August is Women’s Month and, as a result, a lot of media focus fell on female South Africans as a whole – focusing on how, generally, women rely on male counterparts when it comes to “money stuff”. But what about financially independent women? What do their money and investment habits look like? What sets high-net worth (HNW) female clients apart from their male counterparts when it comes to financial planning and investment habits?
“Women generally consider broader engagements with all stakeholders thoroughly and generally have a more holistic and understanding view, preventing possible blind spots,” Sonja Steyn, Head of Wealth Management from Momentum Consult shares. “The real difference with the high-net-worth women I speak to is that they are more empowered to take charge and that is always the first step to owning your success.”
Are HNW women as conservative (investment wise) as people may think?
In 2019, Global investment house FlexShares conducted an Executive Investors survey of primary household breadwinners. The survey of over 450 primary household earners found that executive women have a similar, if not greater, risk appetite to men when it comes investing, despite the long-held stereotype that women are more conservative investors.
|●||HNW men were twice as likely to identify themselves as a “conservative investor,” at 31% as compared to 14% of women.|
|●||Overall, 26% of women surveyed considered their risk profile to be “moderately aggressive” or “aggressive,” as compared to 27% of men|
|●||When asked to rank their general investment knowledge on a scale of 1-10, the mean response for HNW women was a 7.3 out of 10, compared to a combined average of 8.1 for all respondents.|
|●||Women ranked their ability to perform a range of financial planning tasks – such as managing investments, planning for retirement, and creating a budget – over 7.0 on nearly every activity.|
|●||While men reported having even greater confidence – rating themselves over 8.0 on every task – both groups demonstrated high levels of financial knowledge.|
Although the majority in both sexes consider themselves to be more conservative investors, Steyn says in her experience South African women are generally even more conservative than their male counterparts, suggesting that a deeper engagement is required to encourage women to take more risk to grow their wealth.
What women prioritise in terms of their savings goals
When asked about their top two current financial goals, the survey results revealed that executive men and women reported significantly different priorities:
|●||“Providing for future generations” and “taking care of my dependents financially” were identified as two of the top financial goals among men at 70% and 62% respectively (women only 30% and 38%)|
|●||The top goal for women was “to know that I’m prepared for the worst” at nearly 69%, as compared to 31% of men.|
|●||Women were also most concerned with “planning for retirement” (56%) and “making philanthropic contributions” (54%).|
According to Steyn women tend to manage their risk more carefully. “We like to know that our money is working for us and any actions clearly aligns with our investment goals. While this does differ from person to person, we do find that women are generally more focused on preparing for the worst,” she acknowledges.
“Many financial advisors continue to cling to outdated assumptions regarding female clients’ risk tolerance and overall interest in investing which may not be accurate for high-earning breadwinners,” David Partain, Head of Marketing at FlexShares Exchange Traded Funds emphasised at the release of the survey results. “Financial advisers, and advice businesses in general, have to be aware of the needs of these financially successful women, both professionally and in their personal lives and provide advice that caters to both,” Steyn agrees.
Click here to read more of Steyn’s comments on women’s investment habits, as well as further insights from the Momentum/Unisa Household Financial Wellness Survey.