While the onset of the pandemic significantly impacted how women viewed their finances, women are taking more proactive approaches to their finances despite a tumultuous two years of stress.
Female investors—defined as women with investable assets of $100,000 or more who are primary or shared decision-makers regarding long-term financial planning for themselves or their family—were significantly more optimistic about their financial outlook in 2021 compared to 2020 at 49% versus 32%, according to Nationwide Retirement Institute’s Advisor Authority .
What’s more, 72% of female investors say they have a strategy in place to protect themselves from outliving savings, 83% have a strategy in place to generate guaranteed income in retirement and 59% have a strategy in place to help protect assets against market risk.
And due to experiencing firsthand how market volatility can significantly impact their portfolio, 68% of female investors will revise their investing strategy more conservatively and 73% will revise their investing strategy to be more actively managed.
“Women investors are not taking their experiences living through the COVID-19 pandemic or other financial crises lightly,” said Ann Bair, Senior Vice President of Marketing for Nationwide Financial. “After experiencing the upheaval of these events, from market volatility to juggling childcare during remote learning, women are being more proactive in thinking about and planning for their futures.”
Financial Futures
The crash of 2008 and the COVID-19 recession were major financial crises that led many female investors to start thinking about their financial futures. As such, many adjusted their approach to managing their personal finances by taking actions, such as starting an emergency fund (23%) or establishing and following a budget (21%).
Nationwide’s survey also found that fewer female investors (8%) than male investors (15%) liquidated assets from qualified retirement savings plans (e.g., 401(k), 403(b), 457, IRA) to cover financial obligations in response to crises that had a profound impact on them.
And with the COVID recession still fresh in everyone’s minds, 16% of women expect to live through two additional financial crises in their lifetimes. These lessons may benefit women in the near-term, Nationwide notes, as 70% are concerned about a U.S. economic recession in the next 12 months and 56% anticipate market volatility will increase over the next 12 months. Female investors’ biggest financial concerns are protecting assets (31%), taxes (27%) and inflation (27%).
Working with Advisors
Although past Nationwide studies showed that women were reluctant to seek professional advice due to competing priorities such as family and career obligations, it appears that sentiment is shifting.
Women apparently are working with financial professionals more to help them navigate the fluctuating pandemic and prepare for future crises. Nationwide found that two-thirds of female investors work with an advisor (64%), with the main reason for doing so to feel more confident in their financial future (40%).
When female investors were asked what would make them more likely to work with, or influenced them to work with, an advisor or financial professional, an advisors’ experience (41%) was the most common factor.
“Women have distinct needs and perspectives that may be different from the traditional male client base that makes up the bulk of many financial services practices. When advisors recognize this and tailor their strategies to meet women where they are, they can build long-lasting, trusting relationships, and help their female clients achieve a more secure financial future,” explains Lori Hall, Director of Strategic Accounts for Nationwide Financial.
To help protect themselves from outliving their savings, women rely on solutions such as Social Security (64%), dividend yielding stocks (36%) and defined benefit plans/pensions (33%). “Advisors and financial professionals can help women understand what they can expect from strategies they currently have in place and think about other factors that may impact retirement income, including when they collect Social Security, health care costs, inflation, market volatility and taxes,” notes Hall. “This can help identify gaps in their plan that may be addressed through new solutions.”
As it currently stands, two in five female investors (41%) are likely to choose an annuity to protect themselves against market risks and about half of female investors (52%) are likely to choose an annuity to protect against outliving savings.
The survey was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from July 22–Aug. 17, 2021, among 1,632 advisors and financial professionals, and 839 adult investors.
