If you’re asked to envision a typical investor, who comes to mind? Chances are the individual you picture is a male. Through the years, however, you’ve likely seen an uptick in the number of women who’ve shown an interest in investing or who control the finances in a household.
There are many factors that may have caused this shift, whether it be the setting aside of traditional norms or the move toward more gender equality. However, there is data to suggest that women are bearing more of the financial brunt of the COVID-19 pandemic.
Pandemic Job Loss for Women vs. Men
The economic downturn resulting from the pandemic is disproportionately hurting women. In the spring of 2020 when the pandemic triggered major shutdowns across the country, more women reported layoffs than men. In fact, nearly 30% more women than men reported being laid off between March and April last year (24% vs. 17%). What makes this unusual is that previous recessions had the reverse effect, with men accounting for three-quarters of job losses during the 2001 recession and the Great Recession.1
The type of employment made a difference, too. Compared with working men, fewer women held jobs that were conducive to working remotely. Adding to the challenge were shutdowns of schools and daycare centers, which kept children at home, with mothers generally tending to provide the majority of childcare.2
The combination of higher unemployment rates, parenting responsibilities, and other factors may make it more difficult for women to recover financially from the pandemic. It doesn’t take much to imagine the added burdens placed on single mothers. This provides major opportunities for financial advisors to fulfill their mission of helping others move toward financial security.
An Advisor’s Role in Helping Women Investors
All these factors may leave women with little time, money or initiative to focus on their financial futures, emphasizing the need for advisors to reach out to their female clients sooner than later. A friendly phone call or email to check in may help remind them that you are there to provide guidance beyond just investing, especially if they’re experiencing difficult times. You may even have professional connections or know of available resources or organizations to help, such as tax accountants, counselors or public assistance programs.
Perhaps you discover your female client is a mother who is choosing to stay home with her children and doing what she needs to for the time being while her husband continues working. Taking a year or more off work and not contributing to her retirement fund, however, might have financial repercussions when compounding interest is taken into account. Strategize ways to minimize the impact in the meantime. For example, if you’re consulting with a couple and the female partner isn’t working outside the home, it may be appropriate to advise her spouse to increase or max out contributions to his employer-sponsored retirement plan.
Pushing products or encouraging catch-up contributions may be woefully inappropriate without first understanding their situation. In times like these, expanding your approach beyond a traditional advisory role may be just what some of your female clients need to help them remain financially secure. More and more, this holistic approach to financial wellness may become the differentiator that sets you apart from other advisors, especially among women who may benefit from it the most.
All the fear and uncertainty associated with the pandemic and economic downturn may cloud a person’s judgment and lead to financial decisions they’ll later regret. The complexities brought on by the pandemic call for comprehensive solutions. View our Elevate Advanced Planning Resources for further guidance on how to enhance your client relationships and help them strategize for the future, no matter what life throws at them.
1The Federal Reserve System, The Pandemic's Early Effects on Consumers and Communities, April 15, 2021.
2U.S. Bureau of Labor Statistics, COVID-19 recession is tougher on women, Sept. 2020.