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Monthly Investment Outlook

Wells Fargo Investment Institute - March 2022

Presenter: Tracie McMillion, CFA, Head of Global Asset Allocation, Wells Fargo Investment Institute


Transcript:

Women are taking on more prominent financial roles by contributing to family income, initiating their own investment accounts, and taking a growing decision-making role managing their families’ investment accounts. Nearly nine out of ten women say they are taking the initiative to teach their children about finances — a leg up for the next generation that they may not have had when they were younger.

In a 2021 survey, we found that women increasingly are becoming as optimistic as men about the performance of the stock market; however, across all age groups, they remain less inclined to take on a high level of risk.

In that same survey, women indicated that they are less confident in fully funding their retirement, and that worry is well-founded. A slightly higher annual growth rate and a higher starting salary mean that men, on average, accumulate more retirement assets than women.

The pay gap — women earn 84 cents for every dollar men earn — and the increased likelihood that women may take a career break contribute to this differential. Women who take just a two-year break from a 30-year career may accumulate significantly fewer retirement assets compared to those without a career gap.

We found that women are doing a lot of things right when it comes to investing. A recent study of Wells Fargo Advisors clients conducted in July 2021 showed that female-led investment accounts earned 96% of the returns with just 82% of the risk when compared with male-led investment accounts in the five years between 2016 and 2020. Women’s greater willingness to develop a financial plan, adhere to that plan, and work with an advisor are among the factors we believe led to these attractive investment results for women.

To build on that success, we suggest that all investors: 1) set tangible investment goals and match their asset allocation to their goals, 2) plan for retirement by identifying sources of retirement income and determining expected expenses, and 3) if not already, become educated about investing basics.

For more information, please see our special report: Women and investing — The strengths of women investors.