Why Addressing Financial Gender Gaps Is Important For Everyone
Leisl L. Cording, CFP®
Senior Vice President & Financial Advisor
As Vice President at Weiss, Hale and Zahansky, I’m somewhat of a finance industry anomaly – research shows that less than a quarter of senior leadership roles within financial services firms are held by women. That gender gap in the finance industry itself is a reflection of a similar gap in investment and wealth building activities among women in general. Even putting the issue of equity aside, these disparities can have serious consequences. Not just for women, but for the families that they increasingly support at an equal or greater level than their male partners.
The good news is that change is happening, and at a faster rate now than perhaps ever before. But the events of the last year have also heightened many of the existing challenges that women face in building wealth and financial security for themselves and their families.
Here’s what’s important for both women and men to understand about these changes and challenges, and what they can do to push things in the direction of improved equity and financial health for everyone.
Women continue to lag in financial leadership – both in the finance industry and in the household.
Women’s involvement in the finance industry as well as in household finances has no doubt evolved quite a bit over the last several decades. But there’s a lot of growing yet to do before equity is achieved. Women may have gotten their foot in the proverbial finance door, but few have taken a seat at the boardroom (or kitchen) table in a position of leadership.
A 2020 report by Cerulli Associates, a research firm focused on the financial services industry, shows that women represent only about 18% of all financial advisors. The situation is similar when it comes to personal finances in the household. Other research by Cerulli found that only 28% of women own stocks compared to 44% of men.
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Societal forces present the major challenge that women face in gaining financial security and leadership – and while some recent events show positive change, others are heightening those challenges even further.
That women continue to lag behind their male counterparts when it comes to finance is the result of many complex reasons, but it’s largely due to the broader gender inequalities that they continue to face.
A woman working full time still earns roughly 81 cents for every dollar that a man earns in the same position, leaving them with less financial security in the present, not to mention less to contribute to retirement savings and other investments for the future. Women are also more likely to leave the workforce to raise children or to care for sick or aging family members, further lessening their earning power – which even further compounds their savings and investments power over time.
The pandemic has hit women especially hard. The U.S. Bureau of Labor Statistics reports that as of January, 2021, nearly 2.4 million women had exited the workforce since the pandemic began in February, 2020, as compared to 1.8 million men.
When people have less to invest in the first place, they will almost always be much more cautious in their investment decisions in order to protect what they do have. That’s very likely why women tend to be more conservative in their investment choices than men, and in particular much less likely to invest in the more volatile but much higher-yield stock market. All of these factors combine to result in women ending up with less capacity to build wealth.
What’s very interesting and encouraging though, is that when women do choose to enter the stock market, their more cautious and balanced approach tends to earn them better returns over time. In other words, they more often adopt the long-term thinking that forms the foundation of our Plan Well, Invest Well, Live Well™ process here at Weiss, Hale and Zahansky. And that’s a great thing.
The end result will likely be exactly the kind of informed, measured and healthy growth in wealth that should be the end-goal for all of us – and not only women but all of society will benefit. So, as work continues to address the gender disparities in other areas of life that stunt earnings, women must also feel confident in taking a leadership role in their personal finances.
And, I’m happy to say, there are also many efforts now underway to bring gender equity to leadership in the finance industry as well. I’d encourage all the girls and women out there who are interested in finance to check out organizations like 100 Women in Finance, Women of Wall Street, Fintech in Action and others that are working to increase opportunities and advancement for women in finance. I hope to see more of you with a proverbial seat at the table of finance leadership with me in the years to come!
Authored by Vice President, Associate Financial Advisor Leisl L. Cording, CFP®. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. http://www.whzwealth.com.