Women's business
Lucinda Schmidt, Sun Herald, 23rd of April 2006
Financial times are changing - men are now rarely the sole breadwinners. And women, with their push for independence and self-provided security, are thirsty for the money-management know-how that will help them secure their future. By Lucinda Schmidt.
When Dianna Goodman turned 30 last year, it was time to get her finances sorted. But the $20,000 nest egg she'd saved did not cut it with the two (male) financial planners she saw. "They had the attitude of, 'You don't earn enough. Come and see me when you have $100,000,'" says the bubbly Geelong-based events manager.
"All I wanted was some help to get started, to put a stick in the ground."
Fast-forward 12 months and Goodman, 31 and single, is happily overseeing a small negatively geared share portfolio after visiting a more sympathetic (female) planner. Although she is now surviving on sporadic income from office temping jobs, she is determined to keep her shares. "It's great. I love watching the stock market and getting involved by researching online."
Goodman is part of a growing number of women who are taking an active interest in their finances. Women are increasingly on their own. Or they're equal - even sole - breadwinners for families marked by redundancy. Gone are the days of waiting for
Mr Right to come along and take care of everything or for the husband to dole out an allowance. But unlike men, many women have not had money skills drummed into them from a young age so they are thirsty for knowledge. And financial companies around the world are starting to twig that their female clients may want a completely different approach.
Goodman's experience with male financial planners is not unique. Susan Jackson, the executive director of Melbourne advisory firm the Women's Financial Network, says 95 per cent of financial advisers are men - and females and males communicate differently. "My male clients don't want much chitchat. They'll say, 'I want to do this,' or 'Tell me where to put my money,' or 'I've heard about such and such.' There's a lot more ego involved. They want to know, 'Am I doing what all the other boys are doing?'"
Women, says Jackson, ask more questions and want more of a relationship. But they'll often be made to feel that they don't have enough money or are just given a plan and told, "Here's the solution." Jackson says some planners can get defensive: "Why are you asking all these questions? Don't you like my plan?"
Yet it's by asking questions that women can learn more about a subject many men take for granted. "Money is a learned skill; you're not born with it," says financial adviser Virginia Dowd, CEO of Sydney firm Money Solutions. "Men have grown up with the notion that they have to be financially responsible.
I see so many women who say, 'I'm hopeless with money' but it's an issue of confidence."
Dowd learned the hard way when she went through a divorce in her early 30s. "I knew how to work hard and earn money but I didn't know how to manage
it." So she ditched her career as a real estate agent, trained as a financial planner and set up the Women's Investment Network. More than 20 years later, she's still evangelical about every woman in Australia being financially independent at retirement.
A staggering 38 per cent of Australian women have no superannuation at all, according to financial planning firm Superwoman, and a further 19 per cent have a balance of less than $5000. Figures from the Association of Superannuation Funds of Australia show that in 2002, women had an average super balance of $43,300, while men amassed $78,700 - yet women's average life expectancy is 83 years, compared with 77 for men. And a survey last year by the BT Financial Group found that 42 per cent of working women believe they are unlikely to save enough for a comfortable retirement, compared with 35 per cent of men.
Of course, many women are at a disadvantage in the race to retirement comfort because they have long periods out of the work force to raise children, then return to work part-time - or not at all. But there's an attitude problem, too, according to Susan Jackson. "Despite making inroads in business, professional careers and all walks of life, only one in three women is serious about securing her own financial future," she warns. "There are still a lot of women who think Prince Charming will come along and look after them."
That's a foolhardy approach when estimates of the divorce rate range from 42 to 46 per cent and one in four women will never marry. But it's not all bad news. More women are working - 56.7 per cent in 2005, according to the National Centre for Social and Economic Modelling, compared with 45.7 per cent in 1985. And the trend towards delaying marriage and children means there is more time for women to start building financial wealth in their 20s and 30s.
Sydney nurse Janet Newton, 36, bought a unit five years ago in Wollongong but decided late last year that she wanted to do more with her $75,000 salary. She was paying off her mortgage and putting spare money into a high-interest bank account but big bills kept depleting the balance.
"I've always been a good saver but I thought, 'There has to be something better than this,'" says Newton, who went to see a female financial planner last December. Newton is now contributing an extra $50 a fortnight to super on top of her employer's compulsory 9 per cent contribution. Another $150 a month goes to a managed-fund savings plan, plus she pays a whopping $366 a month for trauma and income protection because she has a family history of heart problems. And she is working on paying off her credit card debt of "a few thousand" after an overseas trip blew out the balance to close to $9000.
Surprisingly, Newton says the changes have made little difference to her lifestyle. She's studying for a Masters of Nursing and working full-time so there's not much time for shopping or going out. But, she says, "Life is still for living. If I want to go to Opera in the Vineyards, I'll go." As for the financial knight in shining armour, she's not convinced. "I'd love to get married but even if I did, I don't think I could ever be completely dependent on someone else. It might be nice but you just don't know what's going to happen."
Newton's determination to have more control over her financial circumstances is part of a wider trend, according to Linda Duncombe, the head of sales for NAB's private banking division. The private bank, which caters for high net-worth individuals (earning $250,000-plus), has advised many more professional women over the past 18 months. Even when non-working wives come in with their husbands, it's the women who are increasingly calling the shots.
