Over the past decade much has been written about the growth in women’s wealth and the business case for attracting female clients.
This is not surprising given that women are set to own more than 50 per cent of the wealth in the UK by 2025, inherit 70 per cent of the wealth passed down over the next two generations, and control two-thirds of household wealth in the UK by 2030, according to UBS report "Women's Wealth 2030".
Despite this, the reality is that women remain the single largest underserved group of customers in financial services. Why?
In my experience this is because there is a refusal to acknowledge that there are fundamental differences between men and women in how they manage money, how they invest and the risks they take.
In its "Serving Women As Financial Services Customers" report, consultancy Oliver Wyman found that senior executives would express concern that “treating women differently from men could be at best unnecessary, and at worst reductive”.
But the report highlighted the reality that approaches which may appear to be gender neutral in fact default toward men’s needs and preferences, and this results in unintentional blind spots in how the industry meets the needs of women.
Given this, it is not surprising that 72 per cent of women in the UK feel they are not understood by the finance industry, according to WealthiHer Network.
So how do we better serve women and win a slice of their increasing wealth?
Based on my experience working with women for more than 20 years, this is what advisers should and should not be doing.
Fundamentally, you need to adjust your sales process and service proposition; women and men go through a different process when they come to buy financial products and want different things from their money.
Buying: gut instincts vs revalidation
Men will often make a quick decision as they tend to go with their gut instincts when choosing an adviser or investing. Men will quite happily buy the sales pitch which resonates, listen to their gut instinct and follow through quickly.
Women on the other hand will want to revalidate their instincts through further research or questioning. They will not just buy because of the slick presentation or adviser; if anything they are often put off by the hard sell. They will want to verify those instincts and will go through a further process of research and questioning.
Appreciate this difference and adjust your processes to ensure that you are not expecting the women to sign on the dotted line on their first meeting with you.
Be patient, listen to their queries, address their concerns, and help them to a decision by providing all the information they seek.
Selling: performance vs goals
Men are more driven by performance and will often invest in the latest fad or fund recommended by their mate or someone in the office. So it is not surprising that the industry is so focused on selling performance and outperformance.
Women tend not to want to grow their wealth just for the sake of a few percentages, they want to meet specific goals, be it a secured retirement, paying school fees or taking care of their elderly parents.
As a financial planner, I rarely talked about investment returns when meeting a new client; I wanted to understand their aspirations and talk about how well (or not) we were placed to meet those aspirations.
Women and men go through a different process when they come to buy financial products and want different things from their money. In review meetings, little time was spent on portfolio performance as the key question most clients wanted answered was: 'Am I still on target to meet my objectives?'
Here the focus on holistic financial planning rather than financial products is crucial. Many advisers effectively use cash flow tools to bring financial plans to life and that too can be very powerful.
However, please remember that while cash flow tools are a useful mechanism, a cash flow by itself is not a financial plan.
Investing: risk vs reward
Women are often said to be risk averse or lacking in confidence, retaining a much higher level of cash savings than men or choosing to tie up their money in property rather than stocks and shares.
Women, in my experience, are considered risk takers; they do not lack confidence as much as information and they tend to take calculated risk rather than chase performance just for the sake of it.
They also do not want to take big risks with what they see as their core security – whether that is their home or school fees for their children.
They will, however, happily take risk with funds they feel they can afford to lose or take a long-term view on.
About 50 per cent of landlords are now women, which is understandable given that women make up just over 50 per cent of the population. They know that investing in property is not without risk but they are happy to invest because they are comfortable with the risk versus reward matrix that property offers.
Women often do not invest in stocks and shares because they do not always get the opportunity to reach the same understanding of risk versus reward when talking with advisers.
Advisers need to switch from a sales, performance-driven approach to one of communicating information in plain English so women can reach a point where they have all their queries answered and concerns addressed.
Pink marketing
Despite reams of research into female wealth, with the exception of a few firms who are advanced in their approach to serving women clients, most firms focus on 'pinking' their marketing campaigns rather than fundamentally reviewing their products or services to better serve women.
I used to hear regular moans about events targeting high-net-worth women; high-end events in expensive locations, with high-profile speakers only to find that nothing much has changed beyond the veneer of the event.
Most people, women and men, can see through such efforts and know whether what they are seeing and experiencing is authentic or not.
Cultural change beats training
Some firms have gone down the route of providing training for their male advisers and fund managers as research shows that women feel patronised or totally ignored while conversations are held with their partners.
However, such training will not fix the problem unless there is also an effort to change the wider culture within the firm.
The sticky middle in particular will not shift from its 'this is how we do business here' mindset without a concerted effort to address the male-dominant culture.
Recruiting more women advisers
Other firms are attempting to solve the problem by trying to recruit more female advisers on the premise that:
- Women often prefer a female adviser, mostly because they do not patronise them.
- Women advisers would naturally be more empathic to the needs of women clients.
This works as long as you do not recruit one woman adviser and think you have solved the problem.
Women make up more than 50 per cent of the population but just 16 per cent of financial advisers and 12 per cent of fund managers. So while any effort to increase women advisers is to be welcomed, there also needs to be real commitment and action to increasing the number of women advisers as well senior managers.
I am delighted to see the increase in the number of women in senior roles and women setting up businesses, but IFA businesses have some way to go before they can claim to be gender balanced.
Anna Sofat was founder and chief executive of Addidi Wealth, a women-focused IFA business sold to Progeny. She is currently the chair of One Loud Voice for Women
