Retirement Planning for Women

After a long career managing large accounts for an insurance company, Lynn Brooks is hardly a financial novice. But when she sought help from a financial adviser after her husband died, they might as well have been speaking different languages.

Ms. Brooks, who's now 60, knew she had reached the age when her savings should be managed conservatively. Her adviser, however, had something more testosterone-fueled in mind, urging her to buy riskier assets like small-cap stocks. And when she phoned him, she says, he was often in a hurry: "It was as if he was saying, 'Leave me alone. I'll take care of this.'"

Ms. Brooks says she eventually took her business elsewhere -- but only after her nest egg had shrunk 30% over the course of a decade before the crash.

Advisers Can Be Obstacles

This is how the battle of the sexes plays out in the complex world of retirement planning -- and all too often, women come out on the losing end. A recent survey by financial-services company MassMutual found that women's retirement accounts were, on average, just two-thirds the size of men's. The disparity is made worse by demographics: Because they live longer, women need more money than men for a comfortable retirement, according to the Employee Benefit
Research Institute.

"Millions of women are going to lose their standard of living unless they take hold of the situation," says Cindy Hounsell, president of the Women's Institute for a Secure Retirement.

But as women step up to do that, many find that the financial-services industry is an obstacle, not an ally. In a recent Boston Consulting Group survey of women investors, respondents said they routinely feel underserved by the financial-services industry, with more than 70% expressing dissatisfaction with the service they're getting. Among the complaints: disrespectful advisers, narrower investment choices based on the assumption that women can't handle risks and patronizing pitches like one from a bank's website that urged women to give their finances a "makeover."

The disenchantment is especially acute among women who find themselves managing money on their own after their marriages end.

One factor stands out as the bull elephant in the room: Between 70% and 80% of advisers are men, and many veterans have built careers serving a mostly male clientele.

While some companies are addressing the issue, a male-centric mentality still pervades the business. Many planners fail to take into account the fact that women typically earn less than men and are more likely to take time out of the work force while raising their families. And couples find that too often their adviser focuses his (or even her) attention predominantly on the man.

Conflicting styles of communication may have a lot to do with why women feel ill-served. Experts generally agree that women prefer advisers who address their needs holistically, educating them about their choices and explaining how they can reach long-term goals. For brokers accustomed to a hard sell and a fast pace, that's not an easy adjustment. Still, the industry is doing more to take gender differences into account.

Product Pitfalls

Analysts say the industry sometimes shoehorns women into retirement-savings formulas meant for men. But two important variables, income and life expectancy, are very different for women -- generally, they earn less and live longer. Many advisers specializing in women's finances say that means women should invest more aggressively in their younger years. In practice, women tend to be more conservative, keeping a higher percentage of their money in low-risk investments such as cash than men do, according to Cogent Research.

As women get older, conservative investments make sense. But advisers often fail to offer them two products that could be useful: annuities, which convert a lump sum into income, and long-term-care insurance.

Thinking for Two

Financial planners say it's common for married women to assume that their spouse's savings will do the heavy lifting. But in practice, women are more likely than men to spend part of their retirement alone, making it even more important for them to have their own plan.

More pros say they're teaching women a cardinal rule of personal finance: "Pay yourself first."

Greg Ward, of financial-education firm Financial Finesse, recommends investors make automatic deposits into their own retirement plans or brokerage accounts, not just into joint plans they share with spouses.

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