The financial service industry is developing and changing with the economic and technological advancements permeating our culture. We are witnessing changes in the financial industry both in the United States and in other countries. Still a male-dominated industry, we may see a plethora of changes soon with more female financial advisors entering this lucrative career choice. There are a few changes happening today, which will have a profound effect on future individual retirement assets.
Foremost, women control over 50% of the personal wealth and will inherit over 70% of the assets of the baby-boomer generation (Fitzpatrick, Reichmeier, and Dowell 2017). Men, if you think women are only after your money—it is too late, they already have it. Men can assume credit for the meager retirement assets accumulated by retirees over the past three decades because more men have IRA's and 401(k)'s than women. Nonetheless, the average worker in 2016 nearing retirement has less than $100,000 in a 401(k)/IRA asset (Ellis, Munnell, and Eschtruth 2016). This startling revelation reveals men have not done a suitable job with their investments. Of course, there are other factors to consider, such as the limited investment options of the past producing meager returns, and the high fees collected by mutual fund managers.
Who is better at investing, men or women? Men lose again. A recent Fidelity report discovered that not only are women better savers than men, something men conceded a long time ago, but women are also better investors. Women assume less risk and do not trade as often as men. This technique sounds familiar. (Think Warren Buffett and his buy and hold investment strategy) The Wells Fargo Investment Institute reported that women achieved higher returns over 5 years from 2010 to 2015. Men need to heed the advice of many financial advisors, do not trade as often, or take as many risks. Investing is not a fantasy football game! However, when asked who is more confident with their investment knowledge, 60% of men said they have a high degree of confidence; conversely, only 43% of women acknowledged this level of confidence.
Ellis, C., Munnell, A., & Eschtruth, A. (2016). Falling short: The roots of the coming U.S. retirement crisis. Challenge, 59(2), 126-147. doi:10.1080/05775132.2015.1138061
Fitzpatrick, B., Reichmeier, J., & Dowell, J. (2017). Back to the Future: The Landscape of the Financial Services Industry 2020 and Beyond. Journal of Advances in Economics and Finance, 2(1), 40-53. doi:10.22606/jaef.2017.21004
Investment and advisory services are offered through Herrington Financial Services, Inc., a Registered Investment Advisory (RIA) firm. This article's information does not constitute an offer to sell securities or a solicitation of an offer to buy securities. This article is for educational purposes only. All information in this article is the expressed opinion of the author and not Herrington Financial Services.