Being too conservative can be dangerous

A Kamloops financial planner has written a chapter in a book called Financial Success for Women by Women.

The book has 27 chapters penned by 27 women across Canada — including one from Vanessa Cullen, an investment planning consultant at Bradford Financial.

Cullen’s chapter is called Women are Too Conservative as Investors.

“Twenty-five years ago, women generally deferred to their spouse on any investment decisions,” Cullen said. “They were not actively engaged in the decision-making process. Today, women are getting more engaged with investment decisions and are not afraid to ask questions when they don’t understand.”

A shift in domestic roles in society has changed the role women play in the finances of many families.

“Men are more involved with raising kids and sharing in the household tasks,” she said. “I do not see women taking on less of a home caretaker role, but more relaxed as the entire burden is not on them. It gives women time to participate in a more meaningful way in regards to financial decisions.”
According to Cullen, the ongoing COVID-19 pandemic is proving how important it is for investors — women and men — to diversify.

“Diversifying your investments is always important,” she said.

“Amid the pandemic, we have seen how important technology is and that it’s here to stay. There is a process to investing based upon your time horizon, needs and risk tolerance. Many people got pets during the pandemic — pet foods and pet medicine is an industry that has gone up. Airlines and hotels are industries that have been hit hard. They will recover, but the unknown factor is when.”

In her chapter, Cullen talked about a woman she spoke with who was panicking during the 2008 stock market crash. She wanted to sell everything at a loss and buy GICSs. Cullen advised her not to, but the woman did — and Cullen said she always thinks of that woman, knowing she likely never recovered financially.

In the chapter, Cullen talked about why women are so financially conservative and she cites being too busy/family commitments, having lower incomes, having a lack of knowledge/interest and having a lack of confidence.

She says being too conservative is a problem for women because of several risk factors:

  • women tend to live longer than men and will need money for a longer period of time.
  • inflation means overly safe investments won’t keep up with cost of living.

Cullen said women can stop being too conservative by becoming more active in their own finances and by taking the time to learn the basics of financial planning. She said women need to understand concepts such as volatility versus risk, saving versus investing and good debt versus bad debt.
She closed her 11-page chapter saying women are becoming more liberal in their investments.

“On a positive note, I have been a financial advisor for over 25 years and I can tell you that I have seen a shift in the average woman’s involvement with her finances,” Cullen wrote.

“I am starting to witness more and more women becoming less conservative and more confident and knowledgeable about their financial affairs, which I know will have a strong and positive effect on their financial future.”

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