Thu, 25 Jun 2015
Although women investors are saving more than men, they are also more hesitant to talk about financial matters and tend to have less confidence in their investing acumen, says Fidelity's Kristen Robinson Darcy.
Christine Benz: I'm Christine Benz for Morningstar.com. Women investors exhibit some positive characteristics, but there are a few things that they could be doing better. Joining me to discuss Fidelity's latest research in this area is Kristen Robinson from Fidelity Investments.
Kristen, thank you so much for being here.
Kristen Robinson Darcy: Thank you for having me.
Benz: So, Fidelity periodically puts out these Money FIT Women studies where you examine women's feelings toward money, their ability to talk about money, and other issues like that. In the latest release, let's start by talking about some of the things that you found women are doing right--some of the positive behaviors, let's say.
Darcy: I like starting with the good news first. So, the good news is that women are actually saving more than men. They are very focused on their retirements and, in fact, they are performing just as well or better than men.
Benz: So, how do you measure their performance?
Darcy: The way that we do that is, we actually have about 12 million customers whose 401(k) accounts we look at. We're able to look to see that their performance is very much equivalent to men. But if everything is equal--so, if men make a $100,000 and women make $100,000--women are saving a greater percentage into their retirement accounts.
Benz: So, that's good news. You also found that women are more likely to take advantage of retirement guidance that they might get, either through their workplace or maybe taking advantage of managed solutions that are available to them.
Darcy: That's right. What we also found is that they are more conservative investors, and they really do look at investing for the long term. They think about money as helping them support the goals that they have. They don't look at investing as being transactional. They look at it as money helps them live the lives that they want to live and they want some help mapping out that.
Benz: So, those are some of the pluses. You also found, though, especially in the realm of communication, that that's an area where women tend to be a little bit reticent--certainly communicating with peers, for example. You found that women tend not to want to talk about financial matters.
Darcy: Absolutely. And this was a surprise with the survey because you would expect that women talk about everything, especially within their networks. They're the first to share information--whether they have a great experience with a company or a person or whether it's a bad experience. And for some reason, talking about money is taboo. In fact, in the study, 80% of the women surveyed said that they were not comfortable talking about money with their friends. So, that's something that we think we have a tremendous opportunity to change because when you think about it, women are twice as comfortable talking to their doctor about their health than they are to their financial advisor about their money.
Benz: I thought there was an interesting finding--that, in addition to not feeling comfortable talking to your peers about money, you found that women are not comfortable talking to financial professionals and, in some cases, even their spouses about financial matters. That seems more serious to me, if they are not really having that honest dialogue.
Darcy: Absolutely. And there are a few reasons, we think, for that. When we asked women why they were not confident talking about this subject, there were really two items that came up. The first was they felt like they did not have enough experience, and the second was that they did not think that they knew enough--they didn't have enough knowledge. And the way that I think about that is if you have a man and a woman who are applying for a job, there are 10 requirements in order to get hired for this job; a man will look at and say, "Well, I have three out of the ten--I'm going to apply." Whereas a woman will say, "I don't have enough experience; I might not have enough information." And even if they have eight out of the 10 requirements, they won't apply because they don't think that it's a good fit.
So, I think that this challenge is broader than financial services, but it certainly is showing up in a way that we think that we've have a tremendous opportunity to change that.
Benz: So, it's a confidence challenge in a lot of ways.
Darcy: It absolutely is.
Benz: You are also able to look at these data by generation--so, looking at baby-boomer behaviors versus generation X and Y. Let's talk about any findings that you see there in terms of confidence, communication skills.
Darcy: So, we found that the younger generation is less confident. But what we also found is that they are more apt to and more interested in learning about financial services and investing. So, I think that's a really good news story there.
However, the bad news is that we asked individuals--especially couples--the question, "Are you the primary decision-maker?" And for baby boomers, it was one out of four women were the primary decision-maker; for gen X, it was one out of six; and then for millennials, it was one out of eight. So, it's the lowest amount that were solely responsible for their finances.
When we asked them why, they said they were just not as good at math. So, we need to change that paradigm because, as you know, more women are going to college, more women are opening up businesses, women will control $22 trillion by the year 2020. So, we have a tremendous opportunity to take this younger generation and make sure that they have the right tools and knowledge.
Benz: So, I know that Fidelity has been actively working to reach out to women to try to get them more engaged in their financial matters. Let's talk about some concrete steps or tools that women can take advantage of to try to improve their level of financial engagement.
Darcy: So, the first call of action is to talk about money. Now, you don't need to talk about how much you have or how much you make, but talk to your friends and your family about what's important to you and understand how they are managing their money. So, start the conversation and, at a minimum, know what you have. That's step number one.
Step number two is that many plan sponsors and many employers have free education on site. So, you should be taking advantage of that. And then, lastly, there is a lot of information that's available online. Certainly, Fidelity.com is a great resource. We recently put together a workshop that you can access on Fidelity.com/ItsTime. It's basically three different components. It's called Thrive. It's built for women to help them really get started and bring them down that path so that they ultimately have a great plan.
Benz: So, it's an online workshop?
Darcy: It is an online workshop.
Benz: Kristen, such an important topic. Thank you so much for taking the time to be here.
Darcy: Thank you, Christine.
Benz: Thanks for watching. I'm Christine Benz for Morningstar.com.