How RIAs can make women's voices heard in financial conversations

While women on the whole are gaining influence as household CFOs and owners of wealth, many still take a back seat in financial conversations, according to new statistics.

A February report from CFP Board highlighted the rising profile of women in financial decision-making. Among hundreds of female clients it surveyed, about 70 percent said they were the primary investment decision-maker in their household, while 60 percent of married women said they were the main financial decision-maker.

But in a separate survey of CFP professionals, that same report found 39 percent of those working with partnered couples said men lead household financial conversations, compared to 21 percent who said the female partner takes the lead.

Debbie Taylor, managing partner and chief tax strategist at Carson Group, says the data doesn't come as a surprise as it reflects a broader trend of low financial confidence among women.

"Interestingly, women actually outperform men in investing due to their tendency to take a long-term, strategic approach but in my experience, many limit themselves since they don’t view themselves as investors due to a lack of representation," she said in an email to InvestmentNews. "This lack of confidence spreads to household financial conversations where many women are letting their male partner take the reins."  

Part of the problem, Taylor said, comes from the historically male-oriented landscape of advisory services. Because of the heavy focus many advisors have on investing, she said the more holistic planning-oriented approach women seek can too easily fall by the wayside.

"From my perspective, investing is an area where many women aren’t aware they can excel, due to underrepresentation and historical barriers to entry. Common financial myths also compound this issue," she said, citing self-limiting perceptions like believing they don't have the time or knowledge to get started in investing.

Krista Baumgardner, associate director of wealth management at Choreo, said the dynamics around household responsibilities play a role. Because men tended to occupy the CFO position historically, that pattern tends to get established early in the relationship, and often persists for years.

"I will say I think there has been a drastic shift in recent years, and that gap will hopefully start to narrow," she said, pointing to the body of statistics showing a rise in female investors from the baby boomer generation through Gen Z.

"From my experience, when women invest, they consistently achieve higher returns than men because they focus on long-term growth and risk management, rather than acting on impulse, which men often do," Taylor said.

From experience, Baumgardner said younger female clients are more frequently playing the part of CFO or are equally engaged as their male partners in investment and financial planning discussions. Still, as demographic themes like women outliving men and growing divorce rates continue, she says it's important for advisors to make space for women in financial conversations.

"If I feel like the male is the decision-maker, and typically the female may opt out of meetings just because she trusts that he's handling it and he's responsible, I will still continue to include her on invites for meetings and on email threads," she said.

For her part, Taylor said advisors must understand women's priorities and concerns to ensure they're properly represented in planning discussions. That involves a holistic approach that goes beyond investment strategies include longevity planning and tax strategies, as well as charitable giving toward causes that matter to them.

"Since women generally have longer life expectancies than men, it’s important for advisors to prioritize planning for scenarios that uniquely impact women such as life transitions like widowhood, caregiving responsibilities – which often fall on women – and estate planning," she said.

Baumgardner also emphasizes the importance of body language during meetings, including eye contact, to make sure women are comfortable.

"I think it's important to take time to explain financial or investment terminology that may not be familiar to everyone. And I also think you should do that proactively, without having to make them ask for that," she said. "You never want to make someone feel that they have to prepare for the meeting or study up on terminology or language to be able to keep up."

Taylor agrees. "Financial education and support are some of the best ways to uplift women in financial planning conversations," she said. "For women from all walks of life, providing them with the tools to break through some of the barriers inhibiting them from having financial confidence will help end the problematic cycle of women not taking control over their finances because they think they can’t be a part of the conversation."

Beyond planning meetings, Baumgardner encourages advisors to build personal connections with the women they work with, even if they are not the primary point of contact in the advisory relationship.

"Consider reaching out and grabbing lunch, to have that dedicated one-on-one time," she said. "If the male is the person of contact, you may not have that many touch points throughout the relationship or the day to day, so you have to be intentional about strengthening that relationship as well."