Financial Goals, Concerns and Actions of Women Business Owners

Financial Goals, Concerns and Actions of
Women Business Owners
Focus: Retirement Planning
February 24, 2012
Jill B. McCullough, DM, CFP ®
Assistant Professor
Youngstown State University
Mary Quist-Newins, CFP ® , CLU ® , ChFC ®
Director
State Farm ® Center for Women and Financial Services
Download an electronic copy of this report at TheAmericanCollege.edu/WBORetirementStudy.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Acknowledgements
About The American College and The State ® Farm Center for Women and Financial Services
The American College is the nation’s largest non-profit
educational institution devoted to financial services. Holding
the highest level of academic accreditation, The College has
served as a valued business partner to banks, brokerage
firms, insurance companies and others for over 85 years. The
American College’s faculty represents some of the financial
services industry’s foremost thought leaders. For more
information, visit TheAmericanCollege.edu.
In 2007, State Farm ® endowed a Chair in Women and
Financial Services at The American College. This faculty
appointment was the first and only academic chair in the
country devoted exclusively to the study of women and their
financial concerns. State Farm Insurance ® made another
generous donation to The College, enabling the creation
of a new Center for Women and Financial Services in 2011.
As the first academic center of its kind, this focal point of
research, education and knowledge serves as the nation’s
leading authority on the economic issues and opportunities
of American women, both as consumers and providers
of financial products and services. Through leading edge
research, financial education and awareness building, The
Center’s mission is to promote the advancement of women
in the financial services industry and to advocate for the
economic security of American women.
About the Authors
Professor Mary Quist-Newins, ChFC ® , CLU ® , CFP ® , has
the distinction of being the Director of the State Farm Center
for Women and Financial Services and holding the research
chair. During her 20-year career in financial services, Quist-
Newins has achieved success as both a field producer and a
corporate leader. Treasury & Risk recognized her significant
contributions to the financial services industry by naming her to
the magazine’s elite list of “25 Outstanding Leaders in Finance
Who Happen to be Women” in November 2008. In 2010,
Quist-Newins authored the comprehensive academic textbook,
Women and Money, Matters of Trust. In 2011, she was
honored by Women in Insurance and Financial Services (WIFS)
as the “Woman of the Year” for her commitment to increasing
awareness of the financial services issues affecting women.
In addition to holding a Master’s in Business Administration
from the Garvin School of International Management,
Quist-Newins has earned the prestigious Chartered Life
Underwriter ® , Chartered Financial Consultant ® and Certified
Financial Planner ® advanced designations. She received her
BA from the University of Washington.
Dr. Jill McCullough supports The Center’s original research
through findings analysis, research report development,
papers in academic journals and the development of course
curricula. She received a Doctor of Management in May
2010 from The Weatherhead School of Management at
Case Western Reserve University in Cleveland, Ohio. Dr.
McCullough has an extensive teaching background that
includes finance, accounting and business technology. In
addition to her fellowship at The American College, she is
currently an Assistant Professor of Finance at Youngstown
State University. Dr. McCullough’s areas of research
concentration include:
• Behavioral finance and organizational management;
• Financial services product development strategies;
• Entrepreneurial behavior as it affects financial
decision making;
• Delivery mechanisms of financial services.
Page 2
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Contents
Acknowledgements ............................................................................... 2
Study Overview: Financial Goals, Concerns and Actions of Women Business Owners ............. 4
Opportunity to Provide Service to an Important and Growing Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Study Focus: Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Overall Retirement Planning Concern ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 1: Women Business Owners’ Concern for Retirement Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Confidence in Their Efforts Despite Inaction in Retirement Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Figure 2: Concern for Retirement Planning Contrasted with Opinion of Adequate Attention Paid.. . . . . . . . . . . . . . . . . . . . . 6
Few Have Formally Calculated Their Eventual Retirement Needs .............................................. 7
Figure 3: Retirement Planning Actions .................................................................. 7
Little Concern for Specific Retirement Planning Items.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Specific Retirement Planning Concerns ................................................................. 8
Figure 4: Retirement Planning Concerns ................................................................ 8
Confidence in the Adequacy of Their Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 5: I take an active role in understanding my retirement needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 6: My financial advisor told me I was on track and I trust/believe her . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Use of Retirement Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Retirement Plan Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 7: Use of Retirement Investment & Retirement Plan Types .............................................. 9
Maximizing the Owner Benefit in a Retirement Plan ...................................................... 10
Figure 8: Maximizing the Owner Benefit in a Retirement Plan ............................................... 10
Maximizing the Value of a Transfer or Sale of Business to Fund Retirement.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 9: Maximizing the Sale or Transfer of Business for Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Advisor Used for Retirement Planning ...............................................................11
Financial Advisor Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Table 1: Women’s and Men’s Use of Advisors by Area and Type ..............................................11
Financial Advisor Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Summary & Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Methodology .................................................................................. 13
Works Cited .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
© 2012 The American College, All Rights Reserved. Page 3

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Study Overview: The Financial Goals, Concerns
and Actions of Women Business
Opportunity to Provide Service to An Important and Growing Market
Women business owners represent an increasingly robust
and important market segment for the financial services
industry and its professionals. According to the Center for
Women’s Business Research, women-owned firms (firms
where women hold more than a 50 percent stake in the
business) now account for four in 10 of all closely-held
concerns i . This represents a substantial market segment.
