This is a problem many Women face of all ages.
Women from the Silent Generation (1925-1942) often outlive their spouses and find themselves ill prepared to deal with the finances, owing to their sole reliance on their companion’s management of house-hold savings. This same problem is now creeping up on the baby boomers. Traditionally, Men from these generations have often been the sole gatekeepers in these matters.
The problems with this arrangement start manifesting themselves early on as Men are less likely to seek professional advice and make common mistakes regarding tax liabilities down the road. It's rather like the reluctance Men have for asking directions when lost in the car!
IPSOS Reed published research in 2010 which showed that Canadian families who work with an advisor accumulate four times the wealth by aged 65 compared with those people who go at it alone. One of the reasons for this startling difference is that people who go at it alone focus on their investments and rates of return, rather than future and ongoing tax strategies.
An example would be two of my elderly female clients who had wealthy husbands (now deceased) who took no financial advice whilst alive and built up large pots of Registered cash, which attracts a lot of tax when cashed in retirement. These Women are now forced to draw income from their RSPs that they don't need and as a consequence, service unnecessarily large tax bills. Unfortunately, a lot of men ignore the fact that they are statistically more likely to die before their female spouse, who will eventually end up holding the financial baby.
Please understand that this is not meant to be a men bashing article (as I am one), but to point out that Women have an equal and important role in financial planning. Let's look at some facts:
8 of 10 Women at some point in their lives will be making important financial decisions on their own.
Half of Canadian Seniors are single and that will increase as marriage numbers fade.
The divorce rate is currently 50% and as a result many Women have to start over, often with little financial experience.
Single Women often have to navigate a complex financial world that can prove intimidating since it is dominated by Men and let’s not forget, Women see the world differently to Men.
My experience has been that Women tend to be better investors than men, you may think that a sweeping statement. So let's look at what I have found, women are:
Generally more organized.
Better listeners.
Generally more honest with themselves.
Cautious with risk
Have less ego issues.
These are all good investing qualities to have. So if you are a single Women, what qualities should you look for in an advisor? First of all find someone you like - very important and then someone you trust and someone who listens to you. A good test is "would I go and have a drink with my Advisor?" if the thought of spending any social time with your Advisor fills you with dread, or you would rather stick pins in your eyes, then you are probably with the wrong person. You need to work together as a team, so your Advisor can help you fulfill your dreams and goals.
Does your Advisor have other female clients? What do they think of him/her? Ask for a couple of references.
My last piece of advice would be to avoid very technical Advisors, you don’t need to know what the standard deviation of the SP500 has been since 1945 or what the beta is on your portfolio (no one does). Find someone who talks your language and understands your needs. How do I know all this? The answer is that 60% of my clients are single women. Good luck with your search.