By Mary Lauritano, CFA, Senior Vice President–Wealth Management at UBS Wealth Management USA; St. Petersburg
In a recent UBS report of women and wealth, Own Your Worth, the study showed that eight in ten women will, one day, be alone and solely responsible for their financial well-being due to increased life expectancy and divorce. Moreover, 98% of widows and divorcees surveyed urged other women to participate in long-term financial discussions, and estate planning, with their spouses at the outset.
These statistics indicate now, more than ever, the importance of women taking a proactive role in planning for their financial future, whether independently or collaboratively with a spouse or a financial advisor.
Our study found that while women were engaged in routine bill paying and budgeting, nearly half (49%) defer to their spouses for decisions about how to invest their money for retirement and long-term wealth. There were generational differences noted as well. More than half of millennials (54%) let their spouses make long-term financial decisions versus 39% of baby boomers.
While the report shows that the majority of women and men believe equal financial participation, and decision-making, are necessary to help build a secure future, there’s a gap when it comes to active involvement. The reasons women do not participate in financial planning range from lack of confidence, time or knowledge, to entrenched roles and a desire to avoid conflicts in the relationship.
However, due to the current pandemic and its economic impact, women are becoming more concerned about protecting themselves and their families financially, both for short-term and long-term needs. The study found that two-thirds of those surveyed intend to have financial discussions with their spouses, and adult children, including financial reviews, portfolio discussions and estate planning revisions.
Initiating constructive discussions is the first step in the right direction for sound financial control. Understandably women want, and need, to be prepared for the unexpected. What if something happens to their spouse, the marriage ends or health care and other long-term expenses arise?
Secure Equal Engagement and Accountability Upfront
Couples need to work equally, as partners, with their financial advisors, participating in calls, and meetings, where both spouses understand their resources, assets, needs, lifestyle and long-term financial goals. I encourage both spouses to attend meetings and review calls.
As early as possible, it’s important for couples to develop a simple “spending plan”—a roadmap for using, growing and protecting money wisely to ensure resources are available when needed. We encourage spouses to evaluate, together, necessary living expenses, discretionary spending, debt, savings and investments toward long-term wealth goals, including children’s education, a comfortable retirement and estate planning. Creating and maintaining a financial plan may help limit surprises in the future.
If you want to retire, and live comfortably, a plan assists in getting you there sustainably for the long-term, especially given the increase in life expectancy. Early on, it’s useful to employ simple strategies to lower household expenditures, including negotiating better insurance rates, reducing car expenses and living within means to avoid overspending. Over time, thousands of dollars can be saved without sacrificing comfort, convenience or lifestyle.
Have Financial Conversations Regularly, Simply
To charter a sound financial course, it’s essential to identify and facilitate client needs, engaging both spouses, and sometimes their adult children, in simple, practical conversations while avoiding financial jargon that may be intimidating. Conversations should be comfortable and understandable. One of my clients, a surgeon, likes that I “speak in crayon”—clear and to the point. There’s no need to make it complicated. Together, financial advisors and families can conduct honest evaluations, regularly assess progress and acknowledge achievements. Ongoing conversations are necessary to help avoid surprises. We work towards securing financial independence.
Prepare for the Unexpected
During the divorce settlement process, it’s critical to have an inventory of all marital assets, including homes, savings and investments to help develop an equitable, sustainable, financial plan for each partner post-divorce. Take the time to make a simple spreadsheet of the marital assets, expenses and investments and review the numbers carefully. This exercise helps take the emotion out of dividing the assets and provides a realistic view of each spouse’s financial future.
Start Now—It’s Never Too Late
Importantly, more women are realizing now that understanding, and planning, their financial future can provide confidence in the future. Taking advantage of financial resources available and having more frequent, deeper and constructive conversations with financial advisors, spouses and families can result in well-informed decision-making to pursue mutual financial goals. Money is energy; you can use it sustainably.
The first step in “owning your worth” is to set up time with your spouse, and financial advisor, to understand how to create a wealth plan to pursue your financial needs.
To download Own Your Worth: Women, wealth and the path to financial independence, please click here.
About the Author
Mary Lauritano, CFA, is a senior vice president–wealth management and financial advisor at UBS in St. Petersburg. She has more than 30 years of experience in financial advisory roles, including senior portfolio manager and wealth advisor, serving clients across the U.S. Lauritano recently earned national recognition as one of Forbes’ 2020 Top Women Wealth Advisors.