Financial advisors
will be attracting a larger share of women clients as long-living females seek and attain their financial independence.

A survey recently conducted by TD Waterhouse Canada Inc. shows independence is second only to retirement security as an incentive for women to invest.

Three of every five women who manage the household investments say financial independence is the reason they became interested in investing, up from only half the women surveyed a year ago. About three-quarters of the women surveyed say saving for retirement is the main reason for their interest in financial management, about the same as last year.

“With women living longer than men, there is a risk that they could outlive their money,” says Patricia Lovett-Reid, senior vice president of TD Waterhouse in Toronto. “There is also a high incidence of divorce and a growing number of couples that are divorcing later in life. Women don’t want to be dependent on children or social assistance; they want to take control of their financial situations.”

The mortality tables of Toronto-based Manulife Investments show that a man who is now age 65 has a 56% chance of living to 85, while a woman has a 70% chance. The probabilities of the man living to more than age 95 are about one in five, and one in three for women.

Many women have had their working years interrupted by child-bearing or caring for aging parents, or have lower lifetime income than men, and may not be eligible for the same public and private pension benefits.

“There is a lot of boomer anxiety around finances,” Lovett-Reid says. “Some women are caught in the ‘sandwich generation,’ and may find children leaving home later, at the same time as aging parents need help. And they’re looking at 25 or 30 years of retirement.”

The TD Waterhouse survey found that 36% of women did not know how much income they would need in retirement, indicating they lack a formal financial plan and have not sought professional financial advice.

“There are still many husbands who take care of the family’s finances,” says Peter Andreanna, a certified financial planner at Continuum 11 Inc. in Mississauga, Ont. “With many women outliving men, it is essential that women become part of the financial planning process and advisors establish a relationship with both spouses.”

The survey also found three-quarters of women who have taken financial responsibility say they invest differently than men. More than half described their risk tolerance as medium, preferring stable and high-quality investments. However, 44% reported low risk tolerance, and a preference for guaranteed deposits and interest-paying investments, which may indicate “too much caution” to achieve their financial goals, says Lovett-Reid. IE