Women Face More Financial Challenges Due to COVID-19

Financial advisers can help them through a mix of offerings and communication.

The COVID-19 pandemic has severely impacted retirement savings for women. A Nationwide study explains what women are looking for to get back on track. 

Nationwide’s “Advisor Authority” study found that among 297 women with investable assets of $100,000 or more, 72% believe the pandemic had a negative impact on their retirement savings. Women listed losses from the pandemic as their top financial concern last year, along with protecting assets, health care costs and longevity risk in retirement.

Additionally, women were more likely to be interested in lifetime income options than men. Nearly six in 10 women (59%) said they would feel more secure if a portion of their portfolio was invested in an annuity to help protect against market risk. Fifty-five percent of women said they would feel more secure if a portion of their portfolio was invested in an annuity to help protect against outliving their savings. Women were also much more likely to use fixed indexed annuities (FIAs) rather than registered index linked annuities (RILAs).

“Historically, there has been a lot of discussion on income provisions in retirement plans that were not, up until the SECURE [Setting Every Community Up for Retirement Enhancement] Act, given the opportunity and guidance to construct options with portability,” says Lori Hall, director of strategic accounts at Nationwide Financial.

Women—and especially women of color—are more likely to have been laid off or furloughed during the COVID-19 crisis, according to a report from McKinsey & Co., which means generating sustainable retirement income has become even tougher. A 2020 Transamerica report found 52% of women said they have experienced one or more negative impacts to their employment as a result of the pandemic, including reduced work (24%), layoffs (16%), reduced salaries (13%), furloughs (13%) and/or early retirement (4%).

Others have been driven out of the workforce altogether due to a lack of flexibility in their work, housework and caregiving burdens, or burnout inflicted by the pandemic, according to the McKinsey research. Without working, many women miss out on key benefits including health care and access to financial wellness programs and retirement planning education.

Hall says the male-dominated demographic of the financial services industry may lead women to avoid seeking help from advisers. According to a 2020 Milliman study, just 23% of women are certified financial planner (CFP) holders.

Additionally, a different McKinsey & Co. report found female investors are less likely to seek financial help than their male counterparts, even though they are expected to control much of the $30 trillion in financial assets that Baby Boomers will possess by 2030. “As a woman, we’re not seeing people who looks like us or have the same mindset that we do, so it’s sort of a recipe for disaster,” Hall explains.

Women who do work with an adviser said the top reason they choose to work with a financial professional was to feel more confident in their financial future (35%). When markets are volatile, women with an adviser said the top benefit of working with a financial professional was that they were able to protect their assets against market risk (26%).

While more advisory boards are pushing to increase the number of female advisers, Hall urges financial advisers to connect with female investors. Understanding their personal journeys can be a great opportunity to engage on another level with them, bridge the financial services gap and understand their needs, she says.

She says investors will appreciate feeling like “my adviser can get me to where I need to be, but it’s not just by throwing numbers at me, it’s helping me understand the full implication of that.”