Women step up hunt for financial advice

Women are earning more, marrying later, and starting to take charge of their financial futures.

They make up 48 percent of stock-market investors. In families where both spouses work, nearly 1 in 4 wives earns more money than her husband does. Women-only investment clubs outperform their brother clubs.

So why is it that women still feel out of their element when it comes to making financial decisions? Studies and anecdotal evidence both show that women are more likely to say they need financial advice, but are less likely to seek it out.

Now, after years of ignoring women, some financial-services companies have started courting them with targeted marketing and special services. Women value relationships, education, and respect, these companies have found – quite different from the typical firm's orientation toward transactions.

While this reaching out by Wall Street may be one piece of the puzzle, many experts emphasize that an effort on the part of women themselves – to inform themselves about money matters and put action plans into practice – is also desperately needed.

"All of the issues that apply to men apply to women more forcefully because of their lower earnings, greater longevity, time spent out of the workforce, and because they're likely to be earning their money in sectors without a retirement plan," says Claire Hushbeck, an economist with the retirement group AARP in Washington.

Building a nest egg for retirement is clearly one of the challenges. If women are earning money at all, they are more likely than men to work for a small company that doesn't offer retirement benefits. And since they earn, on average, lower wages, even if they do put aside a percentage to invest, it doesn't match what a higher wage-earner could put away. They may also qualify for fewer Social Security benefits.

"It's a reverse snowball effect: as women roll toward retirement, their options get slimmer," Ms. Hushbeck says.

Women's priorities also differ. They tend to want to provide for everyone else before they provide for themselves, says Deborah Owens, author of "Every Woman's Money: Confident Investing."

When Ms. Owens asks women during financial seminars which they should put first, invest for retirement or for their children's college education, they almost always vote for the latter.

"I say, 'No! It's retirement! Kids have other options – they have their whole lives,' " Owens says. "Women make up 85 percent of the elderly poor, and it's because of the choices we make early on. It's OK to be selfish."

But it's not OK to be uninformed, planners say. Women, including well-educated ones with high-powered jobs, often avoid diving into money management, even when no one else is around to handle the decisionmaking. Patricia Ireland, a financial consultant at Salomon Smith Barney who leads financial-planning seminars for a New York alumnae group called Columbia College Women, says, "I'm constantly surprised by myself before I got into this business, and by my peers who are graduates of an Ivy League institution, who are women who are educated and have an influence but have no clue how to begin securing a future for themselves financially."

Jenifer Herrmann, a young advertising executive in New York, says she never paid too much attention to how her money was being invested until her father passed away four years ago. She describes the relationship she then had with her financial adviser as, "I won't call them, they'll call me."

"It was intimidating," Ms. Herrmann says. "I wouldn't talk about it because I didn't know what I was talking about."

Eventually she decided she felt more comfortable with a woman adviser, who helped map out her goals and a financial plan.

Women who grew up in households where their fathers made the money and the money decisions often feel comfortable leaving their own families' finances in their husbands' hands.

Barbara Reeb, a retired psychologist in San Diego, says her father controlled the money while she was growing up, and her husband made all financial decisions throughout her 35-year marriage. After her divorce, she felt ill-equipped to handle the financial management. "I knew I was going to have to do it, and I wanted to do it, but I didn't know how to go about it," Ms. Reeb says.

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