Updated: Apr 5
What Hurts Women Financially? The Way Some Male Financial Advisors Make Them Feel.
Back when I was a teenager, my dad showed me how to fill out my 1040 EZ tax return after I had earned some money at a job. After a few years, I started to do my own taxes. While doing your own taxes sounds scary, I know I'm lucky that I have a thoughtful and caring father who wanted to set his daughter up for success by showing her how to fill out her own tax form.
Now I’m a CERTIFIED FINANCIAL PLANNER™ and most women who come to me seeking advice are going through a major life transition. It's usually an emotional time and involves something like the death of her father or spouse, divorce, or having an empty nest.
The theme I hear most from these women is that they dread dealing with a male financial advisor who is going to talk down to them. They worry that he is going to tell them that they have to sell their house, stop spending so much money, and then barrage them with confusing things about stock market volatility, the yield curve or small cap blend stocks.
Unfortunately, most financial advisors, accountants and other finance professionals talk down to women or talk over their heads or worse — simply ignore them. And instead what women have shared with me is that they actually FEAR dealing with a male financial advisor, CPA and even their own lawyer.
How can this be the case when the financial services industry is supposed to put the client first!?!? Maybe they should just say they put male clients first.
Some women get so intimidated and flustered by their lack of financial knowledge that they are afraid to ask their own CPA or financial advisor — who they are paying for their service and advice — the important questions that can significantly impact their financial decisions and even prevent them from making costly financial mistakes.
This intimidation causes some women to have to pay high penalties because they haven’t withheld enough in estimated taxes, or they make early withdrawals from their retirement savings to pay down part of the mortgage to keep the house. It can even hurt their future retirement savings.
It’s a real problem: More than one-third of women say they feel patronized by financial advisors, according to a recent survey by New York Life Investing.
Some women have a lot of financial knowledge and experience. Maybe they studied business in college. Some are responsible for running a portion of their company’s P&L. Others are in charge of financial matters at home.
However, some women may not have much financial knowledge and this is usually because of a lack of experience. Perhaps their spouse or partner makes most of their family’s financial decisions, or they simply haven’t been interested in it before. This can be especially hurtful to women of color and minorities who may experience institutionalized marginalization in other areas of their lives.
Lack of financial literacy and confidence can be a major hindrance to developing a sound financial plan, retirement savings strategy, estate plan, tax plan and other critical things that build wealth and secure a woman’s financial future.
The bottom line is that some men assume stereotypes or have unconscious bias that women don’t understand finance, and they shouldn’t assume things one way or the other.
Every financial planner, accountant and estate planning lawyer should begin every engagement by asking new clients in a respectful and open way how much financial knowledge they have.
Do they know how to run a household budget? Do they understand how their income is taxed, and what tax bracket they are in? Do they understand how various investment instruments work?
This is especially important for women going through a major life event, such as the death of a spouse, divorce, or becoming responsible for overseeing financial decisions for an elderly parent. It also advances the financial services industry’s commitment to addressing inequality by improving diversity and inclusion.
Make sure women feel empowered and encouraged to ask any question they might have, and be respectful and appreciative of those questions.
Take time to explain things, and make sure that they understand the way you are explaining it. If not, find a better way to make it clear to them. And remember: there’s no such thing as a dumb question.
When it comes to paying taxes, reassure her that the reason she owes taxes is good — it’s a sign of success in her career and higher earnings to support herself and her family. If she owes the federal or state government money at tax filing time, it means she either earned more than expected or simply needs to adjust future withholdings a little higher.
Financial decisions are about putting her in the driver's seat and helping her make the decisions about trade offs, especially during a major life event. During a divorce, she may be able to keep the house if she gives up expensive vacations and clothing, but she shouldn’t raid her 401(k) retirement account to pay for the house.
Women who have confidence in their financial literacy will become savvier as clients by asking more pointed and detailed questions. They will be more decisive and confident in their decision-making. They will raise issues or concerns earlier when it’s easier to course correct, or flag potential problems before they become catastrophes.
There are also significant benefits to their careers as well: women who are more confident in financial matters will feel empowered to make decisions on the job and analyze business challenges in a more thoughtful way.
Over time, financial professionals will build deeper trust, respect and stickiness as they educate women and share knowledge with them.
I was lucky to have a father who took the time to teach me about finance and how to do my own taxes, and ladies you should ask yourself: is my financial advisor giving me the knowledge, respect and attention that I deserve?
CERTIFIED FINANCIAL PLANNER ™ Wealth Engagement LLC An Independent Registered Investment Advisor (RIA) 3715 Northside Parkway Bldg 100, Ste 500 Atlanta, GA 30327 Office: 404-795-6124 Cell: 917-826-5955 The information contained in this e-mail message is sent on a confidential basis to the recipient(s) named above. This message is not an advertisement and does not constitute an offer of any securities or investment advisory services. Any offering may only be made pursuant to the securities laws, an offering document and related subscription materials all of which must be read and completed in their entirety. This message is intended exclusively for the use of the recipient(s) named above, and it is not to be reproduced or redistributed to any other person without the prior consent of Wealth Engagement. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message.