Wealth Management Insights: Overcoming Barriers for Women Investors

| June 18, 2024

According to Ellevest1, the Great Wealth Transfer will unfold over the next 20 years, putting more capital into the hands of women than ever before. This shift is an excellent opportunity to address and overcome the unique barriers that may affect a woman’s investment journey to help shape their financial future. 

As more women gain wealth, empowering them to strategically invest and manage finances is critical for creating a path to financial independence. Discover the common hurdles women face and explore how we can support and provide resources to help more women become confident investors.

What Are the Common Barriers for Women Investors?

Historically and culturally, there are several barriers women investors face, ranging from the gender pay gap to societal beliefs about their financial abilities. Challenges may be more pronounced for single women, parents, women of color, and women experiencing a transition, such as divorce or the death of a partner. 

  • The Gender Pay Gap: The gender pay gap2 remains a significant hurdle for women investors. Women as a whole earn 82 cents of every dollar a man earns2, while women of color earn 57 cents3. Whether real or perceived, many women may feel they do not have enough income to invest. Employment gaps due to caregiving4 further magnify this issue, with more women often leaving the workforce to care for children or other family members. The lack of national paid parental leave benefits in the United States5 increases the chances of these employment gaps and income disparities.
  • Lack of Confidence or Support: The majority of financial advisors are male6, further perpetuating finances as a male field. This may contribute to women feeling underrepresented and less confident with investing.
  • Risk Aversion: Society has traditionally underscored women’s need to save, coupon, and budget to “stretch a dollar” at home. It may be that this has made many women risk averse7, prioritizing saving over investing. While women investors typically outperform their male counterparts8, primarily due to their conservative approach, they can sometimes miss opportunities to achieve higher returns by not adjusting their risk to match those of male investors.
  • Loss of Income or Partnership: There are additional hurdles for single women and those experiencing divorce. Single women often have fewer resources9 to invest, especially if they are also parents. Divorce generally negatively impacts women’s standard of living more than men’s10. Divorcing women must also manage the loss of dual income, alimony or child support, caregiving responsibilities, possibly reentering the workforce, or managing their finances independently for the first time. 

Why is Investing Important for Women?

Investing is a powerful tool that empowers women to grow, rebuild their financial security, and manage changes with more confidence. Other benefits include:

  • Financial Independence and Security: Investing provides women with an opportunity to grow wealth, support themselves, and pursue goals without relying on others, such as a partner or their family. Additionally, since women statistically live longer than men11, investing can provide peace of mind and security in retirement, as women need more wealth to maintain their quality of life and everyday expenses later in life.
  • Reaching Financial Goals: A personalized investment plan can provide women with the resources they need to achieve their short- and long-term goals, such as buying a home or starting a business. 
  • Navigating Changes: With unexpected life events, such as death, disease, divorce, and income changes, investing can provide women with financial stability during transitional or uncertain periods. Independent financial security also allows women to pursue significant life changes, like leaving a marriage12, changing careers, or temporarily leaving work for caregiving.
  • Equity and Progress: When more women invest, it compels more diverse perspectives, services, and support. Additionally, financially empowered women often influence social change as they commonly invest in socially responsible investing13 and in their communities, and use their resources to uplift other women.

How Women Can Get More Confident Investing

While there are undeniable challenges women face when investing, there are effective strategies and supportive allies who can help women feel more empowered and confident in their investment journeys.

  • Prioritize Education: Taking an active role in learning about investing and managing finances is crucial. Married and single women should seek support, ask questions, access resources, and engage in financial communities as important steps in building wealth and achieving financial independence.
  • Seek Female Advisors and Women-Focused Firms: While the field is predominantly male, the number of female financial advisors is growing. More firms are also developing tools and strategies tailored to women. Finding a female advisor or working with a firm that prioritizes women’s needs and understands their unique challenges can help women feel more represented and confident.
  • Invest Early: Investing early, even with limited resources and a conservative risk profile, can be highly beneficial for all investors because of compound interest, especially for women given their unique challenges. 
  • Leverage Tools to Stay on Track: Women often juggle professional careers, household responsibilities, and caregiving, leading to a significant mental load. Automating your savings or delegating your investments to an expert can help ensure finances are managed effectively despite busy schedules.
  • Support Women-Focused Investing Efforts: Women and men can support women’s growth in the investing world. Supporting women-led firms, literacy efforts, inclusivity, and initiatives that empower women and girls in finance can help create a more diverse and equitable investment community.