Over 10 million businesses are now majority owned by
females. This is also a growing market segment. The number
of women-owned businesses has increased by 44 percent
from 1997 to 2007 —a rate twice as fast as that of maleowned
businesses ii . In 2009, women-owned firms created/
maintained employment for more than 23 million Americans
and had an estimated economic impact of $3 trillion iii .
Rarely has there been such an easily-identified, growing
group of potential clients for business service providers.
Yet, this segment has frequently been under-identified as a
market for financial services and products. A one-size- fits-all
approach has been the standard for services provided to men
and women small business owners. Unfortunately, women
small business owners, similar to women in general, face
formidable financial risks. Greater longevity, lower financial
literacy and higher probabilities of disabling health conditions
create significant financial challenges. While each of these
risks can be difficult to manage, when combined, their drain
on an individual’s financial resources can be devastating.
If financial services industry thought-leaders are to
successfully engage this market, it is critical for them to gain
awareness of the specific priorities and challenges facing
women. Strategies must be crafted that address the concerns
of women small business owners. In addition, more time
must be allocated to better train representatives on how to
properly address this market.
This project was undertaken with the goal of learning
more about women business owners’ financial concerns.
We obtained responses from 835 female business owners
who have recent business revenues greater than $50,000.
The results yielded a robust body of information that was
summarized into a series of issue- oriented reports focused
on retirement, financial management, asset management,
protection planning and advisor preferences. It is the goal of
the researchers to help strengthen the bridge between the
women that own small businesses and the financial services
providers who can best help them achieve financial success.
Page 4
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Study Focus: Retirement
Business owners, unlike most workers, were always
responsible for funding their own retirement. It might be
assumed, therefore, that retirement planning is a routine
aspect of their financial activities. Evidence suggests,
however, that small business owners have done very little
planning and saving for the time when they must transition
out of their businesses. In fact, 40.8 percent of U.S. small
businesses do not even have a retirement plan in place iv .
Women are particularly vulnerable to the risks associated
with inadequate retirement funding. Since they live longer
than men, they face a greater risk of running out of money
to pay for expenses during their retirement years. This
longevity risk is also often accompanied by increased medical
costs that can further drain retirement savings.
To get a better picture of the retirement planning status of
women business owners, this study concentrated on their
retirement goals, concerns and actions. We focused first on
the small business owners’ general opinions and concerns
about retirement planning. We then asked about the actions
they have already taken, as well as the actions they feel they
should be taking. Next, the owners were asked to identify
those financial products they use for retirement preparation.
We also asked in-depth questions concerning their use
of retirement plans and strategies for transitioning their
businesses. Finally, we asked small business owners about
their preferences when choosing financial advisors.
The responses to these questions strongly suggest that
women small business owners are very confused about their
retirement planning. Even worse, they often may not be
making any decisions at all, leaving them vulnerable. Here
are some of the more alarming results of our research:
• The majority, 84 percent, are concerned about
retirement.
• One in three (34 percent) have not estimated how
much they will need in retirement.
• The majority, 77 percent, do not have a written
retirement plan.
• Just 37 percent believe their retirement planning
needs are complex.
• Approximately 50 percent say they want to maximize
their business value to help fund retirement, yet only
10 percent have a written plan to accomplish this.
