Single women clients face a unique set of challenges that financial advisors need to prepare to assist with, especially when it comes to retirement and estate planning issues, according to Heather Zack, the manager of the advanced planning department of Commonwealth Financial Network.

Finding ways to help those clients can also enable advisors to address broader issues of financial security for women, which the gender pay gap and decreasing participation in the workforce have been hindering, Zack said last week at Commonwealth’s 2021 Virtual Summit for Women Advisors.

“It’s an opportunity to not only help a client plan for her financial future, but it's also an opportunity to contribute to creating financial parity for women in general to achieve financial parity with our male counterparts,” she said.

Financial planning for single women

When financial planning for single women, advisors should check eligibility for retirement benefits, which requires 40 quarters of working history, and special considerations for the self-employed, according to Zack.

Estate planning for single women with no spouse or children is also often overlooked, she said.

For divorced women clients in particular, advisors should actively “check dual eligibility for retirement benefits and spousal benefits,” Zack said.

It’s also crucial for estate planning considerations to review clients' beneficiary designations, which may have named a spouse, as the way those are handled can vary from state to state, she said.

For widowed clients, advisors should ensure they are working with a lawyer on the probate process and that they are promptly filing estate tax returns “to claim portability of any of their deceased spouse's unused exemption amount,” Zack said.

“Help her to understand and define what her financial future looks like, how much she can comfortably spend and what sort of legacy she wants to leave,” she added.

Gender gaps

More broadly, advisors have a role to play in helping close the gender wealth gap, Zack said.

The Bureau of Labor’s 2020 statistics show that women earn 82.3 cents on the dollar compared to men, and the gap was even more pronounced for women of color, according to Zack. Women earn less than their male counterparts in nearly every occupation and earn less than males of the same race and ethnicity, at every level of education, she said.

To close the gender pay gap, advisors should create and stick to a strong financial plan, Zack said. They should also try to help clients with negotiation skills, annual review preparation, benefits package evaluation as well as dealing with a salary raise or job change, she said.

“Often, the fear associated with these endeavors can prevent a client from taking that first step out of concern for losing her current financial stability,” she said.

Meanwhile, Zack said there has been a decline in women’s participation in the labor force in recent years.

Women's participation in the labor force is at its lowest point since 1988 with only 57% of women working or actively looking for work, Zack said.

More than 2.3 million women left the labor force between February of 2020 and January of 2021 to care for children whose schools were closed or to care for sick family members, compared to less than 1.8 million men, Zack said, citing a recent study conducted by National Women's Law Center.

Advisors should ensure their female clients "account for childcare costs in a financial plan, assess disability and long-term care insurance coverage, and address care needs for aging parents or other family members,” she said.

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