WASHINGTON Many women say they don't feel prepared for retirement. Could more female advisors solve the problem?
As millions of baby boomers prepare to exit the workforce in the coming years, a large majority of women are feeling anxious about their retirement security, according to a new study.
While highlighting the important role that advisors can play in helping women prepare for retirement, the Insured Retirement Institute's report also calls attention to the significant gender gap within the advisory sector.
"So what can be done to help women of all ages to gain greater financial security? Well, of course, financial education and financial advice really, both quantitatively and qualitatively, can help women," IRI President and CEO Cathy Weatherford said at an event organized for the release of the research.
"Financial advisors help in creating a financial framework for successful retirement outcomes. They provide expert guidance and support in achieving savings goals. Those who work with a financial advisor are more likely to feel very or somewhat prepared for retirement by a margin of nearly two to one," Weatherford added.
In all, just 30% of female boomers said that they feel extremely or very confident in their efforts to accumulate enough savings to live comfortably in their retirement years. Just 13% of Gen X women said the same.
Of the women polled in IRI's survey, 46% of boomers said that they had worked with a financial planner to prepare for retirement, compared to just 23% of Gen Xers who said they had consulted with a planner. The Gen Xers polled identified retirement planning as the single most important service they receive from their planners. Retirement ranked a close second for boomers, just behind investing.
The report highlights a litany of benefits that can come from working with an advisor, including intangibles like peace of mind, as well as material payoffs such as higher savings rates. Citing data from ING's Retirement Research Institute, the study notes that people who work with an advisor report better financial habits across the board than those who do not. That translates into higher rates of contribution to employer retirement savings plans, a greater likelihood to pay off credit cards in full each month, and far stronger feelings of confidence about retirement.
"Planning is, I think, the thing that's going to shift things," said Millicent Eubanks, an associate vice president with Wells Fargo Advisors. "To that extent, once the investing public begins to see the value of that, they'll stop running into the pitfall of the DIY approach."
Part of women's reluctance to work with financial advisors could stem from the lopsided demographics of the sector. Some 70% of women say that they would prefer to work with a woman as an advisor, yet women occupy just 30% of the positions in the industry. Among boomers who work with an advisor, just 21% said that their advisor is a woman.
"That's where the gap is," said Rep. Gwen Moore (D-Wis.) "Women are much more likely to want to get advice from females. ... We have a real challenge."
The authors of the report suggest that the single biggest reason why there are not more women financial advisors is a basic misperception about the nature of the profession.
Many women, quite simply, see advising as a numbers game. No surprise, then, that the IRI reports that women tend to view the field as "boring," and just 9% say they have ever thought of a career as an advisor.
But the report argues that advising actually tracks quite closely with the factors in a job that women say in surveys that they value -- work/life balance, meaningful work and relationships with the boss and coworkers.
"That's why I think some women stay away from this profession. They think it's all about numbers," said Katie Libbe, vice president of consumer marketing and solutions at Allianz Life. "It's all about relationships."
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