How Monarch Supports Women Investors

At Monarch, we believe in the power of women investors and understand how women’s financial needs and motivators are evolving. Our systems and services are designed to address the unique challenges of women, whether they’re navigating divorce, managing complex financial situations for the first time, or planning for long-term security. 

Our relatively young firm is committed to inclusivity, ensuring we meet our clients’ needs at any life stage. We specialize in guiding women in transition and developing tailored investment and wealth management plans that align with their personal goals and circumstances. We also offer:

  • Personalized Guidance: We work closely with our clients to understand their unique financial situations, develop customized strategies that reflect their values, and help them adapt to various life circumstances.
  • Specialized Training in Divorce Financial Planning: As a Certified Divorce Financial Analyst® (CDFA®) professional, Wealth Advisor Irene Timmons specializes in advising clients through the separation and distribution of assets, tax implications, spousal and child support, and other financial areas in the divorce arena, ensuring women receive the support they need during this transition.
  • Collaboration with Your Professional Team: Collaboration helps us understand and explain how your decisions will shape your financial future and long-term goals.
  • Preliminary and Ongoing Education: You may be managing your finances for the first time, have limited market and investment knowledge, or need guidance in organizing a more complex financial situation. Our team is available as a resource so you can become more informed and make wise financial decisions.

Addressing these barriers requires systemic change and targeted efforts to support women investors. By understanding these challenges and working to provide better resources and opportunities, we can empower more women to take control of their financial futures. We know the impact women can have as investors and are here to help them reach their goals. If you need guided support in your investment journey, please contact us to learn more about how we may assist.

Sources:

  1. Ellevest. “Why the Great Wealth Transfer Is Making History for Women and Wealth.” ellevest.com. Jan. 16, 2024. https://www.ellevest.com/magazine/investing/great-wealth-transfer
  2. Pew Research Center. “Gender pay gap in U.S. hasn’t changed much in two decades.” Pewresearch.org. Mar. 1, 2023. https://www.pewresearch.org/short-reads/2023/03/01/gender-pay-gap-facts/#:~:text=The%20estimated%2018%2Dcent%20gender,cent%20gap%20four%20decades%20earlier
  3. Center for American Progress. “Women of Color and the Wage Gap.” americanprogress.org. Nov. 17, 2021. https://www.americanprogress.org/article/women-of-color-and-the-wage-gap/
  4. Center for American Progress. “Fact Sheet: The State of Women in the Labor Market in 2023.” americanprogress.org. Feb. 6, 2023. https://www.americanprogress.org/article/fact-sheet-the-state-of-women-in-the-labor-market-in-2023/
  5. The New York Times. “The World ‘Has Found a Way to Do This’: The U.S. Lags on Paid Leave.” nytimes.com. Oct. 25, 2021. https://www.nytimes.com/2021/10/25/upshot/paid-leave-democrats.html
  6. Investopedia. “The Leading Women Financial Advisors of 2023.” investopedia.com. Jan. 27, 2024. https://www.investopedia.com/leading-women-financial-advisors-7558536#:~:text=Historically%2C%20the%20vast%20majority%20of,50.4%25%20of%20the%20U.S.%20population
  7. Harvard Business Review. “How the Gender Balance of Investment Teams Shapes the Risks They Take.” hbr.org. Dec. 24, 2020. https://hbr.org/2020/12/how-the-gender-balance-of-investment-teams-shapes-the-risks-they-take
  8. The Motley Fool. “Investing for Women: What You Should Know.” fool.com. Feb. 20, 2024. https://www.fool.com/research/women-in-investing-research/
  9. The Ascent: A Motley Fool Service. “7 Shocking Stats About the Gender Investing Gap.” fool.com. Mar. 28, 2024. https://www.fool.com/the-ascent/personal-finance/articles/7-shocking-stats-about-the-gender-investing-gap/
  10. Legal & General. “The Divorce Gap – women see their household income drop twice as much as men, following divorce.” legalandgeneral.com. Feb. 7, 2024. https://group.legalandgeneral.com/en/newsroom/press-releases/the-divorce-gap-women-see-their-household-income-drop-twice-as-much-as-men-following-divorce
  11. The Census Bureau. “Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060.” Census.gov. Feb. 2020. https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1145.pdf
  12. CNBC. “Money stress traps many women into staying in unhappy marriages.” cnbc.com. Aug. 13, 2019. https://www.cnbc.com/2019/08/13/money-stress-traps-many-women-into-staying-in-unhappy-marriages.html
  13. Female Invest. “The Gender Investing Gap is Real and the Statistics Are Here to Prove It.” femaleinvest.com. Feb. 20, 2023. https://www.femaleinvest.com/magazine/gender-investing-gap