Women are generally behind when it comes to understanding money management, finance and investing, whether they are low-earning retirement plan participants or senior members of ultra-high-net-worth families, says financial advisor Leslie Thompson.

“Even as a female advisor, when I talk to women, they always begin with something like ‘I don’t want to sound stupid,’ or ‘I don’t really understand.’ It always starts with an excuse,” she says. “I think that’s a sign of a general lack of confidence.”

That lack in financial literacy could be ruinous not just to their own financial well-being, but to the well-being of their families and the economy as a whole, says Thompson, a managing principal and co-founder of Spectrum Management Group, an Indianapolis RIA that manages $750 million in client assets.

That gap in literacy could be persistent and have widespread effects, she says, since women are increasingly taking lead roles in business and household finances.

Still, women have been making more gradual inroads to corporate boards and C-suites. According to the recent “Women’s Retirement Literacy Report” from the American College of Financial Services, more than nine in 10 women with partners or spouses reported having lead or equal share in financial and investment decision-making.

Naturally, Thompson thinks advisors have a role to play in closing the financial literacy gap among women.

Spectrum works with approximately 180 client households, focusing on organizing finances for very wealthy individuals and families. Thompson generally takes a high-touch, comprehensive approach with her clients similar to the one multi-family offices use. She also works with several workplace retirement plans, primarily in the healthcare sector, that serve low-earning female participants. Across both of these populations, she has seen the financial literacy gap at work—and the inequality it leads to.

Though both men and women scored poorly in literacy, says the American College, women earned significantly lower marks, 38%, on a quiz of basic financial concepts than men, who scored closer to 47%. Women scored particularly low in areas like life insurance, investing basics and asset protection.

Origins Of Inequality
Thompson says the knowledge gap starts at a very early age.

Though women graduate from college at a higher rate than men, their progress is delayed because financial literacy is not a priority for American families, schools or communities, she says. “Our schools do an inadequate job of teaching people about anything financial.”

Also, women are thrown off the path at an earlier age—financial education typically favors boys over girls—and women are kept from attaining parity with men in later stages of their life.

“Women don’t feel like they have ownership over financial issues,” she says. “Growing up, money might not have been a topic that was discussed in their families, or wasn’t discussed with women. That leads to women feeling unworthy of having a seat at the table to talk about finances.”

She took an interest in financial matters because of her father, who operated a brokerage firm. Though she never worked for him, she did from a young age help him with charting and calculations. She says now it would help if more fathers and mothers engaged their daughters in financial literacy conversations and activities.

That problem extends to the STEM fields as well—science, technology, engineering and mathematics—where boys still receive more encouragement and resources than girls, she says. By the time they reach college and select majors, men remain more likely to gravitate toward STEM, business and finance, while women gravitate to the liberal arts or technical fields where women have traditionally dominated, like nursing.

Women fall further behind since they most often shoulder the caregiving burdens of a family, such as having and taking care of children.

“These issues can lead to permanent scars in terms of how their finances develop over time.”

Some, but not all, women have found themselves during the pandemic doing jobs remotely and don’t have to separate from work to take care of an infant or an infirm family member. That’s created inequalities among women.

“Not all careers take the same amount of time and focus, and not all women have to take the time of having to be caregivers and step away from their jobs,” says Thompson.

Long-Term Consequences
Because of the recurring obstacles, though, many women miss out on the opportunity to compound their wealth, and that problem is combined with the fact that they live longer and earn less. It gives American women a nearly impossible task to reach parity with men.

Thompson acknowledges that the financial services industry often fails its female clients. A common tactic of advisors, even female advisors, is to have both members of a couple come into client meetings so their concerns are addressed equally and both receive the same information and education. But that doesn’t seem to be working.

“What tends to happen is that eventually the female member of a couple drops out,” Thompson says. “They come in, interview us, and then we just end up talking to the male over the majority of the client relationship.”

She thinks this happens because most advisors are men and they’re not addressing the issues that women want to speak about.

Thompson has tried to create room for deeper conversations. She developed a particular specialization, helping women through divorce and working with clients who have lost a spouse. She also brings her own perspectives into the client meetings.

“Even though we work with high-net-worth clients, sentimentally, with female clients and female advisors, women share different things together,” she says. “One issue a male advisor might never hear or be able to address is that we have multiple women who are widowed who come to us and want to start dating. And they want to know what they should share, financially speaking, how they should approach dating again. Even whether they should split the checks. We’re having conversations around those topics.”

Unfriendly Industry
But a graying industry that remains stubbornly male-dominated perhaps isn’t well positioned to pivot to conversations like those. While Thompson thinks it would be preferable to solve the issue with more female advisors, she also acknowledges that “this industry is not good for women” because it does not make allowances for women’s career gaps.

She says the retirement wave in financial planning means the proportion of experienced and qualified female advisors is on a decline, even as the industry itself seems to be inching toward parity.

That may lead women to look elsewhere for financial education and services. They might look for help online instead—seeking out education, products, services and advice through financial technology, in a way that lets them self-direct their financial lives.

Thompson thinks the industry has an opportunity to better serve and communicate with women, if it is willing to listen and evolve.

“Think about our conversations about divorce and dating and the potential financial consequences,” she says. “That’s what women want—the services have to be the same and just as robust, but the conversations should be a little different. Women want more soft-touch conversations. I think the financial industry is making strides in addressing and providing content for women, but I’m not sure if it’s being accessed by the people who need it most.”