It may come as no surprise that women are better than men at asking for directions when they are lost — whether on a busy highway or the road to retirement. But it can still be a long, arduous journey.
Women are approaching their finances more proactively and using financial wellness programs at work more often and more regularly than men, according to a new survey by Financial Finesse, a provider of workplace financial wellness programs. In 2013, women made up 63% of financial wellness program participants, a steady increase from 60% in 2012 and 52% in 2011 when the company first started tracking this data.
In spite of these rising numbers, there is still a significant knowledge gap between men and women in nearly every key area of financial planning, particularly investing and cash management, which are essential to building long-term wealth.
The study found that only one-third of women feel confident about their investment allocation compared to one-half of men, and only 66% of women report a general knowledge of investing compared with 85% of men. Similarly, 63% of women report having a handle on cash management versus 78% of men and only 47% of women indicate that they have an emergency fund compared with 62% of men.
Liz Davidson, chief executive officer and founder of Financial Finesse, said it is encouraging to see women closing the financial literacy gap and participating more regularly in financial wellness programs, but more needs to be done. She noted that women still earn less than men on average, spend fewer years in the workforce due to childcare and elder care responsibilities and often collect smaller Social Security benefits due to curtailed careers. Yet they need to make their retirement savings stretch further, as women tend to outlive men by five to seven years.
“Women need to save considerably more and invest more wisely and more aggressively than men because of these challenges,” said Greg Ward, director of Financial Finesse's think tank of financial planners who compile the firm's research reports. “The fact that they lag behind men in these areas is concerning,” Mr. Ward said in a statement accompanying the annual study.
(Related: Sallie Krawcheck starts women-friendly index fund)
The Financial Finesse study notes that there is a critical need for role models for women of all ages to overcome the gender gap in financial literacy. It points to Girls Inc., a nonprofit organization devoted to girls, as a prime example of how to use mentoring to inspire life-changing results.
Last month, the Insured Retirement Institute released a study on women and financial advising careers that noted that the Bureau of Labor Statistics projects the financial advice field will grow 32% between 2010 and 2020. Yet, today, only three in 10 advisers are female.
“The financial advising field is already experiencing considerable growth but given the emergence of the women's market, the opportunities for women advisers are more than substantial,” IRI president Cathy Weatherford said in the report's news release. “As such, firms' ability to recruit and retain women advisers is only going to grow in importance.”