Research Summary

Women Business Owners Give Priority to Retirement Plans

Center for Women’s Business Research  ·  November 13, 1997

They also offer more plan options; seek to minimize risks

“Retirement Plan Trends in the Small Business Market: A Survey of Women- and Men-Owned Firms” is based on interviews with 610 women- and men-owned businesses with 10 or more employees across the country. The study confirms other NFWBO research women entrepreneurs draw upon a wider circle of sources more regularly when seeking business advice and making decisions than men business owners.

“With respect to other types of employee benefits, women business owners are more likely to offer job sharing or flex time and profit sharing than men-owned firms,” explained Lois E. Haber, CLU, ChFC, NFWBO Chair and President & CEO of Delaware Valley Financial Services, Inc. in Berwyn, Pa. “Fully 54% of women-owned firms with 10 or more employees offer flextime or job sharing arrangements as an employee benefit, compared to 33% of men-owned firms. Thirty-nine percent (39%) of women-owned firms, compared to 30% of men-owned firms, offer profit sharing to their employees.”

“Women business owners are as likely as men business owners to be concerned about retirement planning, and as likely to have a retirement plan in place,” observed Beverly Holmes, Vice President of Retirement Services at MassMutual. “While half (51%) of women-owned firms currently have no retirement plan, more are discussing the issues of retirement with an advisor (43% of women without plans compared to 25% of men) and more women intend to put a plan in place for their employees (37% of women compared to 31% of men-owned firms).”

“There are some gender differences in what retirement plan characteristics are important to business owners,” MassMutual’s Holmes noted. Among firms with retirement plans, women tend to offer a wider range of investment options to their employees, according to the NFWBO survey. Nearly half (49%) of women business owners, compared to 41% of men business owners, offer their employees six or more different investment options or funds to choose from in their retirement plan.

The NFWBO survey also found that women business owners place higher relative importance in not putting their employees’ investments at risk.

The NFWBO survey also determined that women business owners consult with a wider variety of sources more regularly than men business owners when making financial decisions. For example,

56% of women entrepreneurs regularly consult with an outside accountant, compared to 47% of men business owners;48% of women, compared to 39% of men, rely on business magazines;45% of women, compared to 36% of men, regularly consult a company board; and36% of women, compared to 29% of men, gain frequent input from other business owners.

Word-of-mouth and referrals are the primary source of financial advisors for both women and men business owners, but women business owners are more likely to find their financial consultants through a recommendation from another business advisor than are men business owners. Sixteen percent (16%) of women business owners, compared to 9% of men business owners, found their current financial advisor through recommendations from another business advisor.

“The ways in which women business owners are making decisions about retirement benefits for themselves and their employees are consistent with other NFWBO research,” observed Haber. “Our research documents that women entrepreneurs place value on both relationships and factual information, are more likely than men entrepreneurs to seek out the opinions of others, and are more reflective than their male counterparts when making decisions,” Haber explained.

“Today, 18.5 million Americans work for a women-owned business,” observed Phyllis Hill Slater, president of the National Association of Women Business Owners (NAWBO) and president of Hill Slater, Inc., a Long Island, NY-based engineering and architectural company. “As these businesses continue to grow, their owners are increasingly interested in offering benefits which provide security for their employees and help their companies retain the best and brightest employees.”

Charts

Men and Women Differ on the Benefits They Offer Employees

Business Owners Seek Advice From a Variety of SourcesWomen and Men Business Owners Offer a Variety of Retirement Fund OptionsWomen Business Owners Place Higher Relative Importance on Employee Choice, No Minimum Investment

The complete report, “Retirement Plan Trends in the Small Business Market: A Survey of Women- and Men-Owned Firms,” is available from NFWBO for $90.00. (Discounts are available for NAWBO members and NFWBO corporate partners.)

The National Foundation for Women Business Owners (NFWBO) is a nonprofit research and leadership development foundation. NFWBO is recognized as the premier source of information and intelligence on women business owners and their enterprises by corporations, policy makers, financial institutions and the media. Up-to-date intelligence about women business owners and their enterprises worldwide is documented in NFWBO’s original research and analysis. The Foundation is affiliated with the National Association of Women Business Owners (NAWBO).

The sponsor of “Retirement Plan Trends in the Small Business Market: A Survey of Women- and Men-Owned Firms” is MassMutual Retirement Services. MassMutual is one of the nation’s largest plan providers, offering sound solutions to defined benefit arrangements and defined contribution plans for both large and small businesses. MassMutual is ranked among the top 15 401(k) providers for assets under management (Pensions & Investments Magazine, July 1997). As parent company of Oppenheimer Funds (which manages over 80 mutual funds), David L. Babson & Co., and other subsidiaries, MassMutual has approximately $140 billion in assets under management, over 1/3 of which are in retirement accounts. To learn more about MassMutual Retirement Services call (800) 767-1000.

Methodology Note: The survey was conducted by telephone among 610 firms with 10 or more employees 411 (200 women-owned and 211 men-owned) randomly selected from Dun & Bradstreets’ Dun’s Market Identifier database, and 199 women randomly selected from the National Association of Women Business Owners’ membership database. The over 10 million firms in the Dun & Bradstreet database comprise an accurate census of the commercially active firms in the U.S.; that is, they are likely to be full-time firms engaged in commerce. The survey was pretested in early April, and interviewing was conducted between mid-April through early June, 1997. CJ Olson Market Research of Minneapolis, MN, a women-owned firm, conducted the interviews.

To ensure adequate representation of larger firms and women-owned firms for analysis, the survey was quota-controlled for gender of ownership and business size. The survey results were then weighted to their correct proportions for analysis.

The sampling error for a survey of N=610 is approxiamtely 4.1% at the 95% confidence level. This means that, 95 times out of 100, survey responses are within 4.1% of the true population values.

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