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Is Financial Planning Different for Women Compared to Men?

Financial planning is not a one-size-fits-all process. We all have our unique requirements, tastes, income levels, circumstances and priorities that determine our financial budgeting. What may be the top priority for one person may be the last one for the other. Financial planning at different life stages changes as well. 

However the financial planning principles generally remain the same. We cannot assume that there is a separate model of financial planning principle for men and women. The process of budgeting, planning to invest and saving is more or less the same. The issue is not in the process itself but it arises when women face challenges in this area.

In the past, women may have been reluctant to seek financial advice leaving such matters for men in the family to oversee. The hesitancy stems from feeling intimidated and not having enough financial knowledge. But the dynamics are fast changing. As more women are stepping into the work environment, they are also empowering themselves financially and taking control of financial matters in their own hands.

Challenges Women Face in the Financial Advisory Industry

Women make up only about 20% of financial advisors, so they are clearly underrepresented. This underrepresentation translates to lack of understanding or empathy for women undergoing critical transitional phases in life. 

According to research, it has been observed that often women change their advisors when they experience major life events like a divorce or becoming widowed. The fact that they feel the need to change advisors indicates that they do not feel they get the representation that they deserve. Women do generally seek good advice, being listened to, and respected. They want a client-centered approach and services delivered in clear, understandable ways, similar to what men want and that is how they must be treated. 

Financial Decision-Making Dynamics in Couples

In many couples, it's common for one partner to take the lead in managing finances—and more often than not, that partner is the male. Since the financial decisions impact both, it is important that the couple makes decisions showing equal involvement. It is not smart or advisable to let one partner handle all financial decisions. Both partners must be comfortable with financial discussions. 

It is the job of the advisors to encourage both individuals to participate in meetings, even if one partner prefers not to know every detail. The collaborative approach helps build trust and ensures understanding. All financial decisions must be made with mutual consent for long-term harmony and financial security.

Importance of Communication and Inclusivity

In most relationships, it is not unusual for one partner to feel more comfortable and open when discussing finances, while the other may feel less confident, hesitant, or even avoidant. Women often feel excluded or not fully welcomed in financial conversations. This  needs to be addressed.

It is the advisor who has to make sure that the individual feels comfortable to share the financial decisions that matter to the other partner. If any issues are not addressed it may complicate matters and lead to unnecessary hassles. If one partner is unable to comprehend the technicalities of the financial matters then the advisor needs to explain it in an easy way and check in regularly to make sure everyone is on the same page. 

Preparing for the Surviving Spouse Role

Women must be prepared for unforeseen accidents that life can bring their way. While many of us may not want to think about it, the practical thing would be to plan ahead. Death is a reality that we all have to deal with at some point in our lives. It is crucial to ensure financial security and support in case a spouse passes away. Both spouses should let the other one know about financial investments, documents, will, bank account and insurance policies. One must know what social security benefits you may be eligible for. Be aware of the survivor benefits that you or a close one can avail in case of such an event. These benefits can make a significant difference.

Social Security and Survivor Benefits

It is best to be aware of special social security claiming strategies available only to surviving spouses, or even ex-spouses if they were married for at least 10 years. You can find out what will be the best strategy to maximize benefits. In this scenario timing is crucial. An advisor can guide you when to claim survivor benefits and when to switch to one's own retirement benefits. Timing remarriage also impacts eligibility for these benefits, so also feel free to discuss it in case you are planning it. Knowing all about social security benefits can help you be in control and make better decisions.

Pension Survivor Benefits: What to Consider

Pension survivor benefits can sometimes be misunderstood or miscommunicated. This can be a bitter surprise because often one considers it understood. Reality strikes when you apply and there are so many complications involved. It's important to review the specific survivor benefit options carefully and plan accordingly to avoid financial shortfalls.