Peggy Kessinger, Financial Advisor

Women’s Approach to Money: Getting to the Heart of the

Matter

peg@LFPadvisors.com

History of Women & Money

•Traditional split• Men bring home the bacon• Women take care of home and family

•Industrial Revolution/WW II Era• Women needed in the workplace• Take roles in non-traditional fields

•Feminist Movement• Women demand equal pay, status in

workplace

Women’s Relationship with Money TODAY …

So much has CHANGED, yet much remains the SAME …• Girls are doing better in MATH in school than boys• Women make up LARGE percentage of workforce• Women have proven themselves competent across the

marketYET, • The Glass Ceiling is Penetrated by FEW WOMEN• Pay Scales for Women Continue to LAG• Surveys indicate that WOMEN still largely take care of HOME

& FAMILY

Special thanks to Jane Field for preparing this graphhttp://lehd.did.census.gov/led/datatools/qwiapp.html 

Special thanks to Jane Field for preparing this graphhttp://lehd.did.census.gov/led/datatools/qwiapp.html 

Nature – Female Brain Wiring•Differences in mathematical capacity in early teen years between boys and girl’s brains are virtually nonexistent.•But, at puberty when estrogen feeds the female brain, females start to focus intensely on their emotions and communication.•As testosterone takes over the male brain, boys become obsessed about scoring – in games and otherwise.•Women value things that build living relationships while men gravitate toward mastering the non-human world.

The Female’s Unique Aptitudes•Outstanding Verbal Agility•Ability to Connect Deeply in Friendships•Near Psychic Ability to Read Faces & Tone of Voice for Emotions & States of Mind•Ability to Defuse Conflict

“ALL of THIS is HARDWIRED into the BRAINS of WOMEN.”

The Femail Brain, by Louann Brizendine, MD

Show me the MONEY …

When it comes to money, investing and personal financial responsibility in families: •Women tend to manage the Day to Day Household Cash Flow•Men tend more to the “Big Picture” of Investing

Suze Orman even found:Successful Career Women tend to shy away from Managing their Money

Sometimes to the point of complete AVOIDANCE“60% of Women say they prefer to spend as little time as possible managing their investments.”

Life Stage Roles & Priorities

Life Stage Priority Money Concerns

Teen Friends Spending Money

Young Adult Relationships, Career

Wage Earnings

Mommy Children, Family

Day to Day Cash Flow

Mature Adult Family, Legacy Bag Lady Fears

Retiree Family, Friends Cash Flow Longevity

Fear-Based Resistance

What you Don’t KNOW is FEARFULWhere is the payoff for Women in Engaging with Money Management?

Women engage in RELATIONSHIPS, they enjoy talking about emotions and connections – Investments have LOTS of JARGON and DETAILS with DOWNSIDE RISK …

CONFLICT!!!!

Psychology of Money w/Spouses

•84% of Husbands and Wives admit MONEY is a source of TENSION in their marriage.•Men Like to TALK about Money, Women Not so MUCH.•Who’s in Charge?

MEN WOMEN

Investment Decisions

73% 22%

Retirement Planning

66% 25%

Buying Insurance

60% 34%

Paying Bills 42% 57%

Budgeting 33% 59%

Day to day Spending

22% 64%

Source: Money Magazine,April 2006

Getting to the Heart of the Matter

Women have the Capability, but the Incentive is MURKY

TIME for INSPIRATION:•Best Care for Family is Care for Self … including Personal Financial Health - Control YOUR own Destiny!!•Children Learn from Parent’s Role Modeling – Teaching Children Fiscal Responsibility SHORT & LONG Term starts at HOME•Money begets Money … Well, Money Management is a LEARNED Skill that CAN BE PASSED ON!!

