As the nation entered the Covid-19 pandemic, there were dire predictions for women’s financial health: They faced more divorce, job loss, and retirement contribution pauses. More time spent caretaking, and less time spent earning.
Two years later, many of those predictions have come true. But some anecdotal trends are emerging that could end up being net-positive for women. In the future, there will be more clarity about what financial security means, and women will be more interested in shoring up their financial goals to reflect personal goals. Furthermore, women outlive men, which has prompted some demographers to predict that they will end up controlling most of the wealth in the developed world.
Catherine Seeber, the vice president and a CFP at CAPTRUST in Lewes, Del., said reports of the impact of Covid-19 on marriage run the gamut from ‘Covid is straining families’ to ‘No, it’s making them stronger.’ Where the Daily Mail reports that divorce rates in the U.S. are soaring, the New York Post says they’re dropping.
There’s only one thing Seeber’s sure of, she says: “In America, just like with a lot of things, the pandemic seemed to accelerate the rate of divorce. I don’t think I’m seeing more. It’s just that people who were heading there seem to be getting there faster.”
Lili Vasileff, the president of Greenwich, Conn., firm Wealth Protection Management, is also trained in mediation, and she says the statistics on divorce and the divided assets that go with it will be misleading for a while, no matter what the source. Even in 2020, she says, she saw a large bump in her client-divorce caseload.
“What made it different was they weren’t going through the courts, because the courts were closed. But for most individuals who had challenges in their marriages and were contemplating divorces, those plans accelerated. They just had to come up with other ways to get divorced,” Vasileff says. “So they turned to divorce arbitrations, where only at the end of that is a filing made. So I think in 2022, you’ll see those filings escalate a lot.”
Vasileff says January is typically “divorce month,” and this year was no different. In 2020, all was quiet from March to autumn, but the pace of divorces picked up after that and it was a busy time for marriage dissolutions all the way through 2021. “Now it’s busy at a crazy pace,” she continues. “And the increase is most remarkable in late-life divorce, the mid-50s and after.”
Seeber says brokers and registered investment advisors could and should be doing a lot more to connect with older female clients. Even if they aren’t getting divorced, their circumstances will be changing as they will be on the receiving end of the $30 trillion wealth transfer by the end of the decade. That should make it easier than it was before for advisors to connect with those clients, and to connect in a meaningful way that helps them retain those clients’ assets—if they are willing to make the effort.
“If you asked women 10 years ago what they were most fearful about, it was being the bag lady. That’s not what I hear today. Now I’m hearing the fear is about health, family and mortality,” Seeber says. “Women are showing more of an interest in learning about their finances than they did before Covid because they worry about what might happen if someone gets sick, or if they themselves get sick. Women usually have that great short-term focus where they focus on the budget. But that’s slowly changing to where they’re looking more at the dynamics of long-term investing. To connect with that, you have to pick up the phone more frequently. And the question you ask isn’t, ‘How are you doing?’ That’s too vague. It’s ‘How are you doing today?’”
Vasileff agrees that new times require new conversations, especially with women whose lives were turned upside down during the pandemic. They might have lost their jobs or their businesses, had to quit jobs to care for children at home or elderly parents, or lost a spouse because of death or divorce.
“I think women are realizing they have to be more accountable to themselves. That’s been the lesson, and it’s not a happy lesson,” Vasileff says. “These clients are saying when they move forward they need to have a plan in place. But they had a plan in place. They just feel like they’re starting at ground zero because they weren’t all that connected to what they had before.”
Michelle Connell, a CFA and founder of Portia Capital Management, a Dallas-based investment manager, agrees. She hopes it’s a regional difference, but she still finds too many of her women clientele are disconnected from their own financial lives.
“When I go to family wealth conferences, I see a lot of men, sons, third and fourth generations, interested in building their wealth,” Connell says. “And men say, ‘I want to chase that.’ Meanwhile, women have all this great intuition that they use with their children, that they use socially, and it’s that same gut response that they could use with investments. But they don’t. If you’re an advisor, you can’t wait for them to come to you; you have to reach out. And it has to be more than a tea.”
David Macchia, founder of Wealth2k in Boston, wholeheartedly agrees that the male-dominated industry has failed to increase that connectivity with women. For this reason, he has partnered with advisor coach Marcia Mantell on a new initiative, called Women & Income, designed to give an advisor better training and stronger differentiation when serving older female clients.
“The industry has done an awful job in listening to women’s needs,” Macchia says. “The research has revealed the value and scale of the opportunity, and everything that’s wrong with the industry. But when it comes to what to do, there’s nothing. Advisors are just left wondering, ‘How do I integrate change into my business? What are my actionable steps?’”
He cites one alarming statistic that has made the rounds—that 80% of men die married, and within 12 months, often within six months, their surviving widows have fired the advisor they used. And it’s not necessarily to find a female advisor, but just to find someone who listens.
Mantell says she’s often spoken with jilted advisors who surprise her with their naivete. “After losing a woman client, an advisor will say he never realized there might be a problem in the relationship,” she says. “That’s not accurate. What he never realized was there wasn’t a relationship.”
What likely happens is that an advisor who serves a couple for a time gradually and unintentionally alienates the woman, enough for her to sever the relationship. And as hard as it is to keep these clients, it’s even harder to find new clients, so advisors should take what advantage they can from the pandemic and use it to develop their own better habits.
This means learning how to ask probing questions and then follow-up questions, says Susan Black, senior vice president of private banking at Cambridge Trust in Boston. “It used to be women wanted to save for an event—a hike in Europe, a Viking cruise. Now they really want to know if they’re going to be OK,” Black says. “But that alone is not enough. We really have to dig down to, ‘What does “OK” mean to you?’ The pandemic has presented a much clearer picture of how personalized this industry is and should be.”
That question should lead to even deeper conversations about the specific aspects of planning, she says, so that the advisor can then move the conversation from long-term goals to the cash flows required to support those goals. “Those are the buckets of needs, wants and wishes,” she says. “The absolutely have to have, nice to have and want to have.”
That’s where the advisor, male or female, can really add value by dropping the talk of ROI for a moment, sources say, because women clients would rather know they’re three-quarters of the way toward their goal than hear that their portfolio made 12%, even if the outcome is the same.
Without doubt, the pandemic has inspired more women to take stock of their lives—and take charge of more aspects of those lives. These consultants note that women are listening more, asking more questions and directing the conversations more, even if they’re happily married and their spouse usually leads the discussion with the advisor. And sometimes the results are surprising.
“With all my clients, both male and female, the pandemic really has forced them to think about what fulfills them. To stop running on the hamster wheel and think of priorities,” Seeber says. “Some certainly have retired because they want to do other things. But others are thinking of going on, just with renewed purpose.”