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The financial challenge facing women

by Don Kuehn

At some time in their lives, 80 to 90 percent of all women will be solely responsible for their finances. Blame the high divorce rate or the higher mortality rate among men, but bottom line, handling finances will become a major concern for women who are their household's chief financial officer.

Surveys show that women as a group lack the confidence needed to tackle the challenge of financial planning. Chauvinistic? A gross generalization? Maybe, but it is backed up by studies, like the ones by Hearts and Wallets (2011 and 2012) and Prudential (2012), which show that women are consistently less confident than men in their understanding of financial products, their ability to make financial decisions and their perceptions of their current economic standing.

Hearts and Wallets found that 49 percent of women say they are "very inexperienced" with investing. Their financial responsibilities are growing faster than their knowledge. Too many women are uncertain, frustrated, even convinced that they can't learn the basics necessary to handle savings, investments and retirement planning.

Given the increasing role women play in society, as professionals, as the primary breadwinners in many households and as the dominant gender in old age, this situation has to change. The cost to society will be too great if it doesn't.

Who's at fault? Traditional gender roles, particularly among baby boomers, are a factor. But the financial services industry has only recently noticed that women seek and gather information differently than men do. Advisers need to drop the jargon, end the stereotypes, and junk the assumptions about women and finance. They need to devote the time and resources to make information relatable to women's lives and families.

That's not to paint women as victims of the mean old financial industry. The information is out there on the Internet, easily accessible to anyone who seeks it. It is incumbent on every wage earner (regardless of gender) to learn as much as possible about the "economic ecology"... how to make money, how to conserve it, how to grow it, and how and when to harvest it.

Okay, let's say I've gotten your attention. You want to learn more about your own economic ecology? Start at and type "investing basics" into the search bar. You should get to a page that has eight "chapters" dealing with the basics of fixed-rate finance. Granted, it's skewed toward products offered by banking institutions, but the information seems solid and you've got to start somewhere. Anyone who is, or ever has been, in a classroom can appreciate the format. You can dig as deep as you want and can digest the information at your own pace.

Ready to move on to mutual funds? Search for "mutual fund basics" and take a look around. As with all Internet searches, some sites will turn out to be better than others, but you can sift through the advertising and the blatantly commercial sites to find what you're seeking. Focus your searches on no-load, low- cost mutual funds.

You'll discover that fees are a major determinant of returns on your investments. Some funds charge high management or account fees; some assess what are known as 12b-1 fees; and there is a class of funds that peels off a commission right from your first purchase (called a "load" fund).

It doesn't matter whether your fund experiences an up year or a down year, the fees get paid. Think of them as the gift that keeps on giving (to the fund company). So the lower the fee structure of the fund (or family of funds) you invest in, the better for your returns.

Need help deciding on an overall plan for your future? You may be a candidate for help from a financial planner. This is an exploding market; there is no shortage of people who would like to "help" you manage your money—for a fee, of course.

Financial planners make their money in one of three ways: They charge an annual fee based on the size of your portfolio; they earn commissions from the sale of the securities or products they encourage you to buy; or they charge an hourly fee for their services, which is known as "fee-only." I would limit my search to "fee only" certified financial planners (CFPs).

The designation CFP after a person's name indicates that the planner has at least three years of work experience in the field, has completed a course of study covering 106 planning-related topics and has passed a 10-hour exam. The certification license must be renewed every two years, contingent on continuing education requirements as well as adherence to a code of professional conduct and ethics. You can go to to find a list of CFPs near you.

If you decide to go this route, interview several candidates and find someone with whom you are comfortable. You're not looking for a new best friend; you want someone who asks questions about your net worth, budget, employment benefits, insurance coverage, future earnings or inheritance prospects, and your "risk tolerance." The people you interview should inquire about your plans and dreams for retirement, your desire to leave an estate to your kids, or ideas for relocating after your work years are behind you.

Peg Downey, a certified financial planner was quoted in a recent article in USA Today, saying,"There is a big general problem about women feeling insecure about their finances, not knowing where to get help, being too conservative and then facing retirement alone and underfunded."

Male or female, young or old, if people don't learn about the economic ecology—that is, how to invest and plan for retirement—our society will not be able to absorb the impact. We can't have a majority of our citizens impoverished in old age just because their anxiety, lack of confidence or frustration have blocked them from becoming financially literate. Each of us has the responsibility to provide the gold for our "golden years."

However you decide to go forward—get going. It's your money, and the sooner you take control of it, the better.

Don Kuehn is a retired AFT senior national representative. For specific advice relative to your personal situation, consult competent legal, tax or financial counsel. Comments and questions can be sent to