Are the planners the challenge

I read media on money planning all the time.Few mention anything about the me factor and why I do what I do when doing money.Are the planners the challenge as they take peoples money and invest them with their bosses the banks?Read the following and see what I mean…

Women who follow these strategies will be better off, writes Annette Sampson.

It’s called the Cinderella complex. The lingering, often guilty, hope that one day Prince Charming will sweep in and take charge. And who can blame the average woman for feeling a bit behind the eight ball when it comes to money? Women tend to earn less than men. They are grossly underrepresented in upper management and on company boards but overrepresented in industries such as hospitality, retail and healthcare, where salaries are lower. Advertisement: Story continues below More of them do part-time and casual work. Women are still the primary care givers and more likely to take extended periods out of the workforce to look after children and, increasingly, elderly parents. And, to top it all off, we live longer – which might be a good thing in other respects but increases the odds of running out of money when we’re older. And there are the lifestyle factors. It costs more to be female, says a financial planner for WLM Financial Services, Laura Menschik. “If a man buys six good pairs of socks and cuts his toenails regularly he will have them for years,” she says. “But how many pairs of socks and pantyhose would a woman go through?” As the traditional nurturers, Menschik says women are more likely to spend on family and friends. But as the person responsible for the majority of household purchases, women often get tagged as spenders, according to the managing director of financial website ms money, Susan Jackson. “It gets piled on women that they are the spenders but by default they are in that situation.” Jackson says lots of women hold responsible jobs, earn good money and are very competent but are not familiar with managing money. And while women make up 51 per cent of the population, she says they still tend to be regarded as a niche market by financial services companies. “Their typical approach is to take what they normally do and pink it up a bit or make it a bit more girly and it doesn’t work,” Jackson says. “Most women know they need to save more but the question is how to turn that into reality. They have to get the basics right.” BUDGETING Menschik says women are often more capable than they think when it comes to managing money. “They usually manage the household finances very well,” she says. “And because they’re good at multitasking, they are able to have a budget and, as they go through the day, they manage that budget on a number of levels instead of just saying, ‘I have $X to spend.’ They look at the big picture.” Jackson says the first step is to stop beating yourself up over what may have happened in the past. “You need to make a conscious decision to do things differently and not expect a miracle overnight,” she says. “If you break it down into manageable chunks and identify two or three things you can do, it’s much easier.” Jackson says one of her top savings tips is to keep a list of things you need to buy. When the need for some retail therapy pops up, buy two or three things on the list. You’ll still get the satisfaction of spending without wasting money. Simple things such as checking you’re on the right phone and internet plans and having a credit card that suits your spending habits are sound basics. Sarah Black from Citibank Wealth Management says a budget showing your income and expenses can help find ways to save – but don’t be too strict. “It’s like going on a diet,” she says. “If it’s too extreme you won’t stick to it.” Black says paying yourself first is another must. “Set a target of what you’ll save each month and have it whisked away before you can spend it,” she says. If you are on a low income, a certified financial planner with SBFP, Sandra Bowley, says you should get advice on whether you’re eligible for any Centrelink assistance. DEBT Black says many couples still don’t talk about money and debt in the early stages of their relationship. “It’s a conversation people don’t necessarily want to have but as your other life goals should be aligned, so should your financial goals,” she says. Black says such conversations can prevent women from blindly taking on a partner’s debt, which is known as sexually transmitted debt. Bowley says: “Women can find their husband has been hiding debt. I had a couple where the husband wanted to provide a good lifestyle for his wife but he didn’t have the money to do it so he put it on credit cards. She’s equally responsible for that debt.” Jackson says women can run into problems with credit cards. “If a group of women go shopping you’ll notice they buy the same sorts of things, even if they’re on different salaries,” she says. “If you don’t have the cash flow to pay for them, it’s logical to use debt. “Most women find they manage that debt well initially, so when their bank offers them a higher limit or new card they believe they can control it. But overnight it often seems to go from a manageable debt to a problem.” Menschik says women are generally more conservative with other debts than men. It is often the