"They are taking on a much more strategic role," says Duncombe. "They'll be saying, 'I don't think we have enough insurance,' or 'We need to re-do our wills.' They're not just paying the day-to-day bills." Duncombe says part of it has to do with companies such as NAB starting to pay more attention to women. "In the past, we'd automatically go to the husband for directions." Now, the bank holds workshops and seminars especially for women - and the response has been overwhelming.
Other financial companies are ditching the male market altogether to focus on women. Superwoman, which launched last October, has two offices in Sydney staffed entirely by female advisers and almost all its 200 clients are women. It plans to open more centres in Sydney and to expand to Melbourne. In December, Frauenbank opened in Munich, with services geared to the needs of women.
"I think there is a groundswell - the tables are turning," says Robin Edwards, a senior money manager for Superwoman, who sees both women earning $100,000-plus wanting to set up self-managed super funds and young women, still in their early 20s, wanting to divert some of their salary into managed funds. "The reality is, if you have less money, you want it to work even harder for you," she says.
"The first step is to set a goal," says Virginia Dowd. "And one of the best goals is boosting your super." She says putting aside even $20 a week can make a huge difference to your retirement funds because of the effect of compound interest over many years. So if a woman in her 20s starts putting extra money into super, even if she stops for a decade to have children, she will have a nest egg when she reaches 65. "It's not about whether you earn $100,000 or $20,000," says Dowd. "It's about doing the best with what you've got and learning some good money habits."
At 35, Cassandra Case is starting to change her money habits after several years of blowing six-figure corporate salaries. It's not that she was undisciplined. From the age of 21, she worked in two jobs seven days a week for four years, financing her commerce degree. But from 27, when she started to earn a decent salary as the national marketing manager for Flight Centre, she just wanted to have fun.
"Because I was single and moved so much, finances were not a priority," says Case, who is now earning far less as a part-time IT consultant while she completes her Masters of Law and Legal Practice. In fact, she did visit two financial planners in her late 20s but both berated her for her lack of focus. "I felt like I was in there with my father," says Case. "I spent the whole meeting on the defensive."
After jumping off the corporate treadmill to spend 2004 travelling, Case returned to Sydney determined to follow her dream of studying law but also to start setting herself up for a less stressful later life. "Now that I'm in my mid-30s, I have to be responsible for myself," she says. "I want my financial independence."
She now makes her own lunch and is busy writing down every cent she spends in a notebook to track her spending and flesh out a yearly budget. "I've gone from doing absolutely nothing to being completely anal," she laughs. Longer term, she plans to sell her Flight Centre options to pay for a deposit on an investment property and perhaps buy some shares.
Investec director and The Woman's Money Book author Vivienne James says women often feel more comfortable investing in property rather than shares because it's tangible and perceived as less risky. (The most recent ASX share ownership survey, released in April 2005, shows that 40 per cent of women own direct shares, compared with 50 per cent of men.) Even when women do have a share portfolio, she adds, it's usually more conservative.
A groundbreaking study of women in Australia and New Zealand, Women's Economic Status - Equal Worth Survey, released in 2000, showed the wealth holdings of single females was lower than their male counterparts with the same income and the same work force participation. The survey concluded that it was because women were more risk averse.
"It comes back to being an informed investor - you need a balanced portfolio," says James, who started a share club with three female friends two years ago. Each member puts in $50 a month, then the group meets to discuss where to invest their pooled funds, more to learn than to make millions. "There's much more education and access to information now than when I first published my book 10 years ago."
Despite this, Susan Jackson says women have a way to go. "I am still horrified by the number of women whose choices are dictated by their financial circumstances. Any woman of any age needs to ask herself: "Am I in control of my finances? Am I on track to achieve my goals? Am I getting the right advice?" If you don't answer yes to all three questions, you should do something about it."
Three super strategies
Government co-contributions
If you earn $28,000 or less, the Federal Government will contribute $1.50 for every
$1 you contribute to super, up to a maximum annual government co-contribution of $1500.
The co-contribution gradually reduces if you earn more than $28,000 and cuts out altogether for those earning $58,000 or more.
Spouse contribution
If you earn less than $10,800, your spouse can make a contribution into your super
account and claim a tax offset of 18 per cent, worth up to $540. This tax offset reduces and cuts out once your income reaches $13,800.
Superannuation splitting
Couples are allowed to split money paid into super from January 1 this year, transferring contributions from one spouse's account to the other's account.
Source: Superwoman
Winning the bread
More than 20 years ago, Vivienne Corcoran learned a valuable financial lesson. A former friend stole $4000 from their bank account and disappeared.
"I decided I would never have a joint account again," says the 44-year-old Melbourne woman, who runs her own marketing company, Logic.
Her next financial lesson came when she got married and her husband, Ross, suggested that she put their new home in her name so she could establish a credit record. "The first bank manager I went to wanted to know how much my husband earned - even though I earned enough to pay the mortgage on my own. I told him I didn't know and even if I did, I wouldn't tell him."
After running her own company for 15 years, Corcoran is now the main breadwinner, allowing her husband to abandon corporate life and run a city bottle shop. She also oversees the couple's self-managed superannuation fund, which is primarily invested in the share market.
Corcoran says her background in financial services marketing, as well as running her own business, has made her fairly money savvy.
Her business has modest offices and the family of four gets by with one car. "It's impossible not to watch the money go in and out [of the business] and it's impossible not to do the same thing personally. You never really lose the feeling that, 'I've got lots of work on now but next month there may be nothing.'"
