Canadian women are slightly more fearful about the prospect of outliving their finances compared with Canadian men – regardless of the woman’s wealth or income level, according to recent research from Mississauga, Ont.-based Credo Consulting Inc. This fear provides an opportunity for financial advisors to engage with women and help them plan for their later years.
The findings of this recent research are from the Financial Comfort Zone Study, an ongoing national consumer survey that Credo conducts in partnership with Montreal-based TC Media’s investment group. (TC Media publishes Investment Executive.)
Among the Canadians who were surveyed as part of the study, women gave an average score of 4.7 out of 10 to the statement: “I’m afraid I might outlive my finances.” In contrast, men gave the same statement an average score of 4.5.
When the results are grouped by survey participants’ level of investible assets, the gender gap remains. Similarly, the gender gap is consistent at low-, middle- and high-income levels.
Women’s greater concern about outliving their finances may be attributed to their awareness of their greater longevity relative to men, says Carol Bezaire, vice president of tax, estate and strategic philanthropy planning with Mackenzie Financial Corp. in Toronto.
Life expectancy for Canadian women is about 84 years vs 80 years for men. In addition, women are more likely to outlive their spouses; in fact, there were about 1.5 million widowed women in Canada in 2017 vs 390,000 widowed men. This demographic reality presents a possible retirement funding risk for women.
“Wealth accumulation and planning ahead becomes even more important [for couples],” Bezaire says, “but [women] don’t necessarily pay attention [to financial planning] until something bad happens to a neighbour and it’s her husband who dies early and unexpectedly.”
Women’s fear of outliving their finances also may be attributed to other factors, including worries that the effect of employment volatility and even the wage gap between women and men over a lifetime may result in insufficient savings in later years, says Sara Gilbert, founder of Montreal-based Strategist Business Development.
“Women do live longer than men,” Gilbert says, “and often don’t make as much money as men do. So, put that all together and we have [reason to] fear.”
Another issue may be a tendency for women, in general, to be more conservative relative to men in terms of how they invest, Bezaire suggests.
Indeed, according to Credo’s research, women suggested they feel less confident and more risk-averse compared with men regarding investing.
For example, among the Canadians surveyed, women gave an average score of 5.8 out of 10 to the statement: “I make investments only when I’m guaranteed not to lose money.” In contrast, men gave the same statement an average score of 5.3.
“Women’s portfolios may not grow quite as fast [as they might with a more balanced approach],” Bezaire says.
Another contributing factor to women’s fear of outliving their finances is that they’re still more likely to be caregivers to elderly family members, Gilbert says. This means women have a better idea of the consequences of not having enough money for their later years.
“[Women] see what goes into eldercare, and the illness that comes with age,” Gilbert says, “They don’t want to be a burden to their families.”
Thus, advisors could be doing a better job of helping their clients – women, in particular – understand their financial picture better in order to alleviate anxiety about longevity risk.
“When advisors are looking at their clients’ [financial] plans, including both spouses in the discussion is really important,” says Jean Salvadore, director, wealth products, with RBC Insurance Services Inc. in Toronto.
Adds Marie Phillips, an advisor with IPC Securities Corp. in Ancaster, Ont.: “If you have a [male] client, and the client’s spouse usually doesn’t come in, get her to come by or take her out for a coffee.”
Phillips says that in her experience, female clients tend to react more favourably when the discussion revolves around the bigger picture of a financial plan than when the discussion gets lost in the details of statements and returns. “[I recommend] fewer charts and technical language and more emphasis on goals and how we’re going to get there,” she says.
Adds Bezaire: “Women look for financial advisors whom they trust, so, they look more for the rapport, whereas male investors tend to look more at the performance [of a portfolio].”
Engaging female clients proactively, particularly in cases in which they’re not the ones who are managing their families’ finances, means that female clients won’t be left at loose ends if they find themselves suddenly single, either through divorce or widowhood.
“You don’t want to, all of a sudden, figure out where you’re at [financially], what you owe and where your income is coming from when you’re in the middle of the grieving process,” Phillips says.
Advisors who are able to engage with their female clients and show them how they can achieve their financial goals are positioning themselves to boost their business over the long haul, Gilbert says.
“Women are often dual inheritors; they inherit from their parents and from their husbands,” Gilbert says. “There are a lot of assets there, but you need to understand [your female clients] first.”