Financial Finesse Releases Annual Study on the Gender Gap in Financial Literacy
Report finds women are making significant strides and closing the gender gap in financial wellness, but face a long and challenging road to achieving ultimate financial security
EL SEGUNDO, Calif.--(BUSINESS WIRE)--Financial Finesse, the leading provider of workplace financial wellness programs, announced today the release of its annual study on the gender gap in financial literacy.
“I think society is beginning to realize the severity of the challenges women face in achieving long-term financial security, but they are still so significant that women have to do even more in order to overcome them”
The study found the gender gap is closing as women continue to improve their financial wellness in all key areas of financial planning—a reversal of the trend the firm saw in 2012 when the gap actually widened. That said, there is still a significant gap between men and women in nearly every key area of financial planning.
Significant findings from the report were:
- Women are approaching their finances more proactively and using financial wellness programs more often, and more regularly, than men. In 2013, women made up 63 percent of financial wellness program users, while men made up only 37 percent. The percentage of women using financial wellness programs has steadily increased year over year since 2011 when the firm began measuring this data through aggregated results from its financial wellness assessment tool.
- The gap remains most significant in investing and cash management despite women’s improvements in these areas. One-third of women feel confident about their investment allocation compared to one-half of men, and only 66 percent report a general knowledge of investing compared to 85 percent of men. Likewise, 63 percent of women report having a handle on cash flow, and only 47 percent indicate having an emergency fund, whereas men reported 78 percent and 62 percent, respectively.
- Surprisingly, making more money does not mean a smaller gap in financial wellness. The gap actually widened between men and women who had annual household incomes over $150,000. At the same time, it closed most between men and women with annual household incomes over $60,000 and under $100,000. Those with annual household incomes between $20,000 and $35,000 also saw an increase in the disparity between the genders.
Liz Davidson, CEO and founder of Financial Finesse, says it is encouraging to see women closing the gap and participating more regularly in financial wellness programs, but notes that there is more to be done. “I think society is beginning to realize the severity of the challenges women face in achieving long-term financial security, but they are still so significant that women have to do even more in order to overcome them,” says Davidson, citing the fact that women earn less on average than men and have to make their savings last longer due to longer life spans.
Greg Ward, Director of Financial Finesse’s Think Tank of CERTIFIED FINANCIAL PLANNER™ professionals who compile the firm’s research reports, notes the irony of the gender gap. According to Ward, “Women need to save considerably more and invest more wisely and more aggressively than men because of these challenges, so the fact that they lag behind men in these areas is concerning.” Ward adds that the economic implications of the gender gap are significant. “While I’m not aware of any specific research on the cost of the gender gap in financial literacy,” says Ward, “when you consider that a woman with a college degree will make on average $1.2 million less than a man over her career, we’re looking at a $28 trillion problem over the next 35 years.”
The good news, according to Ward, is that employers are especially doing more to reach women with financial and retirement education to help them overcome these challenges—taking a more holistic approach to their benefits and how they communicate them to women and employees overall. A recent AON Hewitt study found that more than three-quarters of companies plan to implement or expand their focus on financial wellness in 2014. Similarly, Financial Finesse has experienced a 360% increase in inquiries about its services among both companies and financial services firms looking to address this issue.
About Financial Finesse
Financial Finesse is an unbiased financial education company providing personalized and innovative financial education and counseling programs to over 1,000,000 employees at over 500 organizations. Financial Finesse partners with organizations to reach goals such as reducing fiduciary liability, increasing plan participation, decreasing stress, and increasing productivity through its unique approach to financial education. Financial Finesse research is conducted by their Think Tank of CERTIFIED FINANCIAL PLANNER™ professionals who analyze usage of the company’s financial education services to monitor trends in employee financial issues. Financial Finesse does not sell products nor manage assets. For more information, visit www.financialfinesse.com.