As long been documented, there’s a persistent pay gap between men and women – one favoring the former while disadvantaging the latter. While there is some evidence suggesting the gap is narrowing, it persists and it’s still wide enough to indicate women are in need of and receptive to professional financial advice.
Savvy advisors know that male and female clients have different needs and objectives and that's true even when dealing with a couple. I'll leave to advisors to decide, but a case can be made that working with female clients is perhaps more rewarding.
First, it's vital to understand the reasons why women are more apt to be risk-averse than men. An obvious is that there's still a significant gender pay gap in this country, meaning some women may be letting their compensation dictate investment decisions. Second, many women have gaps in their working lives to raise children or for other reasons.
To be sure, those are important factor. Equally as vital is the point that a strong argument can be that with a still noticeable male/female wage gap, women need advisors more than ever and advisors should be seeking out these relationships.
Wage Gap Woes
Using recent data from the U.S. Census Bureau, the National Partnership for Women and Families observes that in 2022, for every $1 a man made, a women made 78 cents. Translation: A women made $78,000 likely for the same job in which a man was paid $100,000.
Extrapolate that over the entire U.S. workforce and that’s a $1.6 trillion wage gap, notes the National Partnership for Women and Families. Putting $1.6 trillion into context, that’s the GDP of small countries and a number that’s slightly above the market capitalization of Amazon (NASDAQ: AMZN).
“Women are the backbones of their families and our economy, yet the persistent gender-based wage gap makes it significantly harder for them to keep their households afloat,” said Jocelyn Frye, president of the National Partnership for Women & Families. “Businesses, lawmakers and the Administration must do more to close the pay gap, especially the steepest gaps experienced by women of color due in part to a combination of race, ethnic, and gender bias. Achieving real equity for women workers requires critical investments in paid leave, child care, and other supports that improve the lives of working families.”
That stunning gap persists despite the fact that women are increasingly primary breadwinners/heads of households and consumer spending forces unto themselves.
Devil’s in Demographic Details
Advisors are increasingly aware of the importance of demographic data and that should be applied to working with women that may be encountering wage gap headwinds.
For example, Asian women, on average, make 89 cents for every $1 earned by white men. That number declines to 74 cents for white females, 66 cents for Black women and 52 for Latinas. Those are data points advisors cannot ignore. They should be points of emphasis in terms of better catering to female clients off all ethnicities.
“Gender and race discrimination directly and indirectly play a large role in the wage gap. Occupational segregation, including the overrepresentation of women in low wage work, and the lack of workplace policies to support workers’ family, caregiving needs and health needs are additional factors contributing to the country’s pay gap,” concludes the National Partnership for Women and Families. “When women are the leaders of their families and breadwinners for their households – as half of mothers in the U.S. are – families that depend on these paychecks struggle more to provide necessities and to save and invest over time.”