The Challenges Facing Women Investors Today

Women investors exhibit some positive characteristics, but there are a few things that they could be doing better. Morningstar director of personal finance Christine Benz recently talked with Kristen Robinson Darcy, senior vice president of Women & Young Investors at Fidelity Investments, to discuss the findings of the firm's 2015 Money Fit Women Study.

Christine Benz: Fidelity periodically publishes Money Fit Women studies that examine women's feelings toward money, their ability to talk about money, and other related issues. In the latest release, what are some of the things that you found women are doing right?

Kristen Robinson Darcy: 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: How do you measure their performance?

Darcy: Fidelity Investments has about 12 million customers whose 401(k) accounts we look at. And we see that their performance is very much equivalent to men. But if everything is equal--for instance, if men make a $100,000 and women make $100,000--women are saving a greater percentage of their pay in their retirement accounts.

Benz: The study 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 through their retirement plans.

Darcy: That's right. We also found that women are more conservative investors, and they 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. Money helps women live the lives that they want to live, and they want some help mapping out that.

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Benz: Those are some of the pluses. You also found, though, that women tend to be a little bit reticent about investing--certainly communicating with peers, for example. You found that women tend not to want to talk about financial matters.

Darcy: 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. But for some reason, talking about money is taboo. In the study, 80% of the women surveyed said that they were not comfortable talking about money with their friends. Women are twice as comfortable talking to their doctor about their health than they are talking to their financial advisor about their money.

Benz: In addition to not feeling comfortable talking to their peers about money, the study found that women are not comfortable talking to financial professionals and, in some cases, even their spouses about financial matters. That seems serious to me, if women are not having honest dialogues with financial professionals and partners.

Darcy: There are a few reasons, we think, for that. When we asked women why they were not confident talking about this subject, two items 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.

The way that I think about that is, if you have a man and a woman who are applying for a job and there are 10 requirements in order to get hired for this job, a man will look at the job and say, "Well, I have three out of the 10 requirements; I'm going to apply." A woman will say, "I don't have enough experience; I might not have enough information." And even if a woman has eight out of the 10 requirements, she won't apply because she doesn't think that it's a good fit.

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Benz: It's a confidence issue in a lot of ways.

Darcy: It absolutely is.

Benz: You are also able to look at these data by generation, looking at baby-boomer behaviors versus generation X and Y. What are your findings here in terms of confidence and communication skills?

Darcy: The younger generation is even less confident. But we also found that they are more apt to and more interested in learning about financial services and investing. I think that's a really good story there.

However, the bad news is that we asked individuals, especially those with partners, "Are you the primary decision-maker?" Among the baby boomers surveyed, one out of four women were the primary decision-maker. Among generation X, it was one out of six. For millennials, it was one out of eight. When we asked them why, they said they were just not as good at math.

We need to change that paradigm because, as you know, more women are going to college, more women are opening up businesses, and there are estimates that women will control $22 trillion by the year 2020. We have a tremendous opportunity to take this younger generation and make sure that they have the right tools and knowledge.

Benz: What are some concrete steps or tools that women can take advantage of to try to improve their level of financial engagement?

Darcy: The first call of action is to talk about money. Women 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. 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 offer free financial education on site. Take advantage of that. And then, lastly, there is a lot of information that's available online. We recently put together a workshop that you can access on Fidelity.com. It's built to help women get started and bring them down that path so that they ultimately have a great plan.