The most surprising result of the Investments Money FIT Women Study from Fidelity was the overwhelming majority of women (92%) who said they want to learn more about financial planning, says Alexandra Taussig, senior vice president for marketing and business strategy at Fidelity Investments.
“It’s great news,” she tells PLANSPONSOR, “because they want to learn.”
A major finding of the study is that women greatly lack confidence in their own financial ability. They are concerned they won’t have enough money to live on in retirement, but they want to learn, Taussig says. “They want to take action and start taking control of their finances.” Since most women will be solely responsible for their money at some point in their lives, Taussig notes, their willingness to step up engagement in active learning about finance is positive.
Fidelity’s goal is to help women plan for retirement, a much easier objective if they are willing to attend seminars and meet with representatives, where they often take the next step, Taussig says. After taking these actions, participants often increase contributions or change their asset allocation, so women’s willingness to get financial guidance is encouraging.
The study was designed to measure women’s views of their own financial acumen and behavior, as well as to spot any obstacles that might be holding them back from greater engagement.
A majority of women refrain from discussing money, the survey found. Eight in 10 said they hold back from discussing money even with those they are close to. Taussig says the idea of women being reluctant to talk about money was not surprising. “We expected it, but we were surprised to see [the extent of it],” she says. “Seventy-seven percent said they were comfortable talking about health with their doctors, but only 47% said they’d be comfortable talking about finance with a financial professional.”
Let’s Not Talk About It
Women are likelier to discuss just about any other topic—health issues (78%) and issues at work (71%)—with their partners than they are to discuss investment ideas (65%) or difficulties with eldercare (48%). When it came to speaking with friends, women were likeliest to talk about shopping tips (65%), parenting issues (46%) or issues at work (44%), and least likely to discuss investment ideas (17%) or spending habits (25%).
One key to getting women to open up about finances is providing a forum where they feel less constrained. Taussig suggests that employers offer group classes during work hours that are geared to women. “The most successful workshops are women only,” she says. “We found it is OK to have a few men, but if there are predominantly women you’re much likelier to get a lot of questions.”
She recalls a seminar with 200 women and just a handful of male attendees. The women asked questions on every topic imaginable, she says, from whether they should pay off debts first or make contributions, to how much they should contribute. “They asked about 30 questions,” she says, “and they were very engaged.”
When men are present, women just ask fewer questions, Taussig says. “They need to empower themselves and put themselves in the driver’s seat,” she says. Interestingly, women in fact save more than men. Although they take less risk, they get about the same returns as men. The difference is confidence level. “Men tend to focus on what they do know,” she says. “Women focus on what they don’t know.”
Taussig recommends approaching this issue on several fronts: First, target communications and design seminars and meetings for women. Next, it is not widely known that they invest as well as men and are better savers, she points out. “Women would love to hear that message.”
Since women say they want to learn more, plan sponsors should definitely publicize the benefits offered in the plan. If plans have free guidance by phone or online, this should be emphasized. If the provider gives seminars that speak directly to women, this benefit should be promoted, she says.
A Different Conversation
Having a majority of women in the room changes the tenor of the questions and the conversation, Taussig feels. Plan sponsors do not have to segment everything—“You don’t want to say ‘no men,’” she says—but definitely offer women-focused workshops.
One finding of the survey is that 65% of employees do not take advantage of the guidance available in their workplace-sponsored retirement plans; Taussig calls this an opportunity for plan advisers and sponsors. “We would love them to push employees, both men and women, to get help and guidance,” she says.
But the benefit might especially be a plus for women. “They don’t know where to turn, where to start,” Taussig says, “and the plan at work is a good bridge.” Just as people go to the doctor once a year, Fidelity would like people to see a financial professional to do a retirement plan checkup once a year, Taussig says. “A lot of people aren’t doing that, but you are more confident if you know where you are and how you’re doing.”
According to Taussig, wmen and men think about investing differently, which is of interest to retirement plan advisers as they consider their approach to advice and participant education. “Women tend to be much more long-term focused,” she says, “and they focus on goals, not performance.” For women, the questions might be: Can I retire when I want to? Can I put my three boys through college?
Taussig suggests that advisers frame the investment conversation in those terms, rather than making statements about sector performance. Women do not care about how energy is doing, but about how that might impact a college savings account, she says. Other tips for advisers: Let women talk, instead of interrupting them. Increase their confidence by pointing out their skills at saving.
Taussig maintains that women are competent savers and investors, and the stereotype that men are better investors must be broken. Citing the book “Warren Buffett Invests Like a Girl: And Why You Should, Too,” she observes that the confidence mismatch can be overcome by instilling greater confidence and letting them find their own voice as investors.
The Money FIT Women Study was conducted online by Kelton on behalf of Fidelity between October 6 and October 30, 2014, among a sample of 1,542 women ages 18 and over. All respondents were employed or retired and had a qualifying workplace-based retirement plan. Fidelity’s white paper “Empowering Women to Take Control of Their Retirement” can be accessed here.