The Challenges of Women and Wealth Accumulation

by | Jan 30, 2024 | Articles

Are there gender differences that impact the way we accumulate and manage wealth? In the past, studies have suggested that women tended to approach investing with more risk aversion compared to their male counterparts, leading to the formation of more conservative portfolios.1 Yet, other studies suggested that women may be better investors, spending more time researching their investment choices and trading less frequently than men, which resulted in higher returns.2 Our experience has shown that there is no “typical” woman investor. However, many women do share certain common life circumstances that can often present challenges to wealth accumulation:

  • Longer Life Expectancy: Women should anticipate outliving men, with the average life expectancy for Canadian females being 84 years, compared to 80 years for males.3 This necessitates a need for assets to support a longer time span.
  • Career Interruption: Women are almost four times more likely than men to take on caregiving roles.4 Many women interrupt their careers to care for children or elderly parents; some are faced with the dual demands of concurrently caring for children and aging parents, known as “sandwich generation.” The resulting reduced time in the workforce can have a significant impact on wealth accumulation.
  • Wage Disparity: Unfortunately, there still remains a gender gap in wages. Women typically earn approximately 89 cents for every dollar earned by their male counterparts.5 Lower wages can lead to the accumulation of fewer potential assets overall.

Another likelihood is that, at some point, most women will be in charge of wealth. While there is a growing population of those who are single, many who are married may end up needing to manage finances due to divorce or widowhood. Today, the number of divorced Canadians over age 65 grew by nearly 80 percent from 2010 to 2020.6 Consider also that there are now nearly twice as many senior women living alone as there are men.

The good news is that, despite these challenges, the wealth controlled by women is on an upward trajectory. By 2028, it is projected that women will oversee over $4 trillion of assets, nearly double the current $2.2 trillion.8 This growth is driven by the increasing participation of women in the labour market and higher rates of postsecondary education, with more Canadian women having a universitylevel education than men.

We are committed to helping navigate the distinct set of challenges shared by many women, while supporting the wealth planning process. We address these circumstances through various means: Given wealth accumulation differences, it may be necessary to adopt a more aggressive savings plan to achieve comparable retirement outcomes. For those starting their investment journey later in life, a focus on strategic asset allocation becomes increasingly important to balance risk and return considerations. We recognize the significant time pressures arising from managing multiple responsibilities, including work, household roles and caretaking duties.

We are also here to promote financial literacy, whether it be by engaging in thoughtful financial discussions that are explained in understandable terms or supporting more complex activities like legacy planning. This may also include helping to guide your financial discussions with daughters or granddaughters, which can start at an early age (yet, is valuable at any age!). Should you need assistance with these important conversations, we have many resources available.

We understand the unique challenges faced by many women in managing wealth and are here to provide support in the pursuit of a healthy balance between wealth and life.

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Dave Cooper, CFP®, CIM®
Senior Investment Advisor Portfolio Manager
780.484.5777
[email protected]

Tyler Cockbain, BA, CFP®, CIM®
Senior Investment Advisor Portfolio Manager
780.484.5777
[email protected]

 

Justin Nekechuk, B. Ed
Associate Investment Advisor
780.484.5777
[email protected]

 Tower Wealth Advisory
212, 1524 91 St. SW, Edmonton, Alberta T6X 1M5
780.484.5777 ext. 1 or 891
Email: [email protected]
www.towerwealth.com
advisor.wellington-altus.ca/towerwealthadvisory/

The information contained herein has been provided for information purposes only. Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment. The information has been provided by J. Hirasawa & Associates and is drawn from sources believed to be reliable.

The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance. This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document. Wellington-Altus Private Wealth Inc. (WAPW) and the authors do not guarantee the accuracy or completeness of the information contained herein, nor does WAPW, nor the authors, assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.
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