The Overlooked Female Market

Women may earn less than men, but they wield greater power as the family’s key financial decision maker.

The topic of working women has been in the media lately, thanks in part to Sheryl Sandberg’s book Lean In: Women, Work, and the Will to Lead, which advises women to whole-heartedly embrace their career ambitions. Although Sandberg urgeswomen to lean in, credit unions also can help empower women by targeting them with specialized products and financial literacy programs.

Annamaria Lusardi, a professor at George Washington University’s School of Business who has studied financial literacy across dozens of countries, found that, There is a substantial gender difference between women and men when it comes tofinancial literacy: Women know much less about economics and finance than men. This is true not only among older cohorts but also among younger generations. Lusardi points out that financial literacy is even more crucial for woman as divorcerates rise, single motherhood becomes more common, and their lifespan continues to outpace men’s.

Yet, financial institutions often ignore women as a market demographic even though they account for more than half of college graduates and have special financial needs. Women typically earn less money, interrupt their careers more often, and retire earlierthan men. According to the Bureau of Labor Statistics, the median female wage is 81% of men’s.

At the same time, women wield enormous power as household managers and financial decision makers. They are responsible for nearly three-quarters of all household spending, according to a study by the Boston Consulting Group. 59% are in charge of householdfinances, while 30 percent collaborate with a partner on managing. Not only that, but they hold great sway over how and where their children bank.

Consequently, credit unions that earn the loyalty of female members aren’t only tapping into their earning power but also their roles as household CFOs, who directly affect the next generation’s banking decisions.

The New Female Market

Although women generally earn less than men, their earning potential has shown signs of outpacing that of their male counterparts. Between 1970 and 2007, women’s earnings increased 44%, compared with a 6% increase for men, according to the Pew ResearchCenter.

Earnings for female college graduates increased an inflation-adjusted 30.8% since 1979, compared with a 16.3% increase for male college graduates. Not surprisingly, the number of college-educated women also increased drastically. From 1970 to 2010, thepercentage of bachelor’s degrees awarded to women rose from 43.1% to 57.2%.

Based on US Census Bureau data, women working full time in 2010 earned a median annual income of $36,931, while male workers earned $47,715. As this earnings gap closes, credit unions are finding ways to bring women up to speed in personal wealth management.

Great Lakes Credit Union ($523M, North Chicago, IL), for example, recently presented an educational event on a topic many female consumers aren’t always savvy about:auto loans.Called Chicks, Cars, and Cupcakes, the event in Gurnee, IL, included a panel of auto experts, financial advisors, and credit union reps, who educated their female listeners about car buying. The event garnered about 30 attendees. Becausethe event was sponsored, the credit union hosted the panel at no cost.

Statistics indicate that women purchase 65% of all new cars, 53% of all used cars and influence 95% of auto purchases, says Susan Malo, AVP of business development at Great Lakes. Giving women tools to navigate the less-than-transparentautomotive market was the intent of the event, hopefully garnering a few female loan prospects along the way. At a minimum, Malo adds, we hoped to create goodwill among attendees and convey the message that the credit union is female friendly.

Malo and her team at Great Lakes have copyrighted the event’s logo and name, and are now planning a second annual Chicks, Cars, and Cupcakes event. The credit union hopes to make the next event even more high profile.

Mom’s Special Role: Household CFO

Marriage and motherhood also affects a woman’s earnings. According to the Pew Research Center, more Americans are deciding to marry later in life, cohabit, divorce, or stay single. In fact, in 2007, only 60% of 30-to-44-year-olds were married. In1970, 84% of individuals in that age group were married.

In general, married women earn more than single women. According to the Bureau of Labor Statistics, in 2011, married women who worked full time earned a median weekly income of $741, compared with $595 for never-married women or $662 for those who weredivorced, separated, or widowed.

Because women are more likely to take a hiatus from their careers to care for family members, they tend to work fewer years and are more likely to hold part-time jobs. Even with reduced earnings, however, mothers wield a lot of power because they serveas the family’s financial decision maker.

Mothers control 83% of all household spending, says Sheri Storm, chief marketing officer of Verity Credit Union ($397M, Seattle, WA). Ironically, they have largelybeen overlooked in the financial industry.

Besides making financial household decisions, mothers are often the key to attracting younger members. According to the Boston Consulting Group, 94% of mothers believe in educating their children about financial management, including bargain shopping,investing, and budgeting.

To start a dialogue with mothers, Verity began its Verity Mom program in 2009. The cooperative enlisted a Verity Mom as a blogger and social media spokesperson who wrote about making financial decisions for her family. The program helpsSeattle-area moms learn about Verity’s services and products from a local mom just like them.

Storm says, Verity Mom has not only helped our service-per-member ratio, but it has helped lower the average age of our new member. One thing that we’ve learned is that young adults are most influenced by where their parents do their banking.We’ve found that, by focusing on parents, and moms in particular, we are opening accounts for the whole family.

To start a dialogue with mothers, Verity began its Verity Mom program in 2009. The cooperative enlisted a Verity Mom as a blogger and social media spokesperson who wrote about making financial decisions for her family. The program helpsSeattle-area moms learn about Verity’s services and products from a local mom just like them.

Overcoming Obstacles In Retirement Savings

Because they serve as the family’s primary caregiver, women often interrupt their careers or hold part-time jobs that don’t offer retirement plans. Consequently, women lag behind men in retirement savings even though they are more likely toneed more money. A woman’s average life expectancy is 81 years, roughly five years longer than men’s.

According to the U.S. Department of Labor, of the 62 million working women between the ages of 21 and 64, only 45% participate in a retirement plan. In addition, when women do participate in a retirement plan, they tend to invest more conservatively,making it even more difficult for them to make up for lost time.

The Transamerica Center for Retirement Studies found that half of women lack confidence in their ability to retire comfortably. Only 8% of women believe they will reach their retirement goals successfully.

All of these factors mean that come retirement age, women are more likely to be in a precarious position financially. The best way to prevent outliving retirement funds is, of course, to start saving early.

Credit unions can do more to help women meet their retirement savings goals with financial literacy classes that cater to women’s special needs. The classes could be held for members of the community or for a select employee group.

Oregon Community Credit Union ($1.1 B, Springfield, OR), for example, offers complimentary retirement seminars specifically geared towards women. In the seminar, held twice peryear, the credit union’s in-house advisors help women identify traditional and non-traditional sources of retirement income, and discusses income-generating strategies thatwill pay off in the future. The event draws 75 to 90 attendees.

We saw a need in our own membership to address this topic, says Cathy Stoppel, senior financial consultant at Oregon Community. Afterward the seminars, we do follow-up visits with some of the women who come to the seminars. They havea chance to talk about their specific circumstances. The attendees are very appreciative because our focus is on educating them.

May 28, 2015

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