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.

First « 1 2 » Next