Prudential study finds women feel less confident in their ability to save and invest
Research reveals that despite uncertainty, women not seeking help to meet long-term and retirement goals
NEWARK, N.J.--(BUSINESS WIRE)--Women surveyed said they are taking control of household finances, yet are no more prepared to make financial decisions than they were a decade ago, according to new research released today by Prudential Financial, Inc.
“Women who do not use a financial professional may be short-changing themselves”
The study, which is Prudential’s eighth biennial study of women and money, revealed women are less concerned about their financial security than after the 2008 financial crisis. However, at the same time, they do not feel prepared to make wise financial planning decisions. Despite this concern, the research found fewer women say they are seeking guidance from a financial professional.
“The economic volatility of 2008 shook the confidence of many women, as well as many seasoned investors and financial professionals,” said Lori Fouché, CEO of Prudential Group Insurance. “Considering the strength of the financial markets over the past few years, it is understandable many women now feel a little more confident about their financial future.”
“But just because women are less worried, doesn’t mean they feel ready to make important, long-term financial decisions. What is more worrisome is they still aren’t seeking help from financial professionals to do so,” said Fouché.
The Prudential research, titled “Financial Experience & Behaviors Among Women,” polled 1,407 American women and 606 American men between the ages of 25 and 68. A copy of the report, along with educational resources and information, is available at www.prudential.com/women.
According to the study:
- Women feel more confident about their ability to manage day-to-day household finances, with nearly a third giving themselves an “A” for their knowledge of managing money (33%) and managing debt (29%).
- Some 75 percent of women believe having enough money to maintain their lifestyle in retirement is very important, but only 14 percent are very confident they will be able to do this. This gap is virtually unchanged from 10 years ago.
- Only 33 percent of women feel they are on track or ahead of schedule in planning for retirement, down from 46 percent in 2008.
- Many women, 66 percent, say it’s very important to keep pace with rising health care costs, but only 9 percent are confident they will be able to.
“In light of these findings, it’s not surprising women are not self-assured when it comes to achieving their financial and retirement goals,” Fouché said. “Women are unsure of where to start with financial planning and say they are unsure of what they need to consider when evaluating options, but they are not seeking help.”
The research showed most women understand checking and savings accounts and life insurance “very” or “somewhat well,” but only 38 percent understand mutual funds and 31 percent understand annuities “very” or “somewhat well.” And, across almost all products and planning options–life insurance, retirement plans, IRAs, stock and bonds, estate plans, wills and trusts–understanding is now lower than it was in previous years.
The study results also show even though many women don’t feel they have a grasp of investing, they are not seeking the help of financial professionals in great numbers. Only 31 percent of women use a financial professional, down from 48 percent in 2008. In addition, one in five women say the financial services industry doesn’t understand their needs, and many say the industry needs to use less jargon and maintain a strong code of ethics.
The study results indicate that age may play a role in whether women seek guidance from a financial professional. Forty-five percent of Baby Boomers use a financial professional, while 31 percent of Gen Xers and just 15 percent of Millennials do. Fouché said “the declining use of financial professionals may be due in part to the vast amount of investment research and tools available on the Internet, which Millennials and Gen Xers are often more likely to use than Baby Boomers.”
“Women who do not use a financial professional may be short-changing themselves,” Fouché said. “Those who work with a financial professional report feeling much more confident about their finances than those who do not.”
Women are still calling the shots financially, with 44 percent now in the primary breadwinner role. That is down from 53 percent in 2012, but the drop among married men is even greater, suggesting a leveling off of income among spouses and partners, and the fact that major financial decisions are made jointly.
This year, 27 percent of married women say they take control of financial and retirement planning, up from 14 percent in 2006. Among married women who are their family’s primary breadwinner, 65 percent say they take the lead role in financial and retirement planning. Even among women who simply contribute to household income or were not wage earners, nearly 50 percent share equally in the financial planning process.
“These results all suggest women are gaining confidence in their ability to manage money,” Fouché said. “At the same time, it’s clear the financial services industry needs to start doing a better job reaching out to women and meeting their specific needs.”
Prudential Financial, Inc. (NYSE:PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.
The Prudential Insurance Company of America, Newark, NJ.