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Family Money: Two heads are better than one
by Rita Silvan, CIM

As a teenager, I worked part-time in a ladies clothing shop whose clientele was mostly well-off middle-aged women with a penchant for Scottish cashmere and classic suiting. One day, a soigné woman in her '60s was the very picture of breezy confidence until I presented her with the bill. Had she not realized the cost of the items? She slowly handed over her wallet and nervously said, "Take what you need."

She was the most memorable, but she wasn't the first of our clientele to appear uncomfortable handling money. Many of these ladies were from upper-class, WASP backgrounds where they had probably never paid a bill in their lives. Everything was charged to accounts which were magically settled at month-end by their fathers and then husbands. Now, as widows, their particular upbringing - that money was a man's job - had left them utterly ill-prepared to deal with financial matters.

"When I'm doing a wealth plan, I'll ask the woman, 'Do you expect to inherit? If so, do you know the amount?' Half the time, they have no clue. They might say, 'I think my parents own their house outright, but I don't know for sure,'" says Rebecca Clark, CPA, CA, CFP, Director, Wealth Planning, BMO Nesbitt Burns. "When I ask if they think they may have to support their parents, they'll say it had never occurred to them. Families are not transparent about their financial positions."

Some tribal family values handicap women's financial confidence. Here are some of the more common myths:
  • In the household, women deal with non-financial matters while men deal with finances;
  • Women are more emotional about money;
  • Women are impulsive shoppers and, therefore, make impulsive financial decisions;
  • Women have weaker math skills.
Women who internalize these messages are at a major disadvantage because, like it or not, money touches nearly every facet of life - housing, education, career, health, relationship, leisure, philanthropy, etc. By one estimate, 90 per cent of Canadian women will, at some point, be the sole financial decision maker in the family. Wealth management companies are, of course, chomping at the bit to get their hands on what is estimated to be a massive transfer of private wealth in the coming years. (According to Boston Consulting Group, women currently control over 32% of private wealth, or approximately $72 trillion.) Yet not all elderly women are affluent. In fact, 16 per cent of senior women live in poverty, a predicament where even the smallest financial decision can have critical consequences.

Although the tone is changing, the trope of a woman either being a ditz with money (overspending) or being obsessed with small beer (budgeting, bargain hunting), is still common. In fact, as Sallie Krawcheck, a former Wall Street banker and the founder and C.E.O. of Ellevest, an investing platform for women, told The New York Times, "It's actually viewed as an attractive female characteristic to be bad with money."

When Anne Boden, chief executive officer of a British bank, was flipping through magazines at the salon she was struck by the gendered language around money. "Had I been influenced by these magazines my whole life?" she wondered. Boden commissioned a study and found that women were often characterized as excessive spenders with articles focusing on penny pinching in order to buy a new pair of shoes. Articles aimed at men were more likely to emphasize investing and long-term goals as well as big-ticket, high status purchases such as cars and boats.

It's no wonder that perceptions of women's investing acumen are distorted. A U.S. study conducted by Fidelity Investments found only 9 per cent of those polled thought women were better than men at investing, despite evidence to the contrary among both retail and institutional investors.

All things being equal, it's individual, not gender-based, preferences that dictate who is keen on investing. "I worked as a portfolio manager for over 20 years, at one large Canadian bank and at two independents and I've seen at least as many women in a couple driving the conversation," says Barbara Stewart, CFA, a researcher specializing in women and finance. "Maybe it was the personality types I attracted but it was rare to be in a room with a woman who wasn't interested. There were only two CEO's wives who never showed up."

Even in affluent households, things change. "I used to deal with a lot of divorcing couples. In my experience, the man had always been in control and the woman sat at the table like a deer in the headlights," says Clark. "In one case there was a stay-at-home Mom who was in her 40s. When they married, her husband told her, 'I'll take care of it,' and she thought 'great, I'm washing my hands of it' and focused on being a traditional homemaker. When they divorced, she had trouble qualifying for a mortgage and was very fearful of how she would look after herself and return to the workforce. Within three years she found a better job and gained financial confidence, but it was a tough period."

Strikingly, research shows that highly educated and high-achieving women who consider themselves feminists are less involved than their husbands in long-term financial and investing decisions. And, according to a study by UBS, a Swiss banking group, millennial women are less financially engaged than boomer women and more likely to defer investing decisions to their male partners in the belief that their partners know more.

While family dynamics play a role, the investment industry could do more to be inclusive. According to BlackRock, 68 per cent of non-investing women believed their futures would be better if they invested. And, in another study by Merrill Lynch, 41 per cent of women said their biggest regret was not investing more.

"I've recommended to all my clients to open practice accounts, something small like five stocks in order to gain knowledge and to be more engaged in the investing process, and it's been very well received," says Stewart.

For Clark, getting both partners involved has meant pushing back when the investment advisor tells her to follow up with the husband. "I'm like, wait, what about the wife? And they'll say, 'Oh, she doesn't do the money.' All the more reason because if something happens, she needs to have a resource. A lot of it is reprogramming the investment executives to include women and invite them in."

The final word goes to the late Carl Reiner, a successful performer, writer and director who characterized his career moves: "I acted like a director. I acted like a producer. I sat in front of a typewriter and acted like a novelist." Women who want to become investors could take a page from Reiner: Act like an investor - and start investing.

About Rita Silvan

Rita Silvan, CIM, is a freelance financial writer and speaker who specializes in women and investing who has appeared on BNN Bloomberg, CBC Newsworld, conference panels, and other media outlets. She is the former editor-in-chief of ELLE Canada magazine and Golden Girl Finance. @RitaSilvan

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