Power to the Pocketbook
Women advised to take control of their own financial destiny

Monday, January 22, 2007
Mary Vanac
Plain Dealer Reporter

In past generations, it was traditional for the man of the house to handle the big financial commitments - real estate purchases, credit and investments.

But these days, widows, divorcées, the 25 per cent of U.S. women who never marry and an increasing number of women business owners are managing a lot more of their own wealth.

Women tend to have different financial and business goals than men. They also communicate, process information and make decisions differently from men, said Beth Marcello, vice president and man aging supervisor of women's business development at National City Corp. in Cleveland.

So some local companies have developed programs to help women, in particular, manage money, minimize taxes and protect their estates.

Know what you have and where you have it. That means knowing the location of important financial documents or computer files, as well as account numbers and telephone numbers of financial counselors.

It also means knowing the dollar amount of your debts and assets, not to mention debt repayment schedules and rates of return for investments.

Do you know the coverage limit and deductibles on your home insurance policy? What are your retirement accounts worth?

"The most important thing that must be conveyed to women is that they must take control of their finances," said Lisa Sampson, a senior vice president in the private-banking practice at National City.

Women should establish credit histories in their own names, Sampson said. That means women should apply for credit cards or mortgage loans, even if they are married.

Too many times, a divorced woman or a widow can't get a car loan or a credit card because she lacks a credit history. "A little credit is just as bad as no credit," Sampson said.

Make financial plans. Wives should be in on their husbands' financial planning, Sampson said.

"It's important you know who your financial planner is and make sure you're comfortable with that person," she said.

Sampson and her colleagues take a holistic approach to planning. "We're not just talking to you about an investment plan but also an estate plan and a succession plan for your business," she said.

Women's succession plans - which direct what happens to your business when you retire, become disabled or die - tend to look different from men's plans, National City's Marcello said.

For instance, women are more apt to plan for the security of employees than men are, Marcello said.

Part of planning is revisiting your plans now and then, Sampson said.

Investing in your future. Make and keep a budget so you know where your money goes, said Molly Balunek, vice president and director of financial planning for Spero-Smith Investment Advisors in Beachwood.

Participate in your company's 401(k) retirement savings plan, Balunek said. Your savings are subtracted from your paycheck before you get it, so you learn not to miss the money.

Make sure you contribute enough to earn your company's full 401(k) match. Start saving for retirement early, she said.

Some women are investing in businesses. "We're seeing women exiting the corporate community and buying businesses to run in retirement," said Maria Coyne, executive vice president of community banking for Cleveland's KeyBank.

"They are looking to grow something that is meaningful to them and sustainable," said Coyne, who leads Key4Women, which provides women business owners with access to capital, education and networking.

Protect your nest egg. There's an insurance policy for just about everything. For instance, life insurance can protect your family from the loss of your income if you die.

Life insurance also can mitigate business transfer taxes and costs, Spero-Smith's Balunek said. Disability insurance is a must for most wage earners, she said.

Consider disability insurance even if you're a woman whose workplace is home. You may not be paid in dollars and cents, but your work is valuable and costly to replace if you're disabled.

Christopher Eckley's job at Cleveland risk manager Oswald Cos. is to protect family wealth. That starts with making sure each family member has adequate liability coverage for property and vehicles, Eckley said.

Let's say an adult child drives an all-terrain vehicle, has an accident and hurts a friend. The friend's medical costs often are not covered by the parents' homeowners' insurance, Eckley said.

"You have to make sure that person has proper coverage," he said.

Know when to get help. Establish relationships with professionals such as financial planners, wealth managers, accountants and attorneys before a major life event.

Heather Ettinger, a partner at Fairport Asset Management in Cleveland, remembers a client who was dying of cancer and wanted to provide for his wife.

Ettinger and her colleagues listened to the husband's intentions and were given financial documents. They also reached out to his wife and began educating her about financial management.

After the client died, "we ran a lot interference, working with attorneys and [accountants] for retitling assets, tax payments and so on," Ettinger said.

Ettinger and her team reviewed the widow's assets and developed spending and investment plans that could meet the financial goals of the widow and her daughter.

Passing on your wealth. What if you receive an inheritance from your parent? How do you make sure your children get that money after you die rather than your husband's children from your second marriage?

A trust probably would be the right vehicle in this case, Balunek said. A will distributes your money and property after you die. But a trust can be a vehicle that provides ongoing income for heirs.

Remember: Certain assets, such as 401(k) accounts and life insurance policies, pass outside your will or trust to your beneficiaries.

"There are still a lot of women who don't feel comfortable about talking about money," Balunek said. "But talking about it now could reduce the possibility of arguments after death."

To reach this Plain Dealer reporter:
mvanac@plaind.com, 216-999-5302