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Why women need different financial advice to men

Nov 30 2016 15:30

Cape Town - When it comes to matters of wealth and investing women want the same as men: sound financial advice that secures their financial well-being now and into the future.

However, according to Michelle van Wyk, a wealth manager at Private Client Holdings, what does differ is the path to developing a wealth plan that suits women.  

“Financial advice and wealth planning for men and women should differ, just as the circumstances and behavioural approach to finances differs between the two sexes,” says Van Wyk.

Differing circumstances

The reality is women generally live longer than men. Added to this is SA's extremely high divorce rate, another factor which means that women need to be independently financially savvy.

“Women who may have recently lost a spouse or gone through a divorce can be feeling especially vulnerable if their partner was the one to handle the finances. These women may feel a bit misinformed or totally uninformed about finances and investing, and may lack confidence," said Van Wyk.

"They need to be made to feel that they are in a comfortable environment and are able to ask any questions without feeling foolish. Financial jargon must be avoided – with strategies and plans explained in clear and understandable terms.”

Although statistics for South African women are lacking, when looking at recent statistics from American research conducted by Sandy Chaikin, co-founder of Chaikin Analytics, it is notable that apparently 72% of women don’t feel confident about selecting financial investments on their own, while 63% of women don’t feel knowledgeable that they can plan for their retirement, and 57% of women surveyed felt that financial terminology was confusing and made it more difficult to make decisions.

Different approaches

Van Wyk advises that women are usually more risk averse than men. Their main goal is normally to safeguard themselves from risk rather than chase gain.

“Women look at long-term goals and at strategies to accomplish what they want out of life – two things which must greatly shape the approach taken by the adviser,” said Van Wyk.

Another factor that sees women needing a different approach to wealth planning is that many take career breaks to raise families, or work part-time to accommodate family responsibilities. This means they have decreased income with which to work when planning a long-term strategy.

In some situations, women also earn less than their male equivalents.

“This all affects their ability to save for their future and all of this needs to be factored in when tailoring financial solutions for women and empowering them to establish and meet their financial goals,” said Van Wyk.

Women make great investors

There is a book by LouAnn Lofton entitled "Warren Buffett Invests Like a Girl and Why You Should Too".

“Warren Buffett is arguably one of the best ever long-term investors and it is proposed that many of the attributes which make him so successful are natural to women,” said Van Wyk.

Women’s preference for long-term strategies that are less prone to risk is a good thing, in her view.

“Women generally create a plan and then stick to it – meaning that they are less likely to move their investments too soon. Women also have the right balance between ‘greed’ and fear and have the tendency to filter out market noise and maintain conviction,” according to Van Wyk.

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investment  |  womens wealth  |  money


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