August 14, 2018
It’s hard enough for women to move from the cubicle to the corner office but now the research shows it’s affecting their wellness - financially.
Financial wellness gauges your ability to manage your current finances while preparing for the future. Building wealth and being financially well is an assessment for how confident and comfortable you are in addressing short-term and long-term financial goals while feeling secure along the way.
A new Workplace Benefits report released by Bank of America Merrill Lynch found that women are plummeting on the financial wellness scale with more fear and stress than their male counterparts.
The bottom line is that employers play a huge role in turning this around. As the provider of benefits, companies serve as the gateway to educating women. They can also provide the platform for engaging them so they can make the right financial decisions surrounding those benefits.
Women are much more fearful than men about being able to pay for their children’s education, their ability to work longer and the pressure to support family members. Women are 14% more likely than men to feel stressed about their financial situation and 13% less likely to be optimistic about their future financial situation.
44% of employees under 40 report they are not doing well financially, so this is also a hot button for Millennial engagement and retention.
Being stressed about money impacts day-to-day engagement at work and spills over into negative health effects. The two most critical areas where women fall behind are in savings and investing.
On average, by age 43, women have saved $119,000 in investable assets compared to an average $196,000 saved by men. Investable assets include the total value of all cash, savings, mutual funds, CDs, IRAs, stocks, bonds, employer-sponsored retirement plans such as a 401(k) or 403(b) and all other types of investments excluding your primary home and other real estate investments. This lagging trend continues with the amount women contribute to their 401(k).
The wage gap is a huge factor underlying this great divide: Women are paid less than men therefore the percentage toward retirement savings is a lesser dollar amount. But, women are also not actively investing. Forty-one percent of women across all races and ethnicities report that their biggest financial regret is not making the effort to invest more. Income alone cannot grow your wealth in the way that investments can.
But there is a distinct difference in where women are capable regarding finances and where they are less confident. Women are equally as confident as men in most financial tasks, such as paying bills (90%) and budgeting (84%). That’s not the issue. Where doubt creeps in for women is managing investments.
Talking about money with friends and coworkers has been a longtime social taboo. Sixty-one percent of women would rather talk about their own death than money. Yet the most powerful tool for influencing one another is through authentic storytelling. Women sharing their successes, their learnings and their mistakes will undoubtedly move this topic from taboo to urgent.
Financial tools need a makeover to be more appealing, and we need more female advisors who can speak our language in terms of how they frame our specific goals and vision for attaining them.
“We need to be talking about savings and investment goals throughout the year to build trust and partnership toward goals. So when you get to enrollment time, it's just one financial decision, but it's not the only time we’ve connected about saving and investing.” Lorna Sabbia, Head of Retirement and Personal Wealth Solutions, Bank of America Merrill Lynch is also the co-chair for the firm’s Global Diversity & Inclusion Council.
“The financial services industry has done a poor job in general of making sure that we look like the populations that we serve. We can no longer just admire the problem, we need to go ahead and fix it. We need to ensure that those providing advice, whether it's over the phone, whether it's on a webinar, or whether it's in fact in person, are diverse and accessible to women, minorities and early-career professionals. “
Women have different needs and should have the education to be empowered to become active investors. The onus is on employers to segment the offerings and use different channels and diverse people to connect and promote their offerings within their company.
What can employers do to help their teams feel financially well?
Make Financial Advice More Goal-Oriented: Women want to map out their specific goals, which range from figuring out how to crack the code of paying college loans to building an investment portfolio from scratch.
Provide Space for Uncomfortable Conversations: Raise conversations in a way that fit the company's culture. These conversations need to be a combination of both technology, in-person meetings, small groups meetings, and one-on-one consultations where women can share and even compare. Sabbia concluded that “The action happens in a one-on-one consultation. The magic happens in the small group dialogue.”
Offer Money Mentors and Advocate Career Sponsors:Truthfully, women need more sponsors to advance their career, but they also need influential mentors to coach them in money matters as well. Forty-five percent of women say they do not have a financial role model. Sharing stories about first-time investment experiences and being open about building savings to achieve personal goals will strengthen our knowledge and awareness.