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RETIREMENT PLAN INVESTOR

Use your plan ID (available on your account statement) to determine which employer-sponsored retirement plan website to use:

IF YOUR PLAN ID BEGINS WITH IRK, BRK, 1 OR 2

Visit americanfunds.com/retire

IF YOUR PLAN ID BEGINS WITH 34 OR 135

Visit myretirement.americanfunds.com

Categories
Practice Management
Women’s financial futures: Challenges and opportunities
Jennifer Miller
Retirement Plan Counselor
Kathryn Jordan
Retirement Plan Counselor

The COVID-19 pandemic has presented unprecedented challenges across the board, but it is also emerging as a defining period for women. Capital Group’s research finds they are adapting their financial philosophies in response to their pandemic experiences and are looking to take control of their financial futures.


With many women now prioritizing financial security and resiliency, there is a unique opportunity for you to engage with them. Indeed, Capital Group’s April 2021 Wisdom of Experience investor survey of approximately 2,000 American women and 500 men found that 35% of millennial women and 25% of all women are looking to rely more on a financial professional in the future.


The graphic shows that 35% of millennial women and 25% of all women are looking to rely more on a financial professional in the future. Source: Capital Group, Women’s financial futures: New financial philosophies taking shape post COVID-19, April 2021.

Source: Capital Group, Women's financial futures: New financial philosophies taking shape post COVID-19, April 2021.

Empowering women


To make the most of the opportunity, financial professionals interested in reaching women need to understand their unique mindsets. As they relate to investors overall, women are more likely than men to:
 

  • Feel concerned about their personal finances
  • Express that their finances incite anxiety and affect their physical well-being
  • Use less aggressive investment approaches

To engage these women, you have to understand who they are, and where and how they seek advice.


Changing behaviors


Women have been most affected by the COVID-19 pandemic. Since the early phase of the pandemic, women have been more likely than men to lose or leave their jobs — and to remain out of work, many months later. As a result, women’s behaviors toward money have changed.


Our survey found that 28% of women say they reduced or stopped contributions to employer-sponsored retirement plans during the pandemic. And an equal number expect to delay their retirement. But on the positive side, 43% of women say they now place more importance than before on saving for retirement, and one-third (32%) say they are spending more time thinking about their finances.


This increased interest is especially good news for women, many of whom may have felt underprepared or not empowered to manage their financial futures.


Breaking the silence


Traditionally, women may have avoided talking about finances because they may find it too personal, uncomfortable, or because they lack confidence on the subject.


Now, as a result of the COVID-19 pandemic, many women say their attitudes toward finances are changing. That includes being more open about their financial situations and sharing their experiences, especially among networks of family and friends. More than half of women in our survey (51%) discovered that when they communicate with other women about their personal finances, they find that others are going through similar situations. This is motivating them not only to gather new knowledge but also to share it openly.


Making the connection


As women become more open about their finances, it’s useful to explore how and where they gather their information. Our survey found that where women turn for financial advice differed greatly depending on age, wealth, race and other factors. Some women are system connected, meaning they more often turn to financial professionals, financial advice at work and other traditional financial resources. Still other groups of women tend to be more socially connected and more likely to turn to established social networks among family and friends as well as on social media and other online or public sources of financial information.


System or socially connected: women's sources for financial advice vary greatly

This bar chart shows the sources women find most helpful when navigating finances. The cohorts are broken down into All women, Millennial, Gen X and Baby boomer. The multi-colored chart has six bars for each group representing the sources: Family, Friends, Financial professionals, Social media, Finance websites and News sources. All women: Family, 37%; Friends, 19%; Financial professionals, 35%; Social media, 24%; Finance websites, 24% and News sources, 16%. Millennial: Family, 42%; Friends, 29%; Financial professionals, 29%; Social media, 48%; Finance websites, 34% and News sources, 16%. Gen X: Family, 37%; Friends, 22%; Financial professionals, 27%; Social media, 17%; Finance websites, 27% and News sources, 17%. Baby boomer: Family, 32%; Friends, 9%; Financial professionals, 48%; Social media, 3%; Finance websites, 17% and News sources, 14%. Source: Capital Group, Women’s financial futures: New financial philosophies taking shape post COVID-19, April 2021.

Source: Capital Group, Women's financial futures: New financial philosophies taking shape post COVID-19, April 2021.

How to meet women where they are


White women and baby boomers tend to be more system connected, with 37% of white women and 48% of baby boomers indicating they consider financial professionals to be the most helpful source of information. The survey also shows being system connected correlates with increased financial stability. Affluent women, defined as any woman with between $500,000 and at least $2 million in assets, tend to be system connected and are likely to have a wider range of financial accounts and better access to financial professionals, employers and federal programs.


On the other hand, women of color and millennials tend to be more socially connected and seek advice online. Women in these groups seem to be in need of help, as many report feeling nervous and anxious about their finances. This presents an opportunity for financial professionals to engage with these underserved groups.


For women who seek information online, consider building out your social media presence:
 

  • Emphasize that while discussing finances may feel new and uncomfortable for them, it doesn’t for you — you’ve been helping clients achieve their financial goals for a number of years.
  • Ensure there is current information on financial topics available on your site. Many women use social media to find the answer to something specific, such as tax tables and credits, 401(k) deferral limits and emergency savings tips, to name a few.
  • Promote a “monthly success story” that discusses a way you and/or a team member helped a client achieve a financial goal — both big (purchasing a home) and small (getting a 529 account started for their children). Be aware, however, that there are strict regulatory requirements related to marketing client experiences and testimonials; confer with your compliance department before promoting "success stories."
  • Have a series of short (60-90 seconds) videos available explaining financial topics — either done by you, a resource your firm promotes or reposting other credible content.

Winning with women: keys to engagement


This newfound openness surrounding financial topics gives financial professionals the opportunity to better engage with women. But to have a more meaningful dialogue, financial professionals should consider not just what information is communicated to women, but also how it is communicated.


To help win women clients now:

  • Offer education. Build programs and tailor communications to reach women who are currently more socially connected than system connected. Some financial professionals use content marketing to not only provide essential education to investors but to also improve their brand visibility and position in search engines. Creating educational content that speaks to this market could be a valuable way to build your brand.
  • Connect with your clients on social media. Sharing content on social media, in line with your firm's legal and compliance policies, to reach women directly is a natural first step, but also consider broader audiences. Compelling content could be picked up by an influencer, media outlet or even the website of another business.
  • Leverage your retirement expertise. Women are now placing more importance than before on saving for retirement, which provides an opportunity for you to showcase your knowledge and engage a new set of clients. In addition, many women own businesses and may be looking to start or change an employer-sponsored retirement plan.
  • Make diversity, equity and inclusion part of your practice. According to the Center for Financial Planning Board’s 2020 report, Diversity in Action: How to Sustain the Financial Planning Profession, racial and gender diversity are crucial to the sustainability of the financial planning profession. If you are adding staff to your practice, keep in mind countless studies have found that diversity can lead to stronger teams, greater perspective and increased innovation. Additional voices in the profession could help to organically open up those systems and social connections to reach a wider array of prospective clients. One firm's incorporation of gender diversity into its practice has resulted in low employee turnover and high client satisfaction.


Jennifer Miller is a retirement plan counselor with 21 years of industry experience (as of 12/31/2020). She holds a bachelor’s degree in business administration from Towson University.

Kathryn Jordan is a retirement plan counselor with 11 years of industry experience (as of 12/31/2020). She holds a bachelor's degree from Bowdoin College. She also holds the Certified Investment Management Analyst® designation.


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