Fear of Outliving Finances: Gender Perspective in Canada
The fear of outliving finances is real among Canadians… but it’s more real among women than among men, even when you control for important matters of money; income and investable assets. Consider the analysis in Exhibit 1, below. It shows investors divided by both gender and asset levels… and reacting to our bellwether statement, “I’m afraid I might outlive my finances.” It demonstrates quite clearly that there is a consistent apprehension gap between men and women with respect to the fear of outliving their finances. Men are less fearful than women about the possibility of outliving their finances, regardless of the level of assets they have accumulated.
Exhibit 1. Fear of Outliving Finances by gender and by asset levels
Using our agreement scale (from 0 to 10, where 0 is the strongest possible level of disagreement and 10 is the strongest possible level of agreement,) the graphical analysis shows both men and women who have $500k+ of investable assets have lower levels of apprehension than both men and women who have between $250k and $500k. Those with $250k to $500k have less apprehension than those with $100k to $250k. And, quite understandably, both men and women with less than $100k in investable assets accumulated have yet higher levels of apprehension than investors with higher levels of assets. We won’t waste time presenting results of statistical tests that confirms that asset levels are a significant driver of apprehension around outliving financial resources; that is apparent from the graphic and makes a great deal of sense.
We have a similar set of findings when we analyze things by income levels rather than assets… admittedly a correlated factor. There is a consistent apprehension gap between the genders and income levels are a clear driver of apprehension. At every level of income, women are more concerned about the possibility of outliving their financial resources than men. And, as income levels rise, apprehension diminishes.
Exhibit 2. Fear of outliving Finances by gender and income levels
Though we draw the conclusion that there is a clear and significant difference between the genders with respect to the fear of outliving finances, what does this mean for the Canadian wealth management industry and for financial advisors who are doing what they can to manage relationships with clients?
Men and women are different. What next?
With men and women shown to be significantly different, we contend that it’s essential that they be treated differently from a communications perspective. People who begin to suggest that men and women should to be treated the same way are off the mark. Both men and women need to be treated well and they need to be treated with respect. But the idea that they need to be treated equally or the same manner is essentially ridiculous.
To treat them with respect, appreciate that they are different. Messaging should certainly consider and respect the apprehension gap that exists between men and women. Treating people with respect does not mean treating them as though they are either dumb or foolish, however. It means taking the time to listen and to learn what they think and how they feel before barging in with direction, opinions or ideas that may not be welcome.
From a product demand perspective, this apprehension gap suggests that women may be more receptive than men to principal-protected and lower risk investment alternatives. It’s important, however, that each investor be assessed on an individual basis by an empathetic advisor. Investment strategies that provide security into the latest stages of an individual’s life may be more interesting to women than to men despite the fact that both need protection. From a connection perspective, women may, because of their higher levels of apprehension, find that messages and stories related to the creation of protection against outliving finances more resonant than men.
NOTE: This research is a product of The Financial Comfort Zone study, an ongoing, cooperative research exercise between Credo Consulting and TC Media’s Investment Executive. Each month, Credo interviews 1,000 investors. We ask a number of questions consistently in order to monitor Canadian investors’ evolving perspectives on a host of financial matters. Questions about this or other Credo work? Call us at 905.919.1926.