[Editor's Note: This guest post is contributed by a regular reader, not a physician, who wishes to remain anonymous (to you, not me) but describes herself at the beginning of the post. We have no financial relationship.]
This post is inspired by An Invitation to Contribute blog post from February, which, in summary, criticized WCI for not being very diverse or understanding of anyone who was different than his situation. I couldn’t disagree more: I’m not a white male ER doc living in Utah, yet his blog has inspired and encouraged me, as well as many others, to be much better owners of our financial present and future. What that book review, as well as Dr. Mom’s guest post, Not All Who Wander Are Lost, (part 2) illustrate is the fact that everyone will get what they need out of the blog and make it applicable to their specific situation. So, inspired by the constant readings of the WCI blog and the two guest posts above, I wanted to write a guest post related to becoming financially savvy and successful from a woman’s point of view (and not just physicians – but all along the STEM [Science, Technology, Engineering, Math] professions).
Although, I would like to remain anonymous, here are some general stats – I’m a woman, wife, mother, and a CPA (but not in financial planning or taxes – I work in audit). Also, this is not a post on feminism, gender pay inequality, or any other such politically charged topics. This is simply my thoughts on the facts that are our financial surroundings (or what I have observed specifically). I realize, everyone’s story is different, but hopefully this will resonate with a lot of successful women out there.
What Financial Advisors Think Of Women
As a CPA, I get a number of professional newsletters, one of which is specifically written by and for financial planners. In addition to ACA and tax extensions, one of the continuous themes I’m seeing is catering to female clients. The topics range from catering to widows and divorcees to women living longer. In November 2014, the newsletter linked me to the BMO Private Bank in Chicago national study based on 1,200 people, roughly half of which are women. Although the study did identify 85% of women manage or participate in family finances, it also found that 60-70% of women don’t have wills, living wills or powers of attorney. But the most alarming finding is 28% of women think they would be broke or homeless if they lost/divorced their husband. Sallie Krawcheck, Chairwoman of the Ellevate network for professional women, spoke at the Investment Managers Consultants Association in January 2015 about women representing an un-tapped gold mine for the financial advisors industry. Sallie based her talk on these stats:
“What if I told you there’s a potential client base that holds a majority of wealth in this country, represents 45% of U.S. millionaires, will inherit 70% of the $41 trillion that enters generational wealth transfer over the next 40 years? Ninety percent of them control their money on their own at some point in their lives; they represent today 60% of college students and a greater percent of graduate students and still growing. They start more businesses at twice the rate of the rest of the population. They’re first-time homebuyers at a greater rate than the rest of the population. They’re breadwinners or co-breadwinners in 60% of households, and they live longer than the rest of the population by 6 to 8 years and they’re healthier while doing so…”
So far, so good – I’m tracking and very proud of my gender. But then her message goes south, well, at least in my book. Her recommendation is for the financial advisors to attack this market of rich, successful women, but with a different approach. Krawcheck’s observations (or what I would call stereotypical observations) of women include women not understanding jargon terms like “Monte Carlo simulation”, not caring about differences in large cap vs. small cap, or what the market is doing. She summarizes that women look to advisors to provide a safe place. I think what bothers me the most is that fact that all this is coming from a woman that represents women – she is basically saying that women, unlike men, don’t understand or care about investing and the advisors need to talk to them without using actual terms and literally treat them like children (while enjoying commissions from their portfolio). I truly hope that I’m taking all this out of context and there is well-meaning behind her recommendations. But the fact is – fellow successful women – there is a push out there in the financial services industry to “service” us. And you know what that entails (read several WCI posts on financial advisors.)
I truly hope the gender stereotyping (of women not being as much into investing as men) is not true. But deep down, I can’t help but notice (disclaimer – these are non-statistical personal observations):
- Among my group of friends, the husbands take care of investing, the wives pay the bills.
- Of countless financial blogs out there, the majority authored by men deal with investing, while the majority of the ones authored by women deal with coupon clipping, fashion, shopping, child rearing, and organic living.
