In her career as a wealth management executive, UBS’ Paula Polito has long encouraged women to become more active in their personal finances—“more financially savvy,” as she put it during a recent interview. Yet, for years, little seemed to change.
Five years ago, she and her team turned to hard data to better understand the trends and see whether signs were emerging that more women were taking the lead on finances.
That initially led to disappointment. She thought that straightforward and tech-savvy millennials would be a force for change. “We found out that that was not the case,” says Polito, vice chairwoman of global wealth management at UBS. “Millennial women weren’t going to be change makers.”
Also disappointing: “We spoke to women who were divorced or widowed, and a large majority of them had regrets that they weren’t more financially engaged, and that they had to face financial surprises,” she says.
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“We can tell women to pay attention,” she says. “That’s our message.” But it didn’t seem to be getting through. Only a year ago, she wrote a poignant essay in Barron’s about “the price of women’s indifference.”
Now, at last, with this year’s “Own Your Worth” report, which surveyed 1,400 high-net-worth women, the trends seem to be shifting. A key data point: The percentage of women who say they take the lead on financial decisions has climbed to 26%, up from 21% in 2018. And while 51% of women still defer to their spouse on financial decisions, that’s down from 56% four years ago.
“I’m optimistic,” says Polito. “I actually think we are making more progress than we have. I liked seeing those numbers move.”
What Has Changed
Polito says the pandemic—and the social problems it brought to light—prompted more women to take the reins of family finances, with the goal of creating positive change and helping specific causes they care about.
“During the pandemic, women were faced with a far heavier burden than ever before, juggling work, taking care of the family, and ultimately they began—particularly millennial women—to act with more conviction,” says Polito. “Many spoke about wanting to live a more intentional life, using their time and their money and their expertise to achieve a greater sense of purpose.”
“I think there’s an unconscious bias, sometimes in our business, that the husband’s in charge.”
This year’s survey found that nine out of 10 women believe that money can help them achieve their broader goals. The vast majority (94%) donated financial resources or volunteered their time in the past 12 months, and more than two-thirds (69%) chose a career that aligns with their values, the survey shows.
“Even the women who were the traditional abdicators, the women that would defer to their partners and their spouses, were exerting more control with their families’ charitable dollars,” says Polito.
Not Everyone Can Lead
Polito qualifies that it makes sense in many families for one partner to take the lead on financial matters. “You can defer to your spouse as long as you know what’s going on,” she says. “You don’t have to do it all yourself.”
And part of her message is for men: “There is an opportunity for men to be more educated about this topic so that they pull a chair over to the table and get women more involved. And so they also can help break this chain that’s been going on for a long time.”
This goes for financial advisors, too. “I think there’s an unconscious bias, sometimes in our business, that the husband’s in charge,” says Polito. But advisors can often do more to make sure women are present in discussions.
She recalls asking a male client years ago why his wife didn’t join their meetings. He told her his wife didn’t know anything about “stocks and bonds.”
|Year||Women who say they lead decision-making||Women who say they share decision-making||Women who say they defer to spouse/partner|
Source: UBS Own Your Worth 2022, “Women on Purpose”
“You have to change the narrative,” Polito says. “These conversations should be about understanding what they can afford to spend, their liquidity, their legacy, their tax situation.”
After that, advisors can turn to questions such as what are the right products and services, how should we construct the portfolio, and what kinds of risk-management strategies do we need?
The key is for women to find an advisor with whom they feel comfortable having these conversations. “If you’re a woman, you don’t necessarily need to have a female advisor,” says Polito. “Everybody needs to choose the kind of advisor that they want to have. But I think women sometimes are better about asking different questions and can sometimes relate in a different way with women clients than men can.”
With the market struggling, it’s crucial to have those kinds of long-term financial-planning conversations. “It’s not just about ‘stocks and bonds,’ ” says Polito, referencing the phrase her client had used. “Given the challenges that we’re facing with all the volatility, you have to have perspective on your money, and know what’s really important to you.”
Write to Amey Stone at [email protected]