Men, Women and Money: the Power Shift

As a senior vice president of a global corporation, I was the primary income earner in my family. This fact, coupled with my professional experience in investor relations, made me the obvious choice to handle my family's fiduciary responsibilities. But I was the exception rather than the rule: Men traditionally were the breadwinners and, accordingly, handled most household financial decisions.

Times, however, are changing.

The recession is driving a sea change in workplace gender equity. As unemployment has swept across the world, traditionally male sectors such as construction and manufacturing have been hardest hit. By contrast, women are more likely to be employed in health and education, areas less affected by the declining economy. The numbers bear this out: An article in The New York Times stated that men account for 82 percent of job losses since the recession began. This workplace trend can be expected to continue as many high-paying jobs in engineering and information technology traditionally held by men are outsourced to countries such as India, China and Vietnam.

As the disproportionate job losses pile up, women will increasingly become responsible for their family's income. And when that happens, it stands to reason that they'll have a greater say on where it's spent. Financial Advisor recently reported that 88 percent of affluent women are moderately or highly involved in oversight of their wealth or assets. More and more women are discovering what these successful female professionals have known for years: When you're bringing home the bacon, you have a say in how it's cooked!

Don't be surprised if this shift in responsibility brings about a corresponding change in personal investment strategies. While the old stereotype of women being too risk-averse to succeed in the business world has begun to fade, the fact is that female investors do take a more conservative approach to their investments. A study cited by The Wall Street Journal last month found that women tend to hold less volatile portfolios and trade less frequently than men. Perhaps most important, the study observed that women expect lower returns and are therefore less aggressive--and yes, less risky--than male investors. Another survey cited in the same article cuts to the heart of the matter: Women were more concerned with avoiding losses than achieving big gains.

My own anecdotal experience--both in a professional capacity in investor relations and in a personal capacity as the manager of my family's portfolio--confirms that women take a more conservative approach to asset allocation. When it came to investments, I was always focused on retaining what we had to maintain our educational, travel and philanthropic goals. Accordingly, we invested a high percentage of our portfolio in bonds rather than in stocks. At the time, I had to be firm with my husband and broker, both of whom felt that I was "missing out" by being so conservative. But as the stock market fell last year, I was glad I stood my ground and let my money work for me. In the wake of the market crash, expect newly empowered women to insist on similarly conservative approaches.

As you assume more responsibility for your family's financial situation, here are a few pointers for taking control of your financial destiny and preserving your assets:

1. Educate yourself. It's a vicious cycle: Women who haven't been involved in their family's finances aren't well-versed in the concepts and terminology of financial planning, and therefore don't feel comfortable asking to become part of the planning process. Fortunately, educational opportunities abound, whether it's books about finance, media sources such CNBC and The Wall Street Journal, or just asking family and friends to explain select concepts. Knowledge is power, and becoming fluent in the language of finance will give you the confidence to become part of the conversation.
    
2. Have a serious discussion with your partner about your risk tolerance. As you prepare to allocate your assets, you have two very important questions to ask yourself: How much do you need, and how much can you afford to lose? Gone are the days when savings get dumped unilaterally into high-risk stocks and mutual funds. The level of risk you're willing to accept for your portfolio must be a consensus decision between you and your spouse.
    
3. Consult a professional financial advisor. Think of a financial advisor as a marriage counselor for your money. If there are points of disagreement between you and your spouse on the optimal investment strategy, a financial advisor will help you sort out your expected income needs and the rate of return necessary to meet them. By bringing in an expert who can break down your specific needs, you can turn a philosophical disagreement into an academic one.
    
4. Plan for life after work. It seems like a no-brainer--most financial planning is carried out with retirement in mind, after all. But a 2007 Oppenheimer Funds survey found that half of all women do not participate in a retirement plan, with many citing the burden of daily expenses and mounting debt. If your company offers a 401(k) plan, there's no excuse--start socking away money!
    
5. Plan for life after marriage. It's not something anyone likes to think about. But divorce is a real possibility, and you're not truly financially independent unless you have a retirement account and a credit rating of your own. Likewise, it's never too early to think about life insurance and other estate-planning concerns. While every financial decision should be made in concert with your spouse, the possibility of a sudden change in circumstances should always be in the back of your mind.

While a shift toward female decision-making is inevitable, it won't happen overnight. Old habits die hard, and decades of being shut out of the decision-making process have soured many women on family financial planning. In fact, a 2009 survey by State Farm Insurance found that even as an increasing number of women take a role in their family's finances, 39 percent of them would still rather go to the dentist than talk to their husbands about their family's financial situation. Perhaps knowing that their voices will be heard will prompt more of these women to embrace financial decision-making in the years to come.

Betty-Ann Heggie is a speaker, blogger, and expert on personal transformation and the role of women in the corporate world. Her first book, The Fat Chick Wore Stillettos: Six Steps for Personal Transformation, is due out in late 2009.