Research has proven that investing sustainably doesn’t necessarily impair returns at all – and may in fact be key to achieving good performance in a rapidly changing world.
Wealth managers the world over are really ramping up their focus on the needs and preferences of affluent females. Read on to learn why women’s wealth is such a hot topic, and what institutions are doing to improve their offerings for female clients.
Women may make up half the population, but it is well acknowledged that the financial services industry has generally not maximised its opportunities to engage with affluent females hitherto. Things are rapidly changing, however, as women’s financial empowerment continues to accelerate.
The question of how wealth managers can better serve female clients has been high on the industry’s agenda for a number of years now, but it seems to have shot right to the top in 2017. Hardly a week passes now without an institution launching a new initiative, service or piece of research focused on women.
Today, women are estimated to control a third of the world’s total private wealth[i] – a figure which is neatly mirrored by 31% of visitors to findaWEALTHMANAGER.com being female. In fact, the figures motivating change are truly compelling across the wealth spectrum and throughout the world, representing nothing short of a sea-change in how society and economics are ordered globally.
Today, women are estimated to control a third of the world’s total private wealth – a figure which is neatly mirrored by 31% of visitors to findaWEALTHMANAGER.com being female.
At the upper end, research shows the growth of the world’s female billionaire population outstripping that of males and ultra-wealthy women really driving their families’ businesses, with 57% in the US, 63% in Europe and 96% in Asia being active wealth creators[ii]. Meanwhile, we see that 40% of US households have a female as the primary earner and that American women are expected to control $22 trillion of personal wealth by 2020[iii].
Global wealth demographics are going through seismic changes, and not just on the gender front. Ever more wealth is in the hands of women, but also in those of younger individuals and those hailing from emerging markets as the “pale, stale, male” paradigm of wealth falls by the wayside. As competitive pressures ratchet up, wealth managers are having to rapidly get to grips with these trends to maintain and grow their market share. Along with “millennial money”, tailoring the wealth management offering specifically for women has therefore come right to the fore.
First on the to-do list is improving female representation within the industry itself. The lack of women in the broad financial services workforce is well acknowledged, but this appears to be particularly acute in wealth management. Even in the US, a country well advanced in its equality journey, only 16% of financial advisers are female[iv].
Great strides are being made by leading organisations, however, banks and wealth managers included. In the UK, female representation on FTSE 100 boards has doubled in five years, while we now also see large financial institutions pledging to promote gender equality across their workforces and making moves like signing the Women in Finance Charter.
The importance of improving female representation is threefold.
Firstly, although no-one would suggest that female investors prefer to work solely with female advisers, this sometimes might well be preferable due to cultural, religious or situational factors (such as when a lady is going through a gruelling divorce).
Secondly, female clients will want to know that an institution values the role of women and respects their achievements. Seeing an obvious gender bias within the its management team will signal that it perhaps doesn’t as much as it might. For this reason, the visibility of female leaders is essential, even when the individual sees gender as unimportant to the make-up of their personal team.
Thirdly, and perhaps most important of all, is the fact that strong female representation within wealth managers increases the likelihood that women’s particular wants and needs are being addressed. Again, while sweeping generalisations would be wrong, there are undeniably specific differences and preferences to be taken account of.
There will be exceptions of course, but research generally shows that women have very different investment tastes and objectives compared to men, along with differing communication and relationship styles – factors that might easily cause things to founder.
Accurately assessing a client’s risk profile is the cornerstone of productive wealth management relationship, and here we see that a third of men describe their risk tolerance as aggressive, against a quarter of women[v], for example.
More broadly, research suggests that women tend to take a more holistic view of their financial objectives, defining “success” in wider terms. This often translates into responsible or impact investing having great appeal for women (although that is not to say this style of investing isn’t gaining huge momentum for both genders).
It must also be remembered that women’s lives tend have a different “shape” to men’s due to career breaks related to having children or other caregiving responsibilities, and the fact that they tend to live significantly longer. That they are likely to need to fund many more years in retirement than a man is just one of several factors female investors need to take into account in their financial planning around pensions.
That they are likely to need to fund many more years in retirement than a man is just one of several factors female investors need to take into account in their financial planning.
Elsewhere, firms are moving to recognise that female entrepreneurs can often be “first-timers” to complex issues like business succession, and lacking mentors to guide them, meaning that special attention might be warranted here.
Finally, numerous studies show that women tend to prefer a collegiate approach to wealth management issues, with them liking to share and validate ideas with various advisers, friends, family and colleagues. Importantly, women are also far more likely to admit to lacking confidence in certain areas of finance and to being dependent on their adviser’s guidance. This of course means that female clients tend to be more loyal and recommend good firms more – factors which are also fuelling wealth managers’ moves to court, and serve, them more effectively.
Across regions, firms of all types are really upping their game when it comes to catering to women’s particular wants and needs, meaning there is no reason for affluent females to hold back from exploring their options.
Across regions, firms of all types are really upping their game when it comes to catering to women’s particular wants and needs, meaning there is no reason for affluent females to hold back from exploring their options. Irrespective of personal situation, knowledge and control are key in all financial matters.
Whatever your preferences as to institution or adviser, findaWEALTHMANAGER.com is sure to be able to help. We represent the full spectrum of institutions and are able to connect you with exactly the right people within them.
To discover which wealth managers are best-placed to serve you, try our smart online tool or speak to a member of our team today. Our service is free, fast and carries no obligation, so why wait to see how your wealth could be working harder?