woman who places most importance on paying off the mortgage quickly and is less likely to want to draw on home equity to invest. “They need to be educated that there can be good debt if it is used to buy investments that grow over time and provide income,” she says. INVESTING Research shows women are better at share investing because they have less ego invested, Jackson says. They make better long-term decisions. Menschik says women are often more conservative and more likely to underestimate their risk tolerance. “I think they can underestimate their own ability,” she says. “They still need to feel comfortable with what they’re investing in but they can work towards taking on more risk over time.” Bowley says women can “be made to feel like an idiot” when they seek financial advice. “There are still male financial planners who talk down to women and if you walk out feeling like an idiot, you won’t come back,” Bowley says. She says if you’re uncertain you should look for a planner who is willing to educate you and teach you what questions to ask. “Even if you don’t have a lot of money, there are planners prepared to help with things like budgeting and insurance,” she says. Bowley says you should look for an adviser that charges an hourly rate so you can control how much time you take and what it will cost. Along with super, she says simple strategies such as borrowing $1000 and investing can be a useful way to dip your toe into the water. Even before seeing an adviser, there is lots of user-friendly information available, from books and fund-manager websites to sites designed specifically for women, such as msmoney.com.au and http://www.womenandsuper.com.au. The government also has fact sheets at http://www.understandingmoney.gov.au. SUPER AND RETIREMENT It’s when it comes to saving for retirement that women face the biggest challenges. Thanks to lower wages, part-time and casual work and broken work patterns, women typically have less super than men. According to figures from First State Super, women aged 25 to 34 have, on average, 71 per cent of the super held by males in the same age group – and it gets worse as age increases. Women aged 60 to 64 have less than half the super savings of the blokes. First State Super reports retired men between 55 and 64 have about 1.7 times the disposable weekly income of women and almost three-quarters of retired householders receiving a single-age pension are women. Compounding the problem, says a principal at Deloitte Actuaries and Consultants, Anthony Asher, is that women live longer than men. He says a 65-year-old woman can expect to live 16 per cent longer than a man of the same age – 21.6 years versus 18.6 years. So their money has to last longer. Link up with an older spouse and the gap is wider. The chief executive of the Association of Superannuation Funds of Australia, Pauline Vamos, says the government has to recognise women need more help saving for retirement. She says the lower caps on contributions hit women hardest, as many women need to catch up later in life when the children have left home and they return to full-time work, and may need to be restored for women alone. She says other measures could include employers paying compulsory super on maternity leave and removing the $450 a month earnings threshold for compulsory super contributions. She says women also need to build their savings and make the most of tax advantages such as salary sacrificing into super and claiming the government’s super co-contribution. The co-contribution is especially useful, Vamos says, as the government will match your contributions up to an annual limit of $1000 if you are eligible. The chief executive of HostPlus, David Elia, says even if you can only put aside $50 or $100 it still helps. “People think you have to contribute the full $1000 but you don’t,” he says. “You’ll still get some contribution even if you just contribute a small amount.” With women more likely to switch or have several jobs, Elia says consolidating your super can also make a difference. “You save on fees and automatic premiums for several insurance policies you may not need,” he says. Jackson says transition-to-retirement strategies, which allow older workers to draw on a retirement pension while sacrificing part of their salary into super, also work well for older women who need to boost their super savings. Asher and a Deloitte partner, Paul Swinhoe, say women need to consider post-retirement strategies. “Often the husband will retire with a much bigger savings pot and the wife has some entitlement to that,” Asher says. “But if the husband decides to take a retirement pension, it will usually be calculated on his life expectancy. Later on, the husband will be dead and there’s a 50 per cent chance the wife will still be alive. The wife is twice as likely to survive her husband … which is why it is the woman [who is] most likely to be in poverty in her old age.” Swinhoe says retirement plans have to acknowledge the income needs of both partners and if assets are being sold there is a need for a “harvesting plan” to sell them slowly so they last. Swinhoe says if you’re in a self-managed fund it’s important to be engaged with how it is being run. “I’ve heard of situations where couples have divorced and the financial planner would only speak to the