These responses are particularly troubling since the average
age of the women business owners surveyed was just over
50. Retirement, for many of them, will occur within the next
20 years. These responses, as well as many others are detailed
in the following pages. The results clearly indicate that women
small business owners need more guidance and professional
financial advice in order to reach their financial goals.
© 2012 The American College, All Rights Reserved. Page 5

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Overall Retirement Planning Concern
We first asked women small business owners how concerned
they were, near-term, with their overall retirement planning.
The majority, 84 percent, admitted that they were concerned
or very concerned about their retirement planning. They
appear to be keenly aware that this financial responsibility
needs attention.
Confidence in Their Efforts
Despite Inaction in Retirement
Planning
How confident are business owners that they are paying
sufficient attention to their overall retirement planning?
Surprisingly, even though the majority, 84 percent, feels that
retirement planning is a strong concern, about one half, 51
percent, are satisfied that they have paid enough attention to
this aspect of their finances.
Figure 1: Women Business Owners’ Concern for Retirement Planning
Business entrepreneurs are reported to exhibit a high sense of
self-efficacy v . This may explain why despite being concerned
about retirement planning, small business owners are content
with their own actions. They have a positive opinion of their
own ability to control personal circumstances. So while these
owners are aware that they may eventually face retirement
savings challenges, they believe that they will be able to find
a solution when the time comes. This exaggerated optimism,
which helps propel them through the uncertainty of being a
business owner, may dangerously cause them to ignore the
realities of their future retirement needs.
This tendency towards overconfidence may also present
challenges for financial advisors. A knowledgeable advisor
can play a critical role in small business owners’ retirement
planning. The owners’ feeling of “I can figure this out on
my own,” however, may cause them to underestimate the
importance of professional advice. Also, women in general
report feeling “talked down to” and patronized by financial
services professionals. As a result, strong and confident
female small business owners are likely to be resistant to
working with advisors who do not show respect for their
success and abilities.
Figure 2: Concern for Retirement Planning Contrasted
with Opinion of Adequate Attention Paid
Page 6
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Few Have Formally Calculated Their Eventual Retirement Needs
Although women small business owners overwhelmingly
recognize retirement challenges and needs, there is little
evidence that they are making consistent efforts to address
these issues. To the contrary, owners seem to suffer from
retirement planning inertia.
When asked about specifics, the business owners had very
little worries. Only 39 percent fear not having enough money
in retirement and only 35 percent fear outliving their assets
(see Table 2). Perhaps this is because they have not actually
projected the amount of funds they will require to support
retirement. Although 66 percent of the owners claim they
have estimated the amount of funds they will need to
retire, other responses suggest these calculations have been
very haphazard. Only 32 percent say they have estimated
retirement needs with the help of a financial professional.
In addition, only 23 percent say they have a formal, written
plan for managing income and expenses during retirement.
Fifteen percent say they have used an online retirement
calculator or just made simple calculations on paper.
Only 29 percent say they have more clearly identified
their financial needs in this area. While a major source of
retirement funding for a business owner can come from the
sale of the business and/or retirement plan assets, less than a
half of the business owners surveyed reported starting a new
plan or increasing their retirement savings amount.
Have more clearly identified
retirement financial needs
29%
Increased retirement savings amount
40%
Started a new plan
40%
Have estimated the amount of funds
needed for retirement
Used a financial professional to
calculate retirement needs
32%
66%
Used online retirement calculator to
estimate retirement needs
15%
Used simple paper calculations to
estimate retirement needs
15%
0 10 20 30 40 50 60 70
Figure 3: Retirement Planning Actions
© 2012 The American College, All Rights Reserved. Page 7

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Little Concern for Specific Retirement Planning Items
Specific Retirement Planning Concerns
Anticipated higher health care costs
Increases in cost of living
Not being able to have enough
money to retire
Not being able to have the same
quality of life as current
Cost of inflation
Outliving my assets
42%
40%
39%
37%
36%
35%
Need to continue working
Low Social Security benefits
21%
23%
Inability to remain active
in the business
Not having a solid transition
plan in place
10%
15%
0 10 20 30 40 50
Source: State Farm ® Center for Women & Financial Services at The American College
Figure 4: Retirement Planning Concerns
When we asked the women business owners in our survey
to identify their specific retirement planning concerns, the
results were surprising. Although 84 percent of business
owners say they are concerned about retirement planning in
general, they seem unaware of the specific financial hazards
they may ultimately face. Further, there is little consensus
among the owners as to their strongest concerns. For
almost every retirement item listed, fewer than 40 percent of
the women expressed concern.
