Women and Wealth: does bias affect women’s finances?
“Money is essential to meeting your day-to-day needs, as well as to plan for the future,” says Karen Hubbard, Vice-President, Client Advisory Services, Educators Financial Group. “That’s why bias that affects women’s finances is so important.”
As a professional in the financial industry, and as a woman, it’s clear to me that gender bias has affected women’s finances for a long time, and that it continues to do so today.
What evidence do we have that gender affects women financially? One of the most obvious signs is the gender pay gap. Canadian women working full-time make less than men: an average of 76.8 cents for every dollar men make, to be precise. The gap is wider for Indigenous or racialized women, newcomers, or those living with a disability1. It’s evident across income levels, too. One year after graduating from post-secondary education, women earn an average of $5,700, or 12%, less than men. Five years later, they make 25% less than men across all disciplines2. In almost all Canadian universities, male professors earn more than their female counterparts3.
When it comes to wealth management, bias can be seen both in the assumptions that others make about women and in the way women perceive themselves.
A Merrill Lynch study of financial professionals’ attitudes towards women showed that financial advisors assumed men were the decision makers. Advisors made much more eye contact with a man and generally “assumed the man was the decision maker, assumed the woman wanted direction, assumed the couple’s finances were merged, assumed that the woman was more risk-averse, and assumed women are less knowledgeable than men about investing”4. Furthermore, many of these biased assumptions went unnoticed by the clients.
Bias can also be exhibited by women themselves. Studies show that some Canadian women consider themselves to be less confident in making investment decisions and less knowledgeable about financial terminology than men. 68% of Canadian women rate their financial knowledge as fair or poor, as compared to 57% of men. They see themselves as more risk-averse and less likely to use DIY or self-knowledge channels to invest5.
Whether deliberate or unconscious, bias impacts every aspect of a woman’s finances – from the amount she earns to how she invests.
At Educators Financial Group, we have a unique understanding of the financial challenges that women may face for two reasons. First, women have always represented a large percentage of the education community that we serve, so we are more aware of their needs. And second, our management team is 57% female. This is a benefit to our female clients as, according to Merrill Lynch, women are willing to take on more investment risk, and take more control of their finances, when working with females4.
There are many suggestions on how to stop bias that affects women, ranging from enforced equality in pay to bias training for financial advisors. One of the most commonly suggested ways to deal with the bias women have of themselves is through programs that increase a woman’s financial literacy. Our webinars do just that. Participants can learn how to take control of their money, get insights and tips on subjects such as shopping for your first mortgage, or have questions answered about saving for retirement. Educators Financial Group offers information on a wide range of topics for education members at every age and stage in life.
Reserve your spot for one our our events today.
Karen Hubbard
In addition to being an educational advocate, Karen brings to the team over 20 years of financial specialist experience – spending a good part of that time as an advisor with the Private Wealth Management Division of a major financial institution. She holds a Bachelor of Commerce from McMaster University and has her Certified Financial Planner (CFP) designation. When describing what she enjoys most about working at Educators Financial Group, Karen says, “it’s definitely sitting down with clients – helping them to employ wealth-building strategies and build effective financial plans for life events.”
Sources
1 https://canadianwomen.org/the-facts/womens-poverty/
2 https://www.cbc.ca/news/business/university-college-wages-pay-gap-1.5426250
3 https://www.cbc.ca/news/canada/edmonton/gender-pay-gap-persists-at-canadian-universities-1.5739466
4 https://www.forbes.com/sites/kimelsesser/2020/08/27/financial-advisors-unconscious-bias-works-against-women/?sh=5ef2597b3f76
5 https://www.canada.ca/content/dam/canada/financial-consumer-agency/migration/eng/financialliteracy/initiativesprojects/events/documents/nationalconferencefinancialliteracy2014-finalreport.pdf