Gender Pay Gap
According to 2014 data issued by the Bureau of Labor Statistics, women earn 82.1% of what men earn with the gap widening as women enter later stages of their career (25 to 54 years). Fortune examined the gap by occupation and identified the top 20 occupations with the largest gaps, 10 of which ended up being white collar occupations. Here are a few highlights:
|Occupation||Pay Gap||Women’s median weekly earnings||Men’s median weekly earnings|
|Personal Financial Advisors||61.3%||$1,004||$1,637|
|Physicians and surgeons||62.2%||$1,246||$2,002|
|Securities, commodities, and financial service sales agents||65.1%||$883||$1,356|
|Sales and related workers||70%||$664||$949|
|Marketing and sales managers||70.8%||$1,150||$1,624|
|Human resource managers||71.2%||$1,300||$1,827|
The debate of “why” will rage on forever, with the most common explanation related to women making deliberate choices to enhance work-life-balance at the expense of higher compensation. [Although even when controlling for obvious variables like these, the pay gap, although a much smaller one, persists in many professions. Unfortunately, most studies of this phenomenon, such as this one of docs, don't put those controls into place.-ed]
Gender Savings Gap
Now let’s examine savings behavior differences between men and women. Vanguard issued their “How America Saves 2014” report in September 2014 focusing on “The gendernomics of retirement saving”. According to their report, women have a higher participation than men in their employer retirement savings plan at all income levels. Not only do they participate more frequently, they contribute a larger percentage of their pay than men. Yet, probably due to the same factors as the gender pay differences, the average account balance of a woman is 64% that of a man.
Career Pay Progression
One of the writers for the accounting/auditing site GoingConcern.com put together this nifty analysis of average compensation over the course of 15 years at a big 4 public accounting firm. Make adjustments for geographical differences, and you get a general idea.
In this graph, the bottom line is the number of years since career onset, and the line just above it is age. So as the career progresses and promotions occur, pay goes up significantly for those first couple of decades.
For physicians the graph, (on average) would be close to zero until the late twenties and would stagnate at around 40-50K for a few years of residency and then would shoot up to 300K plus in early thirties, and for the most part would increase marginally from there.
This is where I’m going to tread very carefully, as a CPA talking to a bunch of physicians about the biology of women. Women have babies. That is a fact of life and there is no changing that. As everyone knows, the older the woman gets, the more difficult it may become. So essentially, take that salary graph and overlay it with your optimal child bearing years. It takes a good 10 years to invest in your career with marginal increases in salaries (or none at all if you are in medical school). The big career payoff (as a general rule) doesn’t come until after 10-15 years. Coincidentally, that’s about the time the clock starts ticking. So that’s when a large portion of amazing female brains leave the workforce, or cut it down to part time. Which means they have to do most of the savings when their compensation is the lowest.
What’s my point?
I’m not promoting working mothers, stay at home mothers, women equality, etc. in this post. (Not saying these topics are not important by any means, but they are topics for another discussion, not this one). What I’m laying out are the facts that we, successful women, have to deal with because they are very real and they exist and we have to figure out a way to continue being successful financially, professionally, and personally. Again, without placing blame or choosing sides, the fact is that women have to deal with these factors that most men don’t have to (although men probably also have gender-specific factors to deal with [like an overwhelming urge to buy expensive toys-ed.]) These factors include:
- Having children (and breastfeeding, as more and more women choose to do)
- Making a decision to sacrifice or scale down career (or making a sacrifice of spending less time with family and children in order to promote career)
- Societal pressures (cooking, laundry, school activities, etc. are traditionally women’s jobs – there are exceptions of course, but I’m talking generally here)
And the thing is – most women – don’t mind. I love scheduling my kids’ extracurricular activities, taking them to the doctor, music, etc. I prefer to shop for their clothes and cook and feed them. I am also one of the few female leaders at my organization with a very successful career.
So then it comes down to time – how do women have time to do it all? Some make the choice to let the husband do the investing, but that by far is not the right answer. Your husband is your partner – and both partners should carry not 50%, but 100% and work with each other. I’m still trying to figure it all out, while prioritizing and not getting it all done. But at least, with the help of WCI, from savings and investing perspective – we have pretty much automated everything, or come up with life and financial hacks, to make it work.
I, for one, greatly appreciated WCI’s advice ever since discovering his blog. What impressed me the most was his editorial comment in Dr. Mom’s post regarding child care arrangements. Not only did he pay attention to something that most men wouldn’t even notice, he called it out. I would love to hear more from successful women out there on how they make it work.
Are you a highly paid female? What trials or gender-specific factors have you struggled with? What have you done to find that ever-elusive life-work balance? Comment below!