The owners were asked specifically if they were concerned
about meeting their expenses in retirement.
• When asked if they would eventually be able to quit
working and retire, the majority were very confident.
Only 39 percent worried about not having enough
money to retire and only 23 percent thought that
they might need to continue working in retirement.
• As life expectancy for women continues to
increase, more savings will be required to fund a
longer retirement. Despite this, only 35 percent
of these women are worried about outliving their
assets. Even more surprising, only 37 percent of
the women surveyed were concerned about being
able to maintain their current quality of life during
retirement. Worries about the cost of inflation were
expressed by only 36 percent, and only 40 percent
were concerned about increases in the cost of living.
• As women live longer, they are also at risk for
increased health care costs. Despite this, only 42
percent of the respondents said they were worried
about higher health care costs in retirement.
• Currently, business owners pay a 13.3 percent selfemployment
tax on their first $110,100 of earnings
that helps pay for Social Security and Medicare. One
might expect small business owners to be concerned
about eventually receiving these benefits. However,
only 21 percent were concerned about low Social
Security benefits.
• Finally, the legacy of the owners’ businesses does
not seem to be a concern. A mere 10 percent of
the small business owners surveyed worried about
whether they had a solid transition plan in place.
Page 8
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Confidence in the Adequacy of Their Efforts
Source: State Farm ® Center for Women & Financial Services at The American College
Despite their inertia, owners have
very positive opinions about their
own retirement planning actions.
Seventy- five percent agreed with the
statement “I take an active role in
understanding my needs in this area.”
Simultaneously, they feel less sure
about their advisors. Only 47 percent
of women small business owners
agreed that “My financial professional
told me I was on track and I trust
him/her.”
Figure 5: “I take an active role in understanding
my retirement needs”
Figure 6: “My financial advisor told me I was on
track and I trust/believe her”
Use of Retirement Plans
To finance a sound retirement, a small business owner can
draw upon funds from a combination of sources. These
typically include:
• A business-sponsored retirement plan
• Social Security
• Proceeds from the sale of a business
• A retirement stream of income from the business,
managed in retirement by a family member or
other employee
Retirement Plan Ownership
A well-structured company retirement plan can provide
tremendous benefits for small business owners. The
advantages include an automatic tax-deferred savings
mechanism for owners and their employees, employee
retention incentives and a diversification of resources away
from the business. However, confusion over the tangle of
government regulations combined with a multitude of plan
choices may rattle owners’ confidence in making sound
retirement plan choices.
Deferred Annuity
401(k)
25%
40%
Most owners in this study (70
percent), report having one or more
type of business retirement plan. The
retirement plan types used were:
SIMPLE IRA
Sep IRA
Immediate Annuity
20%
19%
10%
0 5 10 15 20 25 30 35 40
Source: State Farm ® Center for Women & Financial Services at The American College
Figure 7: Use of Retirement Investment & Retirement Plan Types
• 401(k): 23 percent
• SEP IRA: 21 percent
• SIMPLE IRA: 29 percent
• Deferred annuities: 17 percent
• Immediate annuity: 10 percent
© 2012 The American College, All Rights Reserved. Page 9

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Maximizing the Owner Benefit in a Retirement Plan
Although the analysis of retirement plans often focuses on the benefits they provide
to employees, business owners who sponsor a retirement plan also enjoy significant
retirement savings advantages. The annual amount an owner can contribute to a
retirement plan is contingent on complex IRS regulations related to the owner’s
income, the level of contributions being made by employees and other factors.
Have sought education
in this area
Have consulted with family,
friends, colleagues
Have researched the web
Have attended a seminar
about this
Have paid an advisor for a
formal, written analysis
19%
19%
28%
27%
0 10 20 30 40 50 60 70 80
Source: State Farm ® Center for Women & Financial Services at The American College
Figure 8: Maximizing the Owner Benefit in a Retirement Plan
69%
Small business owners who have a
retirement plan seemed to understand
the importance of creating a plan
structure that gave them the ability to
maximize their contributions. Sixtynine
percent of women indicate that
they sought education to learn how
to maximize their own benefit in their
business retirement plan. However, the
sources of this education are unclear:
• Only a few (19%), have paid a
financial planner to develop a
retirement plan analysis.
