Data & Research November 11, 2009

Women Feel Behind in Investment Knowledge

Women feel less confident than men in their investment knowledge—but the financial crisis has motivated some to seek out more information, according to a Scottrade poll.

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The poll found the majority of women investors (59%) consider themselves at a “beginner” skill level, compared to 35% of men. Most men (56%) describe themselves as “intermediate.” Women also struggle more with understanding investing terminology, as 29 % of women reported this to be a challenging aspect of investing compared to 7% of men.

The recent economic downturn apparently made quite an impact on many female investors, with 32% of women saying they’ve gained a new understanding of their financial picture in the last year compared to 24% of men, the Scottrade poll found. Twenty-two percent of women said they’ve worked hard in the last year to learn more about the economy, while 15% of men said they did the same.

“It’s great to see that women have the same investing goals and are taking the same proactive steps as men,” said Chris Moloney, Scottrade’s chief marketing officer and executive director of customer intelligence. “It is surprising, though, that women are not as confident as men. This discrepancy in men’s and women’s opinions of their own investing skills is especially notable because it doesn’t reflect the reality of their portfolios’ performance.”

Retirement Is Main Investing Goal

Nearly 70% of the men and women in the Scottrade poll said they are in the markets as a way to save for their retirement, while about half of both sexes said they are more generally trying to build a financial nest egg.

The Scottrade poll found 64% of men and 69% of women listed retirement as their primary savings goal, while 50% of men and 47% of women said their investment activities were designed to build up a financial reserve/nest egg. Although women are generally less confident of their investing ability, the number of men’s versus women’s portfolios where the value stayed the same or increased in the last 12 months was equal at 48%.

The Scottrade research found that while there were many attitudinal and behavior similarities between the sexes, there was one key exception—women are more likely to want more education.

Thirty-two percent of women said that they’ve become more familiar with their own personal financial situation in the past year, compared to 24% of men. And, 22% of women indicated that they have taken steps to learn more about the economy, compared to 15% of men.

“The economy seems to have spurred many women into action, and we are very pleased to see a trend that women are taking more of an active role in their own investments,” Moloney said. “Education and empowerment are important steps toward achieving the financial health and stability that will ultimately help people—both men and women—reach their goals and alleviate some of the stress they feel about their finances.”

The study was commissioned by Scottrade and conducted online among members of Survey Sampling Inc.’s SurveySpot consumer panel. It was fielded with a nationally representative sample of 1,143 respondents (627 men and 516 women) between July 15 and 29.

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Data & Research November 11, 2009

Women Might Put Kids’ College ahead of Retirement

A survey by OppenheimerFunds suggests advisers might have an opportunity to help women save for their children's college costs without sacrificing their retirement savings.

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Nearly two-thirds of surveyed women believe that paying for their kids’ college education will significantly affect their ability to save for their retirement, according to an OppenheimerFunds poll of parents of pre-college-age children.

Single mothers are especially challenged by saving for both college and retirement. While a little more than half of single mothers say they are equally concerned with their own retirement and getting their kids to college, about one-third said they are more concerned with getting their kids to college, according to the poll.
About eight of 10 women agree (and one-third strongly agree) that it’s important to plan financially for retirement and college costs at the same time, but only 10% of women strongly agree that they have such plans in place, the survey found.

“A professional financial adviser can be invaluable in developing a smart, integrated approach for reaching both college and retirement goals,” said Donna Winn, president and CEO, OFI Private Investments Inc.

Women Push for College

While both men and women see importance in going to college, women place more value on a college degree than men, the survey suggested. Almost three-fourths (74%) of women said it’s very important for their children to obtain a college degree, compared to 66% of men. More than half (52%) of women surveyed strongly agreed that a college education is particularly important for a woman’s ability to achieve financial security (compared to just 30% of men).

Women might push slightly harder for the value of a college degree, but men are taking the lead in the efforts to save for it, the survey found. For example, women are less likely than men to know how much their household has saved for college (56% versus 65%) and also less likely to have a goal for college savings (40% versus 46%). Among those with a savings goal, women are also less likely to have factored the cost of extra college expenses into their goal (67% versus 75%).

"Women are passionately committed to college for their kids, and are typically the key force getting kids ready for higher education everything from meeting with teachers, to helping with homework, to helping to identify the right college," said Winn. "But when it comes to the vital task of college financial planning, we found that women frequently turn over the reins.”

Winn said women should take more of a lead in college financial planning, so that kids do not head off to college with a backpack full of student loans. "College debt is particularly problematic for women, as they earn less than men and are more likely to move in and out of the workforce," Winn said.

Not only do women struggle with their own loans, but poor college financial planning on behalf of their kids can also affect the future financial security of women, OppenheimerFunds noted.

"The implications are clear: To the extent that women don't manage the college saving process well, their retirement could take a hit," Winn said. "It might be because they're paying college costs out of their own retirement funds—or subsidizing a child who 'failed to launch' because of heavy college debt or lack of funds to finish school.”

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Women Take the Lead

The OppenheimerFunds poll found that women take more primary responsibility for the long-term college process, including discussing college with their child (83% versus 64% of men), helping their child research college (89% versus 62%), and helping with the college application process (87% versus 62%).

Paying for college is important for women as parents, and they are even more willing than men to make personal sacrifices to help their children pay for college. More than half of women agree that not paying for college would be "a failure for me as a parent," according to the survey. Women are more likely than men to say they're very willing to eat out less (77% versus 69%), buy fewer consumer electronics (76% versus 65%), buy fewer clothes/shoes (75% versus 64%), give up a vacation (66% versus 59%), take a second job (34% versus 25%), and take out a personal loan (30% versus 25%).

Among parents who said attending college was a significant financial burden for them, women are more likely than men (57% verse 48%) to strongly agree that it's important that attending college be less of a burden on their children than it was for them, according to Oppenheimer.

The OppenheimerFunds poll was conducted online between September 25 and 29 by Mathew Greenwald & Associates. Respondents (1,099 women, 559 men) were parents of a child age 18 or younger who is not currently attending college.

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