During World War II women began to enter the workforce in large numbers. While many men were doing most of the actual fighting, women left their homes to replace men who left jobs and enlisted in the war. Ever since women have been a growing presence in the American workforce. So, the need for financial planning for women dates back to at least the 1940s.
Today women control 51% of the personal wealth ($22 trillion) in the US, according to research by New York Life Investment Management. That number is expected to go up by 30% over the next 40 years, as wealth transfers between generations. Already 96% of women have primary or shared responsibility for family financial decisions.
Unfortunately, women are at a disadvantage to men when it comes to money. They earn less than men. They are not as comfortable with money as men. They are less financially literate than men. They tend to invest less than men, and they invest more conservatively. Women also live longer than men, and, therefore, they need more money for retirement than men do.
A CFP® Can Help
How can you empower yourself to lead a more financially-literate and secure life? By hiring a Certified Financial Planner™ who practices comprehensive financial planning for women. We will discuss 5 ways a CFP® can be crucial to financial planning for women.
What is a CFP®?
Before we start, let’s first describe a Certified Financial Planner™. A CFP® professional is a person who has met the requirements of the CFP Board.
Education: A CFP® holds a bachelor’s degree (or higher) from an accredited college or university and has completed financial planning coursework through a CFP Board registered program.
Exam: A CFP® must pass a rigorous 6-hour exam.
Experience: A CFP® must complete 6,000 hours of professional experience related to the financial planning process or 4,000 hours of apprenticeship experience that meets additional requirements.
Ethics: A CFP® must sign an ethics declaration and pass a background check.
So, a Certified Financial Planner™ is educated, credential, experienced, and acts as a fiduciary. A CFP® is uniquely qualified to provide financial planning for women.
Avoid Mistakes
A CFP® can help you avoid the mistakes that are often made by women. Here are a few examples. When going through a divorce, a woman will often negotiate to keep the home that she shared with her spouse. The problem is that houses are expensive to own and maintain. A CFP® can help you determine if it is really financially wise to keep the house.
Women often invest too conservatively. As a result, their investments do not grow as much as they could and as much as they may need to. A CFP® can help you determine your emotional tolerance for risk, your economic ability to take risk and your financial need to take risk to reach your goals. You should take no more risk than is necessary, but also no less.
Women, like most Americans, often carry credit card debt. Credit card companies charge high interest on revolving balances. A CFP® can help you develop a budget, so that you only use a credit card to purchase things you can pay for today.
Access Resources
Because Certified Financial Planners™ have broad knowledge across many financial topics, they can be a great resource to you. A few examples:
You will need a variety of insurance to protect yourself and your property. A CFP® can introduce you to insurance specialists in areas such as life insurance, disability insurance, long term care, and home and auto insurance. Just make sure your CFP® does not sell financial products.
Everyone should have an estate plan. Most CFP®s are not lawyers and cannot draft the legal documents you need. But a well-connected CFP® can introduce you to several qualified estate planning attorneys and help you select the person who is right for you.
You may need to finance the purchase of a property. CFP®s do not act as mortgage brokers. But they usually know several who are competent and honest and to whom they can refer you.
Don’t leave your future to chance. Contact our team at Springwater Wealth today to learn how we can help you develop a financial plan for your peace of mind.
Invest Wisely
Many women live independently, because they never married, they divorced or they became widowed. Consequently, they are on their own as investors. If you are on your own, a CFP® can help you make wise investment decisions.
The keys to successful investing are proper asset allocation, asset location, diversification, cost containment, and rebalancing. You may not be familiar with these terms and that’s OK. A CFP® can explain them to you and help you earn better investment returns than you would on your own.
Retire Securely
An important aspect of financial planning for women is helping them develop a strong retirement plan. A CFP® can help you determine how much you need to save for retirement, how to invest your savings and how not to outlive your savings.
There are two distinct threats in facing women in retirement: needing expensive assistance with basic living activities and outliving your resources. A CFP® can help you think about the possibility of needing care late in life and how to pay for it. Your CFP® can also help you explore ways to extend your resources by using financial tools such as an annuity or a home reverse mortgage.
Peace of Mind
Perhaps the greatest benefit a CFP® brings to financial planning for women is peace of mind. You don’t have to be an expert. You don’t have to worry about what you don’t know. You just need to find a CFP® you trust and hire them to help you.
This is where women are generally much better than men. Women know when they don’t know something. They know when they are lost. They know when to ask for directions.
So, a CFP® can play a vital role in financial planning for women. If you are navigating your financial life on your own, consider working with a Certified Financial Planner™.