• 27 percent have done research
on the web.
• About 28 percent of females have
consulted with friends and family
or peers and business colleagues.
• Very few (19%), reported
attending seminars.
Maximizing the Value of a Transfer or Sale of Business to Fund Retirement
Are owners counting on using the proceeds from the sale of their businesses
to fund retirement? Many (40 percent) reported that they will not be able to
transition the business. Further, 20 percent say they will need to close or sell the
business upon retirement. Only 10 percent of the women owners have a formal,
written plan to transition their business when ready to retire.
Have sought education in this area
Will not be able to transition business
at retirement
Have consulted with a financial pro in this area
Have done research in this area
Have consulted with family, friends,
and colleagues
Will need to close or sell business at retirement
Have attended a seminar about this
Have a formal, written plan to
transition business
10%
20%
19%
25%
34%
32%
40%
61%
Of the 56 percent of women small
business owners who reported being
concerned about this issue:
• Sixty-one percent have sought
education in this matter.
• Only a few, 34%, have consulted
with a financial professional.
• Thirty-two percent have done
research on the web.
• About 25 percent have
consulted with friends and
family or peers and business
colleagues.
0 10 20 30 40 50 60 70
Source: State Farm ® Center for Women & Financial Services at The American College
Figure 9: Maximizing the Sale or Transfer of Business for Retirement
Page 10
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Advisor Used for Retirement Planning
Financial Advisor Type
The small owners did not express a strong preference for
a particular type of advisor to assist with their retirement
planning. “Financial planner” received the strongest
preference. However, this was a weak consensus, with only
23 percent of female and 17 percent of male respondents
making this selection. By contrast, 55 percent of women
and 46 percent of men selected “accountant/CPA” as the
advisor of choice for tax matters.
Overall, the responses seem to indicate that business owners
are either confused about choosing the right type of advisor
or simply not confident in the help that can be garnered
from engaging any of these advisors. This result is surprising.
One would expect that busy business owners would be
eager to delegate these planning to duties to others.
This lack of confidence and/or understanding the importance
of using the services of a qualified advisor for complex
financial issues should be of interest to those in the financial
services industry. It suggests that professional advisors
might want to rethink the manner in which they position
themselves in this market. It also suggests the potential
for significant business opportunities for financial planners
who successfully develop better approaches to meet the
retirement planning needs of business owners.
Percent Using Advisors
by Area and Type
Accountant/CPA Banker Stockbroker Financial Planner Attorney Insurance Agent
W M W M W M W M W M W M
Retirement Planning 19 12 4 4 7 9 23 17 6 8 6 8
Tax Planning 55 46 2 2 2 3 11 12 8 10 3 4
Source: State Farm ® Center for Women & Financial Services at The American College
Table 1: Women’s and Men’s Use of Advisors by Area and Type
Financial Advisor Gender
Last, it is worth noting that the research revealed a strong
gender bias relative to a financial advisor’s gender. More
than 61 percent of women business owners were found to
prefer working with a female financial advisor. Conversely,
75 percent of men preferred working with a male financial
advisor. Yet industry and government studies (i.e., trade
organizations—CFP Board, SIFMA, LIMRA, Bureau of Labor
Statistics) show that women represent a fractional minority
of financial advisors. Currently, only 20 to 33 percent of
financial advisors are women. This suggests the industry
needs to continue to focus on recruiting and developing
more qualified financial professionals who happen to be
female, in an effort to capture the rising premium and asset
dollars women business owners represent.
© 2012 The American College, All Rights Reserved. Page 11

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Summary & Implications
Women business owners represent an important and
growing segment in the financial services marketplace. The
results of this study suggest that business owners need more
education and guidance concerning their retirement needs.
Despite high levels of reported concern and involvement, a
significant minority (34 percent), have not even estimated
how much capital they need for retirement. Further, just one
in four owners said they had a formal, written financial plan
for managing income and expenses in their golden years.
Fewer still had developed a retirement transition plan for their
businesses. In light of the average age of respondents (just
over 50 years old) and increased risks attendant with business
ownership, these are astonishing disconnects. The owner’s
awareness of retirement planning as a matter of concern
should make them open to help. However, their sense of selfability
may interfere with attempts to guide them.
