BlackRock Asset Management Canada Limited

BlackRock Asset Management Canada Limited

March 05, 2015 08:00 ET

BlackRock Global Investor Pulse Survey: Canadian Women Face "Gender Gap" in Retirement Planning and Investing

Women Are More Likely Than Men to Experience Major Financial Challenges in Retirement, but Those Who Adopt the Habits of "Smart Savers" Can Change Their Futures

TORONTO, ONTARIO--(Marketwired - March 5, 2015) - 'Make it Happen,' the theme for this year's International Women's Day this coming March 8th, 2015 will represent the opportunity to celebrate the achievements of women and will encourage effective action for advancing and recognizing women. One area, identified by BlackRock's Global Investor Pulse Survey, is closing the "gender gap" faced by Canadian women with their approach to retirement planning and investing. Women not only earn less and devote less of their income to savings and investments than Canadian men do, but are also significantly less engaged in managing their finances, according to the second annual survey from BlackRock, Inc. (BLK:NYSE). The survey found that women are having a harder time than men in balancing everyday expenses with saving for retirement, and that lack of engagement in financial matters is translating into greater risk aversion - holding women back from realizing their retirement goals. To address these challenges, they need to adopt the habits of "Smart Savers" - a subset of Canadian women who are saving more and are more committed to financial planning.

While a similar proportion of men and women say they have begun saving for retirement - about three in five - women feel they face significant challenges in reaching their financial goals. One reason: they have less income available to save. Women respondents in the survey were significantly less likely to be working; and those who are working are much more likely than men to have part-time employment. That translated into an average personal income that was 25% lower than male respondents and household savings and investments that were 46% lower than men's. Women more than men cite the high cost of living (55%) and not earning enough (52%) as the biggest barriers to saving more (compared with 46% and 42% of men, respectively).

"The income gap for Canadian women is real and many are faced with greater obstacles to achieving their long-term financial health," said Karrie Van Belle, Managing Director, BlackRock Asset Management Canada Limited (BlackRock Canada). "Women spend a bigger proportion of their income on necessities like mortgages, rent and utilities, and have less to put aside for investing. But income is only part of the equation. Women are less engaged than men in their savings and investments and for many in our survey there is a real knowledge gap when it comes to retirement planning."

According to the survey, far fewer women than men say they know how much income they will need in retirement (41% versus 51% for men), and only 39% of women (compared with 46% of men) know how much they will need to save to meet their retirement goals. When it comes to contributing to some type of retirement plan - including RRSPs, TFSAs and workplace retirement plans - the participation rate among women is lower in all categories. Furthermore, women who do have a workplace plan are far less engaged: nearly half (46%) of women in defined contribution plans say they never adjust their investment allocations, compared with only 18% of men, and 42% of women say they have no idea about the maximum contribution of their plan (compared with only 18% of men).

"International Women's Day is about helping women to have bright and rewarding futures," added Van Belle. "And much like empowering women in other aspects of their lives, we believe it is critical to increase the engagement and education levels of women investors. Women's lack of engagement in their finances seems to be driving greater pessimism about their futures. In our survey, women were consistently less confident than men that they will meet their financial goals - whether it's saving money, saving for retirement or growing their wealth."

The cautious female investor

In the survey, women had consistently different attitudes and risk profiles than men when it came to their money. Most of the women in the survey - 62% - said that they are not prepared to take any risks with their money, compared to fewer than half of men (49%), and few women said they would be willing to take on higher risk to achieve higher return (22% versus 37% of men).

This risk aversion translates into many women parking their savings and investments on the sidelines. Only 19% of women said they were comfortable investing directly in stocks (compared with 37% of men), and when asked their thoughts about the anticipated future of the stock market, the most common response among women was "unsure" (43%, compared with 23% of men). Not surprisingly, given their lower-risk profile, Canadian women hold more of their assets in cash investments - 66% on average, compared with 59% for men - and less in stocks (15% versus 21%).