husband because he was the client,” he says. The clock is ticking when it comes to retirement plans Charmaine O’Sheades (pictured) had a great life. “I travelled the world and haven’t been financially responsible but my attitude is changing.” At almost 38, she is thinking about children but the penny has also dropped that she has just 29 years to plan for retirement. “I’m starting to panic that it might be too late for me,” she says. “It sounds like a long time but it’s not much.” She says her wake-up call came at a conference listening to someone talk about super. She followed the advice to start sacrificing part of her salary into super. “I wish someone had told me to put some money aside when I was 21,” she says. As women’s co-ordinator with the NSW Teachers Federation, she says the challenge is to get other women making smarter decisions earlier. “Financial literacy is one of the skills we need to be teaching younger women,” she says. With a good income, O’Sheades regards herself as fortunate but she is still learning to manage the financial demands of a mortgage, retirement planning and the prospect of starting a family. “I still panic because I want to give my kids the best opportunities I can and I want to live well in my older age,” she says. “I want to be able to enjoy that period of my life because you work so hard to get there.” O’Sheades says First State Super’s women and super website has helped her learn more about managing her money and “all the info and forms are there so I can go on at night or first thing in the morning and put in extra money without having to spend days hunting around”. Don’t wait for a pay rise Women are often less assertive about pay rises, the managing director of financial website ms money.com.au, Susan Jackson, says. “They’ll wait until one is offered or stop pushing at the first sign of resistance,” she says. Research by the website found 61 per cent of women were not confident about negotiating the best wages and conditions for themselves, with only 13 per cent having approached their boss for a rise or bonus — although the proportion was much higher among younger and better-paid women. Jackson says women should increase their chances of success by researching what their job and responsibilities are worth before talking to their boss. It also helps to list responsibilities and key achievements and any tasks you’ve taken on over and above your job description, she says. Work out how much pay you’re going for and arrange a meeting with your boss specifically to discuss it. Be specific about how hard you work and then shut up. “Once you have stated your case, stop talking,” Jackson says. “At this point many women start to deliver long-winded justifications for the raise, which can be counterproductive.”October 20, 2010 Women who follow these strategies will be better off, writes Annette Sampson. It’s called the Cinderella complex. The lingering, often guilty, hope that one day Prince Charming will sweep in and take charge. And who can blame the average woman for feeling a bit behind the eight ball when it comes to money? Women tend to earn less than men. They are grossly underrepresented in upper management and on company boards but overrepresented in industries such as hospitality, retail and healthcare, where salaries are lower. Advertisement: Story continues below More of them do part-time and casual work. Women are still the primary care givers and more likely to take extended periods out of the workforce to look after children and, increasingly, elderly parents. And, to top it all off, we live longer – which might be a good thing in other respects but increases the odds of running out of money when we’re older. And there are the lifestyle factors. It costs more to be female, says a financial planner for WLM Financial Services, Laura Menschik. “If a man buys six good pairs of socks and cuts his toenails regularly he will have them for years,” she says. “But how many pairs of socks and pantyhose would a woman go through?” As the traditional nurturers, Menschik says women are more likely to spend on family and friends. But as the person responsible for the majority of household purchases, women often get tagged as spenders, according to the managing director of financial website ms money, Susan Jackson. “It gets piled on women that they are the spenders but by default they are in that situation.” Jackson says lots of women hold responsible jobs, earn good money and are very competent but are not familiar with managing money. And while women make up 51 per cent of the population, she says they still tend to be regarded as a niche market by financial services companies. “Their typical approach is to take what they normally do and pink it up a bit or make it a bit more girly and it doesn’t work,” Jackson says. “Most women know they need to save more but the question is how to turn that into reality. They have to get the basics right.” BUDGETING Menschik says women are often more capable than they think when it comes to managing money. “They usually manage the household finances very well,” she says. “And because they’re good at multitasking, they are able to have a budget and, as they go through the day, they manage that budget on a number of levels instead of just saying, ‘I have $X to spend.’ They look at the big picture.” Jackson says the first step is to stop beating yourself up over what may have happened in the past. “You need to make a conscious decision to do things differently and not expect a miracle overnight,” she says. “If you break it down into manageable chunks and identify two or three things you can do, it’s much easier.” Jackson says one of her top savings tips is to keep a list of things you need to buy. When the need for some retail therapy pops up, buy two or three things on the list. You’ll still get the satisfaction of spending without wasting money. Simple things such as checking you’re on the right phone and internet plans and having a credit card that suits your spending habits are sound basics. Sarah Black from Citibank Wealth Management says a budget showing your income and expenses can help find ways to save – but don’t be too strict. “It’s like going on a diet,” she says. “If it’s too extreme you won’t stick to it.” Black says paying yourself first is another must. “Set a target of what you’ll save each month and have it whisked away before you can spend it,” she says. If you are on a low income, a certified financial planner with SBFP, Sandra Bowley, says you should get advice on whether you’re eligible for any Centrelink assistance. DEBT Black says many couples still don’t talk about money and debt in the early stages of their relationship. “It’s a conversation people don’t necessarily want to have but as your other life goals should be aligned, so should your financial goals,” she says. Black says such conversations can prevent women from blindly taking on a partner’s debt, which is known as sexually transmitted debt. Bowley says: “Women can find their husband has been hiding debt. I had a couple where the husband wanted to provide a good lifestyle for his wife but he didn’t have the money to do it so he put it on credit cards. She’s equally responsible for that debt.” Jackson says women can run into problems with credit cards. “If a group of women go shopping you’ll notice they buy the same sorts of things, even if they’re on different salaries,” she says. “If you don’t have the cash flow to pay for them, it’s logical to use debt. “Most women find they manage that debt well initially, so when their bank offers them a higher limit or new card they believe they can control it. But overnight it often seems to go from a manageable debt to a problem.” Menschik says women are generally more conservative with other debts than men. It is often the woman who places most importance on paying off the mortgage quickly and is less likely to want to draw on home equity to invest. “They need to be educated that there can be good debt if it is used to buy investments that grow over time and provide income,” she says. INVESTING Research shows women are better at share investing because they have less ego invested, Jackson says. They make better long-term decisions. Menschik says women are often more conservative and more likely to underestimate their risk tolerance. “I think they can underestimate their own ability,” she says. “They still need to feel comfortable with what they’re investing in but they can work towards taking on more risk over time.” Bowley says women can “be made to feel like an idiot” when they seek financial advice. “There are still male financial planners who talk down to women and if you walk out feeling like an idiot, you won’t come back,” Bowley says. She says if you’re uncertain you should look for a planner who is willing to educate you and teach you what questions to ask. “Even if you don’t have a lot of money, there are planners prepared to help with things like budgeting and insurance,” she says. Bowley says you should look for an adviser that charges an hourly rate so you can control how much time you take and what it will cost. Along with super, she says simple strategies such as borrowing $1000 and investing can be a useful way to dip your toe into the water. Even before seeing an adviser, there is lots of user-friendly information available, from books and fund-manager websites to sites designed specifically for women, such as msmoney.com.au and http://www.womenandsuper.com.au. The government also has fact sheets at http://www.understandingmoney.gov.au. SUPER AND RETIREMENT It’s when it comes to saving for retirement that women face the biggest challenges. Thanks to lower wages, part-time and casual work and broken work patterns, women typically have less super than men. According to figures from First State Super, women aged 25 to 34 have, on average, 71 per cent of the super held by males in the same age group – and it gets worse as age increases. Women aged 60 to 64 have less than half the super savings of the blokes. First State Super reports retired men between 55 and 64 have about 1.7 times the disposable weekly income of women and almost three-quarters of retired householders receiving a single-age pension are women. Compounding the problem, says a principal at Deloitte Actuaries and Consultants, Anthony Asher, is that women live longer than men. He says a 65-year-old woman can expect to live 16 per cent longer than a man of the same age – 21.6 years versus 18.6 years. So their money has to last longer. Link up with an older spouse and the gap is wider. The chief executive of the Association of Superannuation