If you’ve read the Diversifying in the Time of COVID blog for female investors, you may have taken stock of the unique pressures you can face as a female investor, and you now know that diversifying your portfolio can be key to addressing the range of challenges you may face in financial planning. Choosing an appropriate balance of diverse investments for your unique situation, especially following a time of crisis, can seem complicated. To save you time and help you prioritized next steps in the wake of this recession, a relationship with a financial professional can be key.
Women who have financial professionals report feeling more confident about their later-life plans than those who don’t.1 Given that women face a different set of challenges than men, however, the financial professional you choose should have expertise beyond product knowledge. They should be an expert in listening to your priorities, understanding your unique situation, and partnering with you in pursuit of your long-term success. If asking for a referral from your social circle isn’t uncovering anyone, don’t be afraid to ask for client references from financial professionals you’re considering.
Other Factors to Consider When Choosing a Financial Professional
Are they administering a plan without understanding your comfort level, or will they work with you at your pace? If you express that you’re risk-averse, your financial professional should volunteer to find creative strategies that fit your risk tolerance. For example, they may recommend an approach called dollar-cost averaging.† This means that the investor commits to buying a fixed dollar amount of a particular investment on a regular schedule, regardless of the share price. As a result, the investor purchases more shares when prices are low and fewer shares when prices are high. This can help balance the highs and lows of the market.
The right financial professional should also understand the financial challenges that women face, rather than proposing a one-size-fits-all approach. Most retirement calculators, for example, don’t include time taken off from work to care for kids or loved ones. If a potential financial professional doesn’t ask about the likelihood of these events and adjust accordingly, that financial professional may not be the one for you. The right financial professional should ask about the other challenges discussed in our last article, such as expectations around funding your family members’ futures, including 529 plans for kids, and who’s going to do the caretaking for the aging adults in your life.
It Takes Two: Making the Advisor Relationship Work
Be your own best advocate.
Even the best-intentioned financial professionals aren’t mind readers. If you don’t feel like your personal values or priorities are being incorporated into your portfolio, speak up! While women are not encouraged as often as men are to be assertive, keep in mind that these are your earnings and your future.
Get comfortable talking about money.
Even though women make the majority of day-to-day purchasing decisions for their households and manage the family budget, they still feel uncomfortable discussing money, even with their financial professional. In fact, 61% of women would rather talk about the details of their own death than discuss money.2 If you’re worried you don’t know enough to start the conversation, HerMoney is a great website tailored to women and their financial needs. The Financial Freedom Studio also features a number of articles focusing on women and their unique relationship with money. Attending a seminar on financial planning focused on women can also provide a safe space where you know everyone is there to talk about investments, so you don’t have to worry about the subject being taboo.
It Takes Time: Commit to Your Commitments
Finally, understand that this is a long-term conversation, not a 15-minute quick fix. Planning in pursuit of financial freedom requires a continuing commitment to education and interaction, as well as a dedication to the lasting health of your financial professional-client partnership.
Learn more about how women can form better relationships with their financial professionals in a story from NBC Today Show financial editor, Jean Chatzky.
1. "The Journey to Financial Litercy," Metia, commissioned by Jackson, 2019.
2.“Women and Financial Wellness: Beyond the Bottom Line,” Merrill Lynch, AgeWave, 2018.
† Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity.
All investments contain risk and may lose value.
There is no guarantee that a diversified portfolio or investment techniques such as dollar-cost averaging will enhance overall returns or outperform a non-diversified portfolio. Neither diversification nor dollar-cost averaging can guarantee against market risk.