How advisors can help women close the entrepreneur wealth gap – The Globe and Mail
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Women face unique challenges in building wealth, but female entrepreneurs encounter even greater headwinds resulting in a wider financial wealth gap that advisors can help close.
Female entrepreneurship is on the rise in Canada. Women now account for 37 per cent of self-employed Canadians and are majority owners of about 16 per cent of small and medium-sized enterprises (SMEs), according to the Women Entrepreneurship Knowledge Hub (WEKH).
Women choose to be their own bosses for several justifiable reasons. Many continue to be primary caregivers of children or elderly parents and want the ability to set their own work schedules. Others have had enough of being subjected to corporate discrimination, pay inequity and layoffs, and want more control over their future.
No doubt running your own business comes with its perks, but when it comes to building wealth and financial security, self-employed women face an even greater financial wellness gap than women who are employed.
Advisors can play a key role in supporting female business owners and help them identify the following four financial gaps in order to reduce the disparity with their male counterparts.
1. The financing gap
More than 83 per cent of women-owned SMEs use personal sources to fund businesses. Women are also less inclined to seek and receive financing at 33 per cent compared with 38 per cent of men, according to WEKH.
While there are well-documented cases of lending biases, many women wear bootstrapping as a badge of honour because it feels less risky not being accountable to investors or liable to creditors.
Yet, the downside of avoiding leverage or “good debt” altogether is they may avoid investments necessary to sustain or scale their business. They also risk depleting their savings – emergency and retirement funds – and growing dependent on high-interest debt.
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