Funds of Australia, Pauline Vamos, says the government has to recognise women need more help saving for retirement. She says the lower caps on contributions hit women hardest, as many women need to catch up later in life when the children have left home and they return to full-time work, and may need to be restored for women alone. She says other measures could include employers paying compulsory super on maternity leave and removing the $450 a month earnings threshold for compulsory super contributions. She says women also need to build their savings and make the most of tax advantages such as salary sacrificing into super and claiming the government’s super co-contribution. The co-contribution is especially useful, Vamos says, as the government will match your contributions up to an annual limit of $1000 if you are eligible. The chief executive of HostPlus, David Elia, says even if you can only put aside $50 or $100 it still helps. “People think you have to contribute the full $1000 but you don’t,” he says. “You’ll still get some contribution even if you just contribute a small amount.” With women more likely to switch or have several jobs, Elia says consolidating your super can also make a difference. “You save on fees and automatic premiums for several insurance policies you may not need,” he says. Jackson says transition-to-retirement strategies, which allow older workers to draw on a retirement pension while sacrificing part of their salary into super, also work well for older women who need to boost their super savings. Asher and a Deloitte partner, Paul Swinhoe, say women need to consider post-retirement strategies. “Often the husband will retire with a much bigger savings pot and the wife has some entitlement to that,” Asher says. “But if the husband decides to take a retirement pension, it will usually be calculated on his life expectancy. Later on, the husband will be dead and there’s a 50 per cent chance the wife will still be alive. The wife is twice as likely to survive her husband … which is why it is the woman [who is] most likely to be in poverty in her old age.” Swinhoe says retirement plans have to acknowledge the income needs of both partners and if assets are being sold there is a need for a “harvesting plan” to sell them slowly so they last. Swinhoe says if you’re in a self-managed fund it’s important to be engaged with how it is being run. “I’ve heard of situations where couples have divorced and the financial planner would only speak to the husband because he was the client,” he says. The clock is ticking when it comes to retirement plans Charmaine O’Sheades (pictured) had a great life. “I travelled the world and haven’t been financially responsible but my attitude is changing.” At almost 38, she is thinking about children but the penny has also dropped that she has just 29 years to plan for retirement. “I’m starting to panic that it might be too late for me,” she says. “It sounds like a long time but it’s not much.” She says her wake-up call came at a conference listening to someone talk about super. She followed the advice to start sacrificing part of her salary into super. “I wish someone had told me to put some money aside when I was 21,” she says. As women’s co-ordinator with the NSW Teachers Federation, she says the challenge is to get other women making smarter decisions earlier. “Financial literacy is one of the skills we need to be teaching younger women,” she says. With a good income, O’Sheades regards herself as fortunate but she is still learning to manage the financial demands of a mortgage, retirement planning and the prospect of starting a family. “I still panic because I want to give my kids the best opportunities I can and I want to live well in my older age,” she says. “I want to be able to enjoy that period of my life because you work so hard to get there.” O’Sheades says First State Super’s women and super website has helped her learn more about managing her money and “all the info and forms are there so I can go on at night or first thing in the morning and put in extra money without having to spend days hunting around”. Don’t wait for a pay rise Women are often less assertive about pay rises, the managing director of financial website ms money.com.au, Susan Jackson, says. “They’ll wait until one is offered or stop pushing at the first sign of resistance,” she says. Research by the website found 61 per cent of women were not confident about negotiating the best wages and conditions for themselves, with only 13 per cent having approached their boss for a rise or bonus — although the proportion was much higher among younger and better-paid women. Jackson says women should increase their chances of success by researching what their job and responsibilities are worth before talking to their boss. It also helps to list responsibilities and key achievements and any tasks you’ve taken on over and above your job description, she says. Work out how much pay you’re going for and arrange a meeting with your boss specifically to discuss it. Be specific about how hard you work and then shut up. “Once you have stated your case, stop talking,” Jackson says. “At this point many women start to deliver long-winded justifications for the raise, which can be counterproductive.”

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