When planning for retirement, women are more affected by emotions and less involved in decision-making, compared to their male counterparts, according to a study by Lincoln Financial Group.
While hope and fear affect both genders when it comes to retirement saving and investing, women are more vulnerable to such emotional influencers.
Seventy-three percent of the women polled by Lincoln said they are affected by fear, compared with 59% of male respondents. Hope plays a role for 91% of women and 85% of men.
When it comes to intellectual influencers, the situation is reversed. The report reveals that 82% of women are influenced by hard facts, compared with 90% of men. Previous experience is a factor for 72% of women and 78% of men.
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The report also shows that while most respondents avoid taking charge of their retirement plans, this trend is more prevalent for women (39%) than it is for men (32%).
This affects women’s investment style. Fifty-six percent of women are likely to invest in stocks or mutual funds compared to 73% of men. And women (48%) are more likely to invest in money market funds than men (43%).
In polling participants, Lincoln also found that women are less engaged in the management of their plans. Only 27% of female respondents said they’re engaged, compared with 37% of men.
That lower engagement level could be the result of relying on a partner. Among those who are married or living with partners, 35% of women are the primary decision-maker when it comes to saving, compared with 53% of their male counterparts.
But the study cautions that these numbers may not show the real picture because “some women think they’re sharing the decision-making, but their partners claim to be in charge.”
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So what should plan sponsors do to eliminate all of these barriers for women? Lincoln recommends that because emotion affects the female investment approach more strongly, sponsors should be “empathetic to investment-related fears and concerns, while helping turn hopes into specific investment goals.”
The report also advises plan providers to introduce high-quality, one-on-one personal communication with female plan members since interpersonal connections play a key role in women’s lives.
“Women may want to feel they have a personal relationship with their retirement plan, their employer and their provider,” the survey recommends, adding that if sponsors and advisors cannot provide face-to-face interaction, they can connect with women on social media.
Avoiding a large number of technical details during communication and providing straightforward choices is another recommendation based on the fact that most plan members—both men and women—do not have the financial literacy of a portfolio manager.
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