Studies in behavioral finance may lend insight into the
overconfidence of some business owners in their ability to
deal with complex calculations—like retirement planning. In
a recent New York Times article, Daniel Kahneman, emeritus
professor of psychology and public affairs at Princeton
University and winner of the 2002 Nobel Prize in Economics,
presented a useful description of the overconfidence bias as:
“The confidence we experience as we make a judgment is
not a reasoned evaluation of the probability that it is right.”
Evidence of this overconfidence bias may be revealed in the
women business owner study’s findings that just over one
third of all respondents said, “My needs in this [retirement
planning] area are complex.” Additional support for this
hypothesis is revealed in the finding that roughly half of all
respondents said they had paid more for the proper amount
of attention to retirement planning.
Exacerbating the risk of overconfidence bias may be the
owners’ near-constant focus on the “here and now” with
their short-term focus overriding the need and possibility for
more strategic thought and planning. As Kahneman goes on
to say in the New York Times piece, “We are prone to think
the world is more regular and predictable than it really is…
Fast thinking is not prone to doubt.” vi
On the flip side, of those who may be overconfident, there is also
a significant proportion—nearly half of all respondents—who say
they should have paid more attention to strategic retirement and
estate planning. These findings suggest these two topic areas
may be more compelling than others as discussion starters and
as areas of competency development for financial professionals
seeking to specialize in serving entrepreneurs.
Another aspect of the lack of attention to retirement
planning may be the owners’ happiness with their current
situation. According to recent polls, self-employed Americans
are the most content with their careers. Because of this
contentment, business owners may not be strongly motivated
to retire. Financial advisors who specialize in this area will
be challenged to educate small business owners on the
importance of planning for the future.
The question then becomes, who do entrepreneurs turn to
when making financial decisions for their business? With the
exception of using CPAs/accountants for tax planning, there is
little conviction from the owners that they have found the advisor
answer to their many financial problems. Despite concerns about
financial issues and the use of a variety of financial products,
most do not report getting professional assistance.
There is evidence that once these business owners select an
advisor, they are satisfied with the relationship. Yet, many owners
have not consulted with an advisor about retirement planning.
Women are more satisfied with a financial advisor relationship
that is characterized as consultative, as opposed to transactional.
Sixty-one percent prefer working with a female advisor.
The challenge in the financial services industry is to find
better mechanisms for meeting the needs of these women
business owners. A first step may be the increased hiring
and cultivation of representatives who recognize the
opportunities in servicing this market. These representatives
will achieve more success by developing a consultative
relationship with women small business owners. There must
be a willingness to educate these confident women on the
importance of addressing long-term planning issues. Hiring
more female representatives may bring the most success to
companies interested in servicing this growing market.
Page 12
© 2012 The American College, All Rights Reserved.

Financial Goals, Concerns and Actions
of Women Business Owners
Focus: Retirement Planning
Methodology
The study is based on the responses of a survey that
included 835 women and 420 men business owners.
Respondents were qualified to participate based on targeted
characteristics including business ownership (business
owners were defined as individuals who own 50 percent
or more of the business and who make or share in financial
and other business decisions), business revenue ($50,000 per
year or more) and business tenure (in continuous operation
for three or more years). The subjects were obtained by a
random sample of respondents from reliable commercial
research panel sources. Like much commercial research
(excluding public opinion polling), statistics quoted from this
study represent statistical conclusions about the available
population, not the universe of all respondents who would
satisfy the qualification criteria if the universe could be
known. Of the 1,255 completed interviews, 835 were with
women and 420 were with men; the margin of error relative
to the available population for these two subgroups is ±3.3
percentage points for women and ±4.7 percentage points
for men.
Works Cited
i
“The Economic Impact of Women-Owned Businesses in
the United States,” Center for Women’s Business Research,
October, 2009.
ii
“2011 Annual Report,” National Women’s Business Council.
iii
“The Economic Impact of Women-Owned
Businesses in the United States,” http://www.
womensbusinessresearchcenter.org/research/keyfacts,
October 2009.
iv
“Employee Benefits in the United States,” U.S. Department
of Labor, 2008.
v
R.G. McGrath, “Falling forward: real options reasoning and
entrepreneurial failure,” Academy of Management Review
(1999): 13-30.
vi
Daniel Kahneman, “Don’t Blink! The Hazards of
Overconfidence,” New York Times, October 19, 2009.
© 2012 The American College, All Rights Reserved. Page 13