Compared to men, even those women who do have stocks, bonds and other investments are less confident that they have the right mix of assets. More than one in five (21%) female respondents admit to being "not confident" about their portfolio (compared with 14% of men), and the primary reason given is that they are uninformed about portfolio construction. But fewer than half (45% versus 54% of men) say that they are interested in learning more about investing. Even more concerning is that compared to the close to 14,000 women interviewed globally for the survey, Canadian women are less likely to view managing their investments as a positive activity. Specifically only 29% of Canadian women enjoy managing their investments compared to 41% of women globally.

"When you look at our survey results, a picture emerges of women investors who feel that they do not have the knowledge or the money to take control of their finances, and who are 'turned off' from taking a greater interest in doing so," noted Van Belle. "That is leading them to risk-averse behaviours like holding too much cash - which over the long term is highly unlikely to provide the returns needed to fund a comfortable retirement. Clearly, there is a real need for investor education that addresses Canadian women in a way that's compelling, useful and relevant to them."

"The good news is that it's a significantly different story for women who are more involved in their money: with clearer goals and a fuller knowledge of what they need, they are also more confident and optimistic about the future. We believe that looking at the saving habits of Canada's Smart Savers we could help empower all women to make a difference by investing in themselves and their own future, so, that they too can become confident about making their own financial decisions and feel in control of their financial future."

Adopting Canadian Women's "Smart Savers" behaviours can help women out of the savings gap

While the majority of Canadian women in the survey were facing significant challenges in saving enough for retirement, a subset of female respondents are taking a much more engaged - and successful - role in building their wealth.

Identified in the survey as "Smart Savers," these women were more likely to be employed than the average Canadian woman, but still earned significantly less than men ($49,700 per year compared with $70,900). Yet Smart Savers have still managed to accumulate more than four times the savings of the average Canadian woman - $145,000 versus $31,700. When it comes to planning for their financial futures and building retirement savings, these Smart Savers are substantially ahead of other Canadian women or Canadians in general.

What can other Canadian women learn from these Smart Savers?

  • Become engaged with your money: Smart Savers dedicate more time and take a more active role in their investments than other women do. On average, they spend 4.4 hours a month reviewing their savings and investments, and 83% say they regularly monitor their investments - double the average for Canadian women. Two in five Smart Saver women say they are active investors, and nearly half say they are willing to take on higher risks to achieve higher returns. And two-thirds say they want to learn even more about investing.
  • Make retirement a priority: 85% of Smart Saver women are saving for retirement compared to a Canadian women average of 61%; and they place a higher priority on saving and investing for a comfortable retirement than the average Canadian women (61% versus 43%).
  • Diversify your investments: Smart Saver women have less of their assets in cash (56%) than other Canadian women (66%), and are far more likely to have portfolio exposures to equities, bonds and investment properties.
  • Plan and seek advice: Smart Saver women are far more likely to use the services of professional financial advisors (47% have done so, versus a Canadian women average of 29%), and seek advice from advisors and others in the financial industry when they are making financial decisions.

"The examples set by these Smart Savers show that even with lower incomes than men, women can achieve substantial financial health if they take a greater interest in their money," said Van Belle. "Even for those women who are struggling with setting aside money for retirement, adopting the behaviours of these women may help them get started in the right direction."

About BlackRock

BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31, 2014, BlackRock's AUM was US$4.652 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, iShares® (exchange-traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions®. Headquartered in New York City, as of December 31, 2014, the firm had approximately 12,200 employees in more than 30 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com/ca / Twitter: @BlackRockCA / Blog: www.blackrockblog.com/ca

About the Survey

One of the largest global surveys ever conducted, the BlackRock Global Investor Pulse survey interviewed 27,500 respondents, in 20 nations: the US and Canada; in Europe, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, and the UK; In Latin America, Brazil, Chile, Colombia, and Mexico; in Asia, China, Hong Kong, India, Japan, Singapore and Taiwan. The Canada sample comprised 1,000 respondents. No income or asset qualifications were used in selecting the survey's participants, making the survey a truly representative sampling of each nation's entire population. Executed with the support of Cicero Group, an independent research company, the survey took place in August 2014. For the Canada sample of 1,000 respondents, the margin of error is +/- 3.1%.

Contact Information

  • Contact for Media:
    Lena Hesse
    Veritas Communications
    416.955.4596 or C: 647.404.4719
    hesse@veritasinc.com