costs, 54% about political instability and 53% about a cut in their Social Security benefits. A lack of confidence can also make women put off retirement until they're comfortable with their 401(k) balance, thus weighing on their employer's benefit program because they're staying in their health plan longer as older workers. 


Women are worried about healthcare because they live longer and thus have to pay expenses longer. Making matters worse, many women had their income cut when Social Security's "file and suspend" provision was discontinued last year. That provision allowed women to collect benefits based on their husband's record, even when their husband had suspended benefits to wait for a larger payout. The idea was for women to get some income while delaying their own benefits for a better payout.


Video: Social Security strategies


The point is that some financial issues are unique to women. So this is where advisors need to have those tough and usually uncharted conversations with female clients. Consider the retirement savings dialogue you might have with a woman who has left work or is thinking about it, either to care for children or elderly parents, because the alternative — daycare — is just too expensive. Yes, times have changed, but women are still more often than not the de facto caregivers.


What these women may not have considered is that if they leave work, stop contributing to their employer-sponsored retirement plan and lose the power of compounding, they could jeopardize their retirement security. The potential damage is very real, as shown here in a hypothetical illustration of how several years taken off work impacts a retirement nest egg.


It's not that this reality check has to change a woman's decision to leave work to care for her kids. But if women are aware of the potential impact and learn the importance of continuing to save and compound even small amounts, they can potentially shore up their finances early on. Perhaps that means saving through a spousal IRA when they're out of work, or maxing out their employer-sponsored retirement plan while they still can. In either case, the end result is potentially more substantial retirement savings.


Video: Compounding takes time


Having these conversations is both an opportunity to help women investors learn more about investing — which 70% of those surveyed say they want to do — and a chance to deepen your advisory relationships. There is no "traditional" role for women. And while women across generations have their differences, we still can't generalize about their financial challenges. Those are individual and situational. So you need to get to know your female clients and prospects, understand their pain points and carefully target your advice to solving these issues.


Women investors are savvy — and they know when to ask for help. In our survey, 57% percent of women currently working with advisors say they will come to you for more help in the coming years. Are you ready? 


[1] "Health, United States, 2015," Centers for Disease Control and Prevention.


[2]About the survey
MFS Investment Management reexamined the research behind its Heritage Planning program by conducting a study among individual investors in the United States. The sample totaled 2,000 respondents, broken out as follows: 998 females and 1,002 males. Gen Y refers to investors ages 21 to 36. Gen X refers to investors ages of 37-51. Boomers refers to investors ages of 52-70. The Silent Generation refers to investors ages 71 to 81. To qualify, individual investors must have $50K or more in household income, own at least one mutual fund, and make or share in the financial decision making for their household. The survey was conducted from December 14, 2016 to January 9, 2017. MFS was not identified as the sponsor of the survey. 



The views expressed are those of Jenine Garrelick and are subject to change at any time. These views should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any other MFS investment product.


This content is directed at investment professionals only.