Why Women Need Financial Education

December 1, 1997
Earlier this year, Kathleen Brown, an executive vice president at San Francisco-based Bank of America (BOA), spoke before 500 women at a seminar entitled "Women, Money and Power." BOA organized the free public seminar as part of its Women's Financial Initiative—an effort launched in April to demystify financial planning and money management for women. The goal is important because women tend to outlive men by seven years. Women on average also earn lower salaries and accumulate fewer pension benefits because they leave the job market more often. In fact, women account for only 22 percent of those over 65 who are receiving pensions at all, according to the U.S. Bureau of Census in 1991.

Such pitiful statistics may change as the next century approaches, however. Employers increasingly are seeking ways to retain valuable employees. As women learn more about financial and retirement planning, they're more likely to maintain control over their lives and remain in the workforce. Employers, therefore, won't have to face the imminent attrition of retiring boomers with panic. HR can fill the staffing gaps—including managerial positions—with high-potential female candidates. But the incentive for women to stay and move up begins with HR providing financial education. "Employees are more productive when they feel their employer cares about them," says Bill Chapman, president of Chicago-based Kemper Retirement Plans.

Provide legislative updates.
Key to encouraging proactive retirement planning is keeping employees abreast of legislation that affects retirement-savings plans. One of the recent bills being considered by Congress is the Women's Investment and Saving Equity Act. It would allow women to make catch-up contributions to a 401(k) plan that would cover the time spent at home on maternity or paternity leave. Women who left the workforce to care for a child could also use this catch-up provision to cover the years, up to a maximum of 18, when no contribution was made.

Sounds good on the surface. But Chapman cautions the bill could introduce a new set of retirement-related problems for women. "The bill's spousal consent provision relies on the outdated notion that men work and women don't," he says. If spousal consent is required for 401(k) distributions, he adds, a working woman abandoned by her husband couldn't receive her retirement benefits until her husband had first given his permission.

Clearly, HR should provide their employees with legislative updates on such bills. These updates can be posted, circulated, or read on the Internet or a corporate intranet. Also, human resources managers can keep up-to-date on the bills because they may change the way HR manages benefits in the future. For example, employers may have to do more record keeping and matching contributions, but such requirements are well worth the effort to retain good employees, says Chapman. "As long as pension programs are structured reasonably, employers won't have a problem. Meeting the needs of female employees makes good business sense." (To view a "Pension Checklist for Women," visit American Savings Education Council in Washington, D.C. web site.)

Promote attendance at local investment conferences.
Since the 1980s, the number of woman-headed households has risen approximately 240 percent. It's estimated that 90 percent of all women will have sole control of their finances at some point in their lives. With that responsibility comes the need to chart an investment course—rather than just to rely on Social Security. Mary Jayne Fabian Barnett, vice president of Fabian Financial Services in Huntington Beach, California, speaks from experience. "Ten years ago, I decided to teach myself to be an investment counselor," says Barnett, who spoke at InterShow's The Money Show—a conference for investors held annually in several U.S. cities.

Thousands of women are increasing the attendance at such events, according to Charles Githler, chairman and founder of Sarasota, Florida-based InterShow—an investor convention and cruise producer. They're also demanding that seminars be tailored to their specific needs.

The most important thing to remember is that female baby boomers are more sophisticated and proactive than their older counterparts. Provide financial information in a variety of ways—and watch them stay.

Workforce, December 1997, Vol. 76, No. 12, p. 51.