PLANADVISER - November/December 2017 - 18

trendspotting
Advising
Women
To Take
More Risk
Female clients may
need to change their
investments
THE reason why many women are
more risk averse than men when
it comes to investing is, primarily,
income uncertainty, says Rui Yao,
associate professor at the University
of Missouri in Columbia, Missouri.
And women have different reasons to
be uncertain than men, she says.
" Women are more likely to be caregivers
to their parents, or to raise children, "
Yao says. " Men are more likely to
choose occupations with income uncertainty
built in, such as becoming a car
salesman. We found that income uncertainty
reduced women's willingness to
take on risk-but that it increases men's
willingness to increase risk. "
More conservative portfolios can
result in women being inadequately
TALKING POINTS
DC Plan Fees Remain Low
The median defined contribution (DC) plan
fee-combining recordkeeping, trust and
custody fees-this year is $59, just a slight
increase from $57 in 2016, according to
the 2017 NEPC Defined Contribution Plan
and Fee Survey. Over the previous seven
years, fees had declined.
18 | planadviser.com november-december 2017 Art by Virginia Zamora
prepared for retirement, Yao says. This
is particularly true for single women,
who are less risk tolerant than single
men or married couples, she says.
Thus, Yao suggests that advisers ask
their female clients if they expect to
leave the work force to look after their
parents or raise a family. If that is the
case, then, perhaps, a more conservative
portfolio makes sense, she says.
Otherwise, she says, " advisers
should say that the latest research
shows that men and women don't
really differ in their need to take
investment risk. Further, they should
point out that women live longer and
really need to take on a riskier portfolio
allocation, including equities, to
compensate for their longer life. "
According to 2015 data from the U.S.
Census Bureau, the average life expectancy
for women is 82, compared with
only 78 for men, notes Robert Massa,
director of retirement at Ascende in
Houston. He also cites 2015 data from
the Bureau of Labor Statistics, which
says, on average, women earn 79%
of what men earn. " So, if women are
going to make up for this disadvantage,
a sound, customized investment
strategy will be needed, " he says.
Massa recommends mapping out,
or plotting on a graph, the effects
of saving more, combined with the
higher investment returns that could
be generated by increasing equities
in a portfolio, then showing this
to women clients. When they can
compare the potential outcomes, they
will often be much more receptive to
an equity-based investment strategy,
Massa says. -Lee Barney

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PLANADVISER - November/December 2017

Table of Contents for the Digital Edition of PLANADVISER - November/December 2017

The Next Step
2017 PLANADVISER National Conference
2017 Practice Benchmarking Survey
Aggressive Plan Design
Professional Groups
The Value of Fixed Income
PLANADVISER - November/December 2017 - C1
PLANADVISER - November/December 2017 - FC1
PLANADVISER - November/December 2017 - FC2
PLANADVISER - November/December 2017 - C2
PLANADVISER - November/December 2017 - 1
PLANADVISER - November/December 2017 - 2
PLANADVISER - November/December 2017 - 3
PLANADVISER - November/December 2017 - 4
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PLANADVISER - November/December 2017 - 27
PLANADVISER - November/December 2017 - 28
PLANADVISER - November/December 2017 - 29
PLANADVISER - November/December 2017 - The Next Step
PLANADVISER - November/December 2017 - 31
PLANADVISER - November/December 2017 - 32
PLANADVISER - November/December 2017 - 33
PLANADVISER - November/December 2017 - 2017 PLANADVISER National Conference
PLANADVISER - November/December 2017 - 35
PLANADVISER - November/December 2017 - 36
PLANADVISER - November/December 2017 - 37
PLANADVISER - November/December 2017 - 38
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PLANADVISER - November/December 2017 - 42
PLANADVISER - November/December 2017 - 43
PLANADVISER - November/December 2017 - 44
PLANADVISER - November/December 2017 - 45
PLANADVISER - November/December 2017 - 2017 Practice Benchmarking Survey
PLANADVISER - November/December 2017 - 47
PLANADVISER - November/December 2017 - 48
PLANADVISER - November/December 2017 - 49
PLANADVISER - November/December 2017 - 50
PLANADVISER - November/December 2017 - 51
PLANADVISER - November/December 2017 - 52
PLANADVISER - November/December 2017 - 53
PLANADVISER - November/December 2017 - Aggressive Plan Design
PLANADVISER - November/December 2017 - 55
PLANADVISER - November/December 2017 - 56
PLANADVISER - November/December 2017 - Professional Groups
PLANADVISER - November/December 2017 - 58
PLANADVISER - November/December 2017 - 59
PLANADVISER - November/December 2017 - The Value of Fixed Income
PLANADVISER - November/December 2017 - 61
PLANADVISER - November/December 2017 - 62
PLANADVISER - November/December 2017 - 63
PLANADVISER - November/December 2017 - 64
PLANADVISER - November/December 2017 - C3
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