Financial Planning Has No Gender

Posted on September 14, 2015

0



It’s basic math, and the most important lesson is: start as young as possible.

Lila’s credit union has just considerately sent her an invitation to a financial seminar for women.

“Join [a lawyer, a Chartered Retirement Planning Counselor, and Financial Advisor] for this complimentary, no-obligation educational seminar, tailored to women ages 35-60. We’ll discuss the unique financial challenges and opportunities women face, share financial stories and provide strategies to help you plan for the future and stay on track… By attending this seminar you will be able to prepare for life’s unknowns, set realistic expectations for your investments and work toward achieving lifetime financial security. “

They even buy you dinner.

Oh, YAY! Thanks for this patronizing offer, but I disagree that women face ANY kind of “unique” financial challenges that men do not also face, and that men do not also routinely screw up just as badly as women might. I have witnessed many young men starting out in the military, who know little to nothing about even the most basic banking and budgeting. They soon find themselves in over their heads, sometimes with a young family depending on them as well.  As for the specter of single parenthood, women do not have a monopoly on that, either, as my widowed father’s experience shows. Nope. There is nothing gender-specific about financial planning.

So I showed the invitation to Hubby, chortling over it. Hubby’s response: financial planning is not gender-specific, but – just as in school classrooms – women may be too insecure or embarrassed to raise their hands in a coed seminar and admit that they don’t understand something. Nobody likes the macho swaggering that such admissions can prompt from male peers. And, sadly, there are still those who leave all of the finances up to their husbands. If the husband were to bite the dust unexpectedly – God forbid, but it happens every day – the wife would be left in complete ignorance of the family’s financial situation or plan (Lila must admit, one of her old friends is very much this way).

Hmmm, Hubby may be on to something. Women as a category have come a long way, but not all women as individuals have, nor want to. And with that in mind, Lila noted that the invitation has some fine print at the bottom (it is very fine print):

“Securities offered through [financial company]. Insurance products offered through [affiliates of the same company]. Investment advice offered through [credit union], a registered investment advisor and separate entity from [the financial company]. [Credit union] is not affiliated with [the financial company].”

NOT NCUA INSURED / NOT CREDIT UNION GUARANTEED / MAY LOSE VALUE

 

Call me a cynic, and you would be right. This helpful seminar is really little more than a clever marketing technique. It targets those who are insecure or ignorant about financial planning, but want to do the right thing for their future security. The class will be very basic, because you are dealing with a group of people who felt that they needed a class. And then comes the kicker: you have no obligation, of course, but right here, right now, while you are thinking of it and wanting to get started, we have just the sorts of instruments and securities that we were discussing in the class! Not only that, but our company will provide the sort of hand-holding and management that you need to feel good about your finances! It’s fire-and-forget investing, just hand your money to the professionals and let us worry about the rest.

Do some folks benefit from this? Sure! If you are the sort who seems to blow your entire paycheck every month and doesn’t even know where it went; if you have too many distractions in your life and can’t pay attention even to an occasional monthly or quarterly money-management task; or if it’s just too friggin’ hard for whatever reason, an arrangement with a financial manager can be a Godsend. This is exactly how Hubby got started when he first joined the Army; he made out a monthly allotment to a financial company and let them handle the rest. And it worked – he did amass some savings he never would have otherwise – but be warned, letting others manage your money can be expensive. You will save, but not as much as if you do the work yourself.

Then again, if the money is put into non-guaranteed securities that may lose value, you may not save at all. Wait, what? Why would they do that?  Ha, I may have failed to mention that the company’s main interest is its own profits, not your financial independence.  They are there to sell you a product.  If it works for you, great.  And high-risk securities do have the advantage of a higher return, when they work out.

One must consider one’s age when determining a good financial plan. If you have lots of time… if you are, say, 25 and have another 40-plus years to retirement… you can afford to invest in very safe, very secure, guaranteed, insured instruments like IRAs, Certificates of Deposit, Treasuries, and top-rated bonds.   You can also invest part of your money in higher-risk, higher-yield instruments like stocks, knowing that if they tank, you have time to make up the loss before retirement, and you have your guaranteed savings to fall back on.

But say you are 35-60, like the targets of this seminar. To achieve a lofty goal, you will have to aim for the higher yield, and that means higher risk… risk which is not insured or guaranteed against. So you are paying extra for someone to manage your planning, and you are taking a higher risk that your plan won’t work out as well as you might like (Have you noticed that every time the stock market tanks, so do people’s 401(k) retirement plans? Don’t even get me started on that…).

But it’s never too late to start saving, even with secure, insured instruments; it’s just that with less time ahead until you need to draw on those savings, the accounts will be more modest. Modest is better than nothing, though, right?

So here’s the real lesson of this seminar, although you won’t hear them say it:  There are no free rides. Start saving young, and hammer this lesson into your kids and grandkids.

Advertisements