What we know about women investors and why wealth managers should care

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By: Gregory Smith, Partner and Canadian Wealth and Asset Management Leader at EY

You know, we keep saying it’s 2017 and about time gender parity was the norm. We’re making progress by slowly chipping away at glass ceilings in government and in business. However, wealth management as a sector has a ways to go, both in employing women and serving women, who are creating and accumulating wealth at an accelerated pace. As clients, women are an extremely influential segment with their own priorities and it’s time we pay more attention.

To start, here are a few interesting facts to think about – according to the CFA Institute, the global income of women will grow from $13 trillion to $18 trillion in the next five years; that’s more than the GDP growth of China and India combined during the same period. In addition, by 2028, 75% of discretionary spending will be controlled by women.

Yet, according to EY’s Harnessing the power of women investors in wealth management, most women don’t have an advisor managing their financial needs. Less than half of women have an emergency fund, and only one quarter of women rebalance their portfolios to keep their asset allocation on track.

Should wealth managers treat women differently?

The answer is yes and no. Both women and men should have the same access to the financial products and the same opportunities to grow their wealth. But at the same time, wealth managers can’t ignore the differences in behaviours in women and men when it comes to managing money.

Here's how women differ from men in terms of decision-making habits:

  • They spend more time educating themselves before making a decision
  • They're typically focused on longer-term goals
  • They choose a financial advisor based on relationship, brand affinity and trust, as opposed to investments and returns
  • They’re more loyal and are less likely to switch advisors

Looking at these tendencies, women have the qualities to be an ideal client – it might take longer to earn their trust at first, but they’re more likely to stay with one advisor for a long time. Having said this, just like men, women are all different. While it’s important to recognize their tendencies listed above, it’s even more important to understand their individual needs.

What can wealth managers and their firms do to serve women better?

Advisors have to invest the time to understand the key issues that impact a female client’s financial needs and goals. A woman who’s an entrepreneur, for example, will have different goals, needs and wants than one who’s a millennial or an executive, or has unexpectedly inherited a lump sum. This understanding of their unique situation should also inform advisors’ marketing strategy that should be as tailored and personalized as possible.

To serve their female clients better, wealth managers and their firms should consider:

  • Recruiting more female advisors: wealth management is currently a heavily male-dominated sector. Research shows that diversity – gender, or otherwise – results in financial benefits for any company and hiring women should be a strategic push from the top. Serving women will be easier with more female advisors.
  • Targeted content: develop content that caters to differences in decision-making habits and women-specific financial needs. For example, women might choose to take a break from their career to have kids – how would that impact their financial health long-term?
  • Go digital: use digital tools to identify and make note of women’s individual needs. With better digital functionality and better use of data, valuable information gathered through digital interactions can personalize content and make it more engaging.
  • Coaching all advisors: coach current advisors – men and women – on how women’s needs might be different and how best to engage them. This could be in the form of training, one-on-one coaching, or advisor forums.

Firms, not just advisors, need to make women a priority. In order to be a successful business in five years, firms need to ensure they’re attracting and retaining women advisors, and attracting women clients. It’s about time we made some investments and really learned – through data and existing relationships – what this segment of the population expects from wealth advisors. And then act on it.