Making the Transition

•Must FACE the FEAR of the UNKOWN•Have Confidence in Step by Step Approaches• Suze Orman’s Women & Money Has “Save Yourself Plan” in

5 months

•Include Others, Join an Investment Club like AAII•Ask for HELP, find an Investment Advisor that Suits your NEEDS

Money Management 101•Pay Yourself FIRST, Spending LESS than Paycheck is a LEARNED Behavior – it takes PRACTICE. Open Savings Account & Save

• 6-9 months worth of Monthly Cash Flow Requirements in Emergency Fund

•Get OUT of Debt• Pay off Credit Card Debt – only hold 1 Credit Card, Cut up the REST.

•Save for Children’s Education – the sooner, the better•Retirement Investing

• Participate in employer’s retirement plan.• Contribute to MAXIMUM level of Employer Match.• ROTH IRA’s are an unbeatable retirement account

•Estate Planning - MUST HAVE Documents!•Insurance – Protect your Family & your Home

Women’s Investment Strengths

•“When it comes to investing, to err is human, but women are less likely than men to do so.”•According to Merrill Lynch survey, women make fewer investment mistakes than men and make them less often.•Women are far less likely than men to hold a losing investment too long or wait too long to sell a winning investment.•Women are less likely to make the repeat the same investment mistake twice.•Women turn to pros. A woman’s planning oriented-approach and propensity to seek professional advice contribute to her long term success.Source: “The Gender Gap: Men and Women make Investment Decisions Differently”, Fairfield County Business Journal, May 30, 2005

Women’s Natural Process•Women tend to think more Holistically• Women rely on their instincts and can integrate a wide range of

variables.

•Women are more experiential• Thought processes are spiral relying on both left and right brain,

rather than linear

•Women are inclusive•Women’s reality is dictated by communication, connection, emotional sensitivity and responsiveness• Downside is that may trust someone who talks and looks good, but

is not acting in best interest.• Make sure to understand the basics and to ask questions

Investment Resources•The Four Pillars of Investing:Lessons for Building a Winning Portfolio, by William Bernstein•A Random Walk down Wall Street: The Time Tested Strategy for Investing, by Burton Malkeil•The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Book, Big Profits, by John Bogle•www.fool.com - The Motley Fool site•www.retireearly.org – Search engine for retirement info•http://finance/yahoo.com - Yahoo’s Finance Button

Women and Financial Advisors•Women want to be Recognized for their Individuality

• Women are not one big homogenous group• Each woman has different needs, wants and fears

•Women want Choices and Options• Beware of the “Safety”, “Guarantee” and “Protection” slick

marketing pitches

•Women want Advisors who are Honest and Forthright•Women want to understand the Investment Strategies•Women are in it for the Long Term•Women have Unique Situations

• Hidden attitudes about money, living single, managing a blended family, etc.

• Understand the obstacles facing the women to help solve those issues

Source: “6+Insights for Working with Women Clients”, by Jeri Sedlar and Rick Miners, http:/www.hoursesmouth.com/80954, Feb. 6, 2008

Avoiding the Bag Lady Syndrome•Start Retirement Saving NOW – the EARLIER THE BETTER•Enemy number one: Inflation

• Inflation erodes a portfolio’s ability to protect a standard of living• Must invest in assets such as stocks and bonds that historically exceed

rate of inflation

•Find YOUR Sleep Number• How much short term fluctuation in investment return can you handle

without losing sleep at night?

•DIVERSIFICATION is your Friend• Avoid the Enron fiasco of having all your eggs in ONE basket

•How Much Do I NEED?• Need a predictable cash flow, focus on withdrawal rate as a percentage

of overall portfolio• Typically, if your withdrawal rate is 4-5% of overall portfolio, your

retirement savings is sustainable.

Bottom Line

Women are BUSYMONEY can mean CONFLICT & FEARAvoidance can seem Prudent, until it Doesn’tTIME to Own our Destiny & Be Role ModelsRedefine our Relationship with Money utilizing our Natural Take a Holistic, Long-Term Approach to Saving & Investing

YOU & YOUR FAMILY WINS