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FINANCIAL PLANNING

Taking charge of their finances

Women need to play a greater role in determining their long-term financial futures

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"I urge all women to play a greater role in their long-term financial future, especially as they tend to live longer than men." - Tracey Woon

WHETHER it's breaking glass ceilings or fighting for gender equality, more women have been stepping up to take charge of their own lives at home and in the workplace. This trend has also extended to planning for their financial futures. A global survey of nearly 3,700 females conducted by UBS found that women who participate in long-term financial decisions feel more confident about their future.

The majority of respondents also believe that their long-term financial needs are a key priority for them. In Singapore, 65 per cent of the women surveyed say that retirement planning is a top concern, while over 60 per cent think that long-term care and insurance planning are important as well. Almost eight in 10 women here also take the lead, or share responsibility equally with spouses when it comes to managing day-to-day expenses. These are all encouraging findings.

Unfortunately, it's a different story when it comes to long-term financial decisions. Our study found that the majority of women surveyed defer to their spouses in this key area, even as they strive for equality in other aspects of their lives. Specifically, some 72 per cent of women in Singapore let their spouses decide on long-term money issues. This was similar to the situation in Hong Kong (71 per cent), but higher than the global figure (58 per cent).

When the majority of women globally, including millennials, defer to men on important financial decisions, there is a need to find out why. This unhealthy trend could continue indefinitely unless both men and women make a commitment to engage in financial decisions together.

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We found that there are two major reasons for this dynamic occurring. Firstly, more than eight in 10 women globally, and nine in 10 in Singapore, think that their spouses know more about long-term finances. This has resulted in many women leaving such duties to their spouses while they focus on other responsibilities.

Different needs

I urge all women to play a greater role in their long-term financial future, especially as they tend to live longer than men. Indeed, more than 70 per cent of Hong Kong women believe they will outlive their spouse. We should acknowledge this challenge and turn longevity into an opportunity.

Another reason why women need to actively manage their long-term finances is that their needs tend to differ from those of their spouses. This is something we hear often from our female clients. Therefore, we actively engage them on interests that are close to the heart, whether it's their family's succession planning, philanthropic causes, or sustainable investments.

Interestingly, millennial women are more likely than older generations to defer to their spouses when it comes to financial decision-making. Globally, almost six in 10 women between the ages of 20 and 34 let their spouse take the lead, compared to just over half for women aged over 50. Singapore has the highest proportion of millennials who defer to spouses, with almost three in four doing so.

On the flipside, females with more investible assets are more likely to take charge of their finances. In Singapore, one in five women with US$1-2 million of investible assets take the lead in making financial decisions. This number rises to over one in three for women with more invested assets (US$5 million and above).

Working together

We feel that the solution to this challenge involves women working together with their partners in managing their finances. Women who share equal responsibility for long-term investing with their spouse said there were clear benefits.

Of those females who make joint decisions, over 90 per cent in Singapore and globally feel more confident about their financial future. Some 99 per cent of women here also mentioned that if something were to happen to their spouses, they would be familiar with their financial situation; thus increasing their chances of achieving financial security. Thankfully, there are also many tools available to help women navigate the critical financial stages in their lives - from marriage and parenthood to retirement. Ultimately, these aim to help them to achieve financial freedom.

There are many downsides for women who do not get involved in charting their financial future, especially following the death of a spouse or in the case of divorce. Our study found that three-quarters of widows and divorcees wish they had been more involved in long-term financial decisions while they were married, rather than trying to navigate them while coping with such significant life changes. Higher levels of engagement may also protect women from unpleasant discoveries later in life after a divorce or death of their spouse.

We hope that our findings will shine a spotlight on the challenges and opportunities facing women when it comes to their financial lives, and lead them to question long-held assumptions, as well as examine in greater depth their long-term wealth planning needs. W

The writer is vice-chairman APAC, UBS Global Wealth Management