Money management isn’t a monolithic, one-size-fits-all thing, and financial planning for women has different considerations than for men, said Lorraine Ell, CEO and senior financial advisor at Better Money Decisions, an RIA that serves clients around the country.

Ell spoke on a panel this week about portfolio construction and financial planning for women at the ETF Strategy Summit in Dallas sponsored by ETF Advisor and Financial Advisor magazines.

“I think there’s a misunderstanding about risk when it comes to designing portfolios for women because women have a problem with longevity,” Ell said. “Seventy-two percent of people who live into their 90s are women, and more than 80 percent of those living to 100 are women. So women have a far greater risk when it comes to running out of money than their male counterparts.”

Ell questioned the notion that people should dial down portfolio risk as they age. “Women have to look 25 to 30 years out [in retirement],” she said. “You can’t start reducing portfolio risk when someone hits age 75 because woman will run out of money. You have to maintain the living standard for those women, and you have to factor in longevity as a greater consideration when deciding on a risk parameter.”

So, how to do it? Little time was spent during the discussion on specific investment options; more of it was about big-picture issues pertaining to managing risk and cash flow.

“Some people say women are risk-averse. I think women are risk averse, but there are men who are risk averse, too,” said Marguerita Cheng, CEO and co-founder of Blue Ocean Global Wealth in Gaithersburg, Md. “I think a better term to use is ‘risk aware,’ because you don’t want to put women in one category and say, ‘They’re all risk averse, so let’s put them in bonds. The language we use is really important.”

She added there are different types of risks involving the markets, longevity and inflation. “But when talking about longevity risk, it’s important to also throw in the concept of frailty risk and health-care risk,” Cheng said.

“On the whole, health-care expenses for women are higher, partly due to longevity but also partly due to factors involved with women’s health care,” Ell said. “So that’s a very important consideration when managing assets for female clients.”

She dispensed the following stat: 67 percent of women think their advisors don’t understand them.

“So guys, I’m talking to you because you’re the majority of advisors out there,” said Ell, who directed her comments to the male advisors in the audience. “Women do not think you get them or understand what’s important to them because their focus is different. It’s not just about performance. They’re more interested in ‘Will I be OK?’ They’re more interested in being able to help their children and in maintaining a lifestyle that they want. I think sometimes that’s a different perspective from the typical advisor in this industry.”

Ell added that more than 80 percent of women leave their financial advisors after their husbands die because they feel they are misunderstood by the advisor.

“One of the ways to prevent that is to make sure at every meeting—and that goes for same-sex couples as well as traditional married couples—that both have to be part of the process and the education as we go along,” she said.

On the topic of fees, Ell noted that fees definitely matter when creating portfolios because women live longer and have more health problems, so the money has to last the duration.

“Those internal expenses are critically important in evaluating the kinds of vehicles we put into a portfolio,” she said. “We do asset allocation, but we spend a lot of time on cash-flow management and how you can manage risk by managing cash flow to make sure there are enough liquid assets available over time so the client can maintain a steady stream.

“We work more not in preventing risk or trying to avoid risk, but in trying to manage the cash flow so they’re living the life they want to in a way that’s comfortable for them,” she added.

An audience member asked the panelists whether they employed qualified longevity annuity contracts (QLACs), annuities or long-term-care insurance into their risk management and cash-flow strategies.

Ell said she’s not one of those “never an annuity” type of people, but she did say she uses annuities and similar products for only a narrow spectrum of needs.

“I think the utility of QLACs is limited, and it’s under very specific situations such as someone continuing their career well into their 70s or even into their 80s,” she said.

“Otherwise, I think they’re too expensive and not worth it. As far as annuities are concerned, sometimes they make sense, but it’s on a case-by-case basis because some people have portfolios that are large enough where they can afford to take some risk and market volatility without impacting their lifestyle. And the same goes for long-term-care insurance. We do a deep analysis of whether the couple or person has enough assets to self-insure themselves.

“But we look into everything, and whatever is right for the client is what we do,” Ell added.

Cheng said advisors need to look at every tool in their retirement toolbox.

“One of those is Social Security planning, which involves careful analysis and the timing of cash flows,” she said. “Utilizing home equity can be another tool; sometimes it can make sense for them to refinance to improve cash flow, and it can help their taxes so they don’t have to draw down as much. Another tool is [a] long-term-care solution, which doesn’t necessarily mean long-term-care insurance. The last thing is annuities. Some clients could benefit from annuities because who doesn’t want predictable, sustainable income? But there’s a trade-off between liquidity and access.

“It’s important to explain the pros and cons of each solution,” Cheng added. “I don’t care how old you are or whether you’re male or female, you have to have a plan for planning for long-term care—it doesn’t necessarily have to be insurance.”