Women should be taking a more active role in household investing decisions, suggests UBS Wealth Management Americas, after a new survey finds that women are generally happy with men taking the lead — until retirement, when they become significantly more worried about their finances.
The firm released its latest quarterly investor survey Tuesday, which examines the ways that high net worth couples approach financial decision-making. It finds that while women are engaged in broad wealth management decisions, they do not take as active a role in actual investment decisions.
In heterosexual households, couples tend to divide financial decisions along gender lines, the report says, with men taking responsibility for investing, long-term planning, and insurance; and, women more likely to manage day-to-day expenses and charitable donations. Couples most often share decisions about real estate and other large purchases, as well as estate planning and post-secondary education funding, it reports.
“As an industry, we often use the terms “financial decisions” and “investing decisions” interchangeably. But financial decisions do not equal investing,” said Paula Polito, client strategy officer at UBS. “It’s 2014 and women of all ages do not take as active a role as they should in investing. Even in Millennial and Gen X couples, fewer than one in five women actually make investment decisions. This is alarming because investing is the foundation of financial security.”
The survey also found that 50% of couples say they have differing risk tolerances, with the majority of women significantly more conservative than men, which makes long-term planning and investing more challenging. It says that 51% of men are looking to track or beat the market, and that men are also more likely to want to immediately invest money they receive.
In couples where the man leads financial decisions (40% of households), couples are satisfied with that choice until retirement, the firm says. In those households, they follow the man’s more aggressive risk tolerance and prioritize investing over saving. Women in these couples choose to be less involved in investing and are very satisfied with this choice until reaching retirement, it says.
“These women feel the best about their financial situation pre-retirement, but after retirement they actually feel worse, by a significant margin,” it says. “Retired women who are not financial decision-makers are significantly more worried about their financial futures than other retired women, and also report the highest percentage of disagreements about how much money to spend in retirement.”
Approximately 28% of couples share financial decision-making equally, the survey found. In these cases, they often share the same level of risk tolerance and, if they don’t, they resolve the disparity by choosing a compromise position between their opinions. Couples who share financial decisions argue least about money and are most satisfied with the distribution of financial roles, it says.
“Women who choose to leave financial decision-making and the financial advisor relationship in the hands of their husbands should seize the opportunity to take a more active role,” says Jeff Scott, head of market research for UBS Wealth Management Americas. “Women are outliving their spouses and because they never dealt with finances before, they’re less confident about handling them later in life. As a result, they are more concerned about the stability of their financial future and outliving their money in retirement.”
In couples where women are the primary financial decision-makers (16%), the survey found that they handle money more like men. They tend to have a higher risk tolerance, and they prioritize investing over saving.
Another 16% of couples maintain separate banking and/or investment accounts. The survey found that these couples are more likely to argue about money, as well as lie or hide information about money.
The survey also found that lesbian, gay, bisexual and transgender (LGBT) couples are more likely to take a separate-decisions approach when it comes to money. LGBT couples are more likely to disagree about risk tolerance, and when they do, they are more likely to separate their accounts so that each can follow their unique risk tolerance, the survey found. “They are also considerably more confident and optimistic financially than heterosexual couples,” it says. “They have a more optimistic view of their own finances and are more confident in their ability to reach financial goals in the future.”
The survey was carried out online between March 27 and April 1 by an external vendor. It sampled 2,595 U.S. investors, who identified as being married or living together. The core sample of 1,260 investors has at least US$250,000 in investible assets; 1,046 have at least US$1 million in investible assets.