Women should take advice that speaks to their needs

Forget the frills and superficial attempts to appeal to your femininity. What you need, as a woman, is to be made aware of what differentiates your financial situation from a man’s and to be given down-to-earth advice – from an adviser of either gender –

Women don’t need financial information in pink folders or their financial adviser to wear a skirt, but they are increasingly taking more financial decisions and need sound advice from a trusted source on how best to manage their money.

Heidi Dreyer, head of corporate sales at Prudential Investment Managers, told a recent Women in Finance network breakfast in Cape Town that women form the biggest emerging market in the world and advisers need to adapt to serve them.

Women are controlling more and more of the world’s wealth. This is not only because more women are working and often becoming the main earners in their households, but because a growing proportion of legacy wealth is being left to women thanks to longevity and shifting demographics.

Dreyer says women are no different to men in needing to be educated about financial matters or requiring competent and professional advice from an adviser who understands their needs, but she does tell advisers that you, as a female client, are likely to be a little different from the traditional male client, and advisers should be prepared for that.

Many women want to, and should be encouraged to, ask more questions about financial matters, she says. Women generally will not invest in something that they don’t understand.

If your adviser is not prepared to answer all your questions to your satisfaction, you should look for one who does, because advisers will increasingly have to adapt to serve women.

Dreyer says surveys of women consumers consistently show that women worry a lot more than men. “It is in our DNA, part of the nurturing instinct,” she says.

However, by educating yourself or taking advice, you can overcome your concerns and balance the risks of investing with the rewards, she says. And a good financial adviser will help you to overcome these fears and concerns, instead of preying on them.

INVESTMENT RISK

Research shows that women tend to take less investment risk than men, as they tend to keep a lower proportion of their money in higher-growth assets such as equities.

But it is very important for women to take appropriate investment risk when investing, because they typically live six to eight years longer than men and retire, on average, with two-thirds less than men as a result of earning less and taking career breaks to raise children.

Equity has long proved to be the best place for long-term investors to put their money.

Tracy Jensen, the chief product architect of 10X Investments, says the average life expectancy of a 65-year old South African woman is now 85.9 years, more than four years longer than the average man.

Jensen says people often mistakenly believe that investing in high- equity portfolios always entails greater risk, but they forget that over time, the risk of investing in equities decreases.

She says that the range of real ( after- inflation) returns of each five-year period between 1900 and 2013 show that a low-equity multiasset fund (with less than 40 percent equities) would have given a return of between minus 13 percent and 14 percent, while a high-equity fund (between 60 and 75 percent in equities) would have low returns of minus 14 percent but positive returns of as much as 26 percent.

“This means, for the long-term investor, a high- equity portfolio actually has the same or less risk than a low-equity portfolio, but double the upside potential,” Jensen says.

Dreyer says women are typically more cost- conscious than men, because they are used to running the household budget. Being cost-conscious about your investments means looking for transparent investment options that meet your financial needs, she says.

Each percentage point of fees, charged as a percentage of your assets, that you can save, adds up to 30 percent more money at retirement over a 40-year savings period, Jensen says.

Longer lives, on average, mean women need larger retirement savings than men, and for this reason it is important that women start saving as early as possible.

Starting early will give you more of the benefit of compounding returns, which will mitigate the effects of earning less and taking time off during child-rearing years.

Yolande Botha, a finalist in this year’s Financial Planner of the Year Awards, says women who follow financial advice when they are young are much better off than those who get advice only when they are older.

A practice like Galileo Capital charges about R20 000 to draw up a comprehensive financial plan. But Botha says that if you do not have the money for a financial plan and your finances are relatively simple, many practices will find a way to assist you. She says Galileo has set up a robo-adviser to help younger clients with uncomplicated financial affairs to set up their first investments. The practice will need an hour-long consultation with you (costing about R1 500) to give you initial advice and point you in the right direction, and will then enable you to help yourself through its robo-adviser.