Most of us are aware of the gender pay gap, the oft-cited fact that the average woman in the American workforce earns 82 cents for every dollar earned by a man.
Some financial professionals also point to a gender savings gap, which could make it more difficult for women to enjoy their retirement years.
According to financial planning and investment management firm BlackRock, women are 12 percent less likely to start a retirement fund, and those who have, on average, have accumulated less than half the savings of male counterparts.
Some professionals believe one reason for that is that the financial services industry has done a poor job of catering to female clientele.
“In general, the wealth management industry’s marketing strategies, communication tactics and investment protocols were developed primarily by men, to attract and engage male clients,” said Lisa Strohm, a Center Valley financial adviser.
“When presented with these strategies, protocols and tactics, many women have a difficult time becoming engaged with their financial affairs.”
Strohm is president and CEO of The Athena Network, a “financial and life management firm” that does a lot of its work with women and their families.
There is little dispute that the financial services industry is dominated by men. In fact, 86 percent of all investment advisers are men who are at least 50, according to Ellevest, a new online investment platform that targets women.
High-powered Wall Street executive Sallie Krawcheck launched the platform last year in the hopes of tapping into an underappreciated class of investors — American women who control more than $5 trillion in investable assets.
In the Greater Lehigh Valley, there are a few investment advisers — such as The Athena Network — who have been working for years to help women invest.
Women often feel “talked over and talked past” when dealing with many financial advisers, Strohm said.
“Advisers often use technical jargon that the average person doesn’t understand,” she said. “Many women find that patronizing and alienating.”
Tricia Ludgate, an adviser with Financial Planning Advisors in Wyomissing, agreed with Strohm.
“I hear that a lot,” Ludgate said. “I hear that [women clients] don’t feel comfortable because the men just assume that they are not interested or not capable of understanding, and that’s not the case. I have never found that to be the case.”
While Financial Planning Advisors works with men, women and married couples, the firm is unusual in that all four of the financial advisers it employs are women.
“We have a really nice little niche here that has developed over the years,” Ludgate said.
“We hope that we empower women to understand that they have the capacity to [invest], and working with professional financial women, hopefully, does that for them.”
In her woman-centric business model, Krawcheck, the former president of Global Wealth & Investment Management for Bank of America, has argued that women not only need to save, but pursue different investment strategies than men.
There are a number of reasons for this, beginning with the wage gap that puts women at a disadvantage in terms of how much they are able to save. At the same time, women typically live several years longer than men, meaning they need more money to retire.
“The biggest challenge that women have that men don’t have is longevity,” said Marilee Falco, a principal and financial planner for JoycePayne Partners, a wealth management firm in Bethlehem.
“Some women, maybe they never worked or maybe they stayed at home for many years. So they don’t have as much saved and they typically live longer than men. Sometimes that comes into play and they are not as well prepared.”
In many cases, however, little can be done about a woman’s investment situation by the time she visits a financial planner because key decisions already have been made, Ludgate said. A lot of women come to an adviser with different goals than men, anyway, she said.
“From my experiences, I have observed that many more women are interested in making a difference or impact through their investments,” Ludgate said.
“Sometimes it’s a desire to avoid investing in ‘sins,’ such as tobacco, firearms, gambling, porn, alcohol and similar. Sometimes it’s a conscious desire to advocate for social justice investing in companies that promote human rights, diversity and are good corporate citizens. Other times, it’s an interest in environmental concerns, ‘green’ investments, such as clean, sustainable energy or agriculture.”
Men tend to be more influenced by “market volatility” and trade more frequently, a strategy that can often backfire with lower returns, Ludgate said.
“Men can be overconfident investors, even aggressive,” she said.
“Women tend to be more cautious and contemplative when making a financial decisions, thus not being reactive to market volatility.
“It’s interesting to me that men tend to be more emotional investors than women. It goes against typical gender stereotypes.”