I have written about the need for more women in the financial industry but now I want to discuss a trend we have witnessed over the past several years. Women are starting to take control of family finances. First, a bit of history.1
It used to be the man’s role to manage the family finances. We still see this in some of the older generations. In these cases the husband decides the investment portfolio, level of risk, budget, etc. This creates several big issues and risks for the wife. If the husband passes away, she is left with a limited knowledge of the family finances. This means she has to rely upon a son or daughter2 or maybe even a complete stranger to help her. The other risk is divorce. Unfortunately, we have seen this many times. Husband and wife divorce after being married for years. The husband “handled” the finances. Now, the wife is left trying to figure out years of financial matters in a short period of time.
The good news about these scenarios is we are seeing them happen less and less. In fact, with many of our younger clients the wife is steering the financial ship. Why is this shift happening?
Americans are getting married later. Though they are waiting to get married, women are not waiting to start being financially independent. Women seem to value independence more than in the past and with this comes the desire to build their own financial foundation prior to marriage.
Women are not scared to ask for help. A lot of men do not like admitting they are lost and asking for directions. This does not only apply to driving. Navigating the financial world can be complicated. Women seem far less worried about perceptions and are asking for help sooner as opposed to later.
Husbands are deferring to their wives. When we stared in the financial industry 10 years ago3 it was often a battle just to get the wife to come to the meetings. They either didn’t want to be involved or their husbands liked to handle it alone. In the past 5 years or so, it is often the wife initiating contact to schedule the initial meeting. I believe husbands have realized financial planning is a family affair.
Women know the end game. Way too often men get caught up with the investing aspect of financial planning. Anyone who has gone through the process knows investing is only a part of financial planning. Men, however, tend to like the “game” of investing. They check their investments daily. They track the market and watch their balances. This is fine but it can lead to neglect of the other important aspects of planning. Things like education savings, protection planning, expense management and other shorter term goals get pushed aside. Women, on the other hand, tend to worry more about these aspects. They usually are not interested in the “game” of investing. They realize investing is a process and the ultimate goal is not some dollar figure but a lifestyle of happiness.
Time will tell if the trend continues but it is obvious women are taking the financial reins from their husbands and very well may end up doing a much better job.