A commonly accepted statistic of modern life is the probability of a marriage ending in divorce 40 to 50 percent of the time. In general, both men and women often are not prepared for how a divorce will impact their finances, but women in particular can struggle due to a lack of initial involvement in financial planning and investing.
In a new report, UBS found that 56 percent of married women leave investment and financial decisions to their husbands, with 85 percent of them believing that their husbands know more about financial matters and investment topics.
When an unexpected event such as divorce, death or inheritance occurs, not being actively involved in finances can make this time even more challenging.
A husband and wife may have different priorities when it comes to saving and how to spend money. For example, one may strongly value saving for a vacation home, while the other is more focused on putting money into a college savings fund for their children. If a woman isn’t involved in early financial planning discussions, her values may not be reflected in the plan that has been in place for years.
It’s never too late for a woman to be better protected in the case of an unforeseen event by taking control of her finances early and often. Although women are making great strides when it comes to equality in the workplace and beyond, the same UBS research found that younger generations aren’t continuing this trend in their personal finances. In fact, millennial women are more likely to leave major financial decisions to their spouse than any other generation (61 percent).
That said, there are important steps women can take to improve their financial lives:
• Get involved as soon as possible. Set up a meeting with your financial adviser, whether you have been previously involved or not. Ask as many questions as possible, make sure you understand the basics of your portfolio and ensure that it reflects your financial goals. Take as long as necessary to become familiar with your wealth plan — but be sure and do it!
•Establish a written financial plan (if you don’t already have one). An old saying goes something like this: “It is better to have a written plan that you never look at, than no plan at all.” It is very difficult to know how much to save or how much risk to take if you do not have a well thought-out financial plan done by a financial professional.
• Invest strategically to take calculated and well-managed risks. At any point in time, situations such as divorce or a death in the family could leave you suddenly responsible for managing your assets. Make sure you have an investment plan that satisfies basic future goals. If a plan has already been created by your spouse, start joining meetings with your financial advisor to become better informed.
• Receive sound investment advice relevant to personal circumstances. Financial advisers are there to educate clients and help them make intelligent decisions. Be sure to express your desires in as much detail as possible, so professionals can fashion a plan uniquely tailored to your needs.
• Generational effect. According to UBS research, women are repeating the gender roles they saw growing up. What better way to change generational assumptions than by being a role model to your children and loved ones by taking demonstrative control of your financial life. As you become more involved, you will set an important example for the younger generation.
Women are a force for economic change. Seven in 10 women overestimate what it takes to be financially savvy, so the sooner one starts the better. By taking personal control of their finances and understanding how to protect wealth, women can better shape their legacy while avoiding surprises later.
Vincent J. Fiorentino is a senior vice president of wealth management and financial adviser at UBS/The Fiorentino Group, based in Stamford. Fiorentino has 31 years of experience overseeing portfolio management, asset allocation, risk control and strategy to help families achieve their most important life goals. He can be reached at firstname.lastname@example.org or 203-602-6953.