What women want (from their brokers)

by AB10 May 2013

Think of the best relationship you have with a male client. He’s been with you for many years and you consider yourself ‘old friends’. How is your relationship with his wife? If your answer is anything other than ‘spectacular’, you should read the following carefully: As a financial services professional, there’s a 70% chance your client’s wife will fire you within a year after the death of her spouse, according to 1st Global Wealth Management Academy manager, Cindy Scott.

Scott believes the finance industry has catered to only one gender for too long. Soon, she says, financial professionals who aren’t prepared to build relationships with women clients will find themselves missing out on a $22 trillion opportunity.

Surging Women’s Wealth

While a gender gap in pay remains in certain industries, women have been consistently accruing more and more share of total wealth in America. Women currently control $8 trillion in assets in the U.S., a figure that is expected to jump to $22 trillion by 2020, according to a TD Ameritrade Institutional study. According to Fidelity’s most recent Millionaire Outlook, roughly 40% of women out-earn their spouses – and this is a growing trend in Australia, as well.

“A 2011 study from Prudential, Financial Experience and Behaviors Among Women, revealed that some 95% of women are directly involved in their households’ financial decisions and 25% stated that they were the primary decision-maker.”

While an increasing number of women are making the financial decisions, many are doing so uneasily. Roughly 82% of those surveyed by Prudential said they needed “some” or “a lot of” help in making those decisions, and nine out of 10 weren’t confident they knew how to choose the appropriate financial products needed to meet their needs. When making an investment decision, women are most likely to gather information from their spouse (64%), printed materials (62%) and the Internet (42%).

The void between what women are looking for from financial services professionals and what they’re receiving could easily be labelled the ‘Grand Canyon’ of financial services, argues Scott. Fidelity says some 73% of women are dissatisfied with the service they receive from the finance industry.

What Do Women Want in a Financial Services Provider?

If you Google the above question, Scott says you’ll see more than 33 million ‘hits’ for books, articles and presentations.

“Don’t let the sheer volume of information dissuade you from taking action. Fidelity says the answer is much simpler. Women want A) a plan, B) to be listened to, C) to be heard, D) time to digest and think.”

When researching gender-based financial characteristics, Fidelity uncovered many overlapping concerns. Women are more likely to:

  •     Take no or below-average investment risk
  •     Find investment decision-making stressful, difficult, time-consuming
  •     Wait if an investment did not produce the expected return
  •     Want to know details when learning something new
  •     Describe advisors as sources of information

“What’s their top priority? Some 74% of women rank ‘concern about their children, grandchildren’ as their top financial planning priority.² Reuters reports this frames their financial discussions in terms of the end goal,” says Scott.

A study from Hearts and Wallets found that women demand more than men from their financial services firms. Some important qualities women look for are that the finance professional explains things in understandable terms. They also prefer to have collaborative relationships with their financial services providers.

However, before brokers and others in the finance industry decide to target women, Scott has some words of caution.

“Financial [service providers] should refrain from making stereotypical assumptions about their client based on gender.”

The Family Wealth Advisors Council says the financial services industry needs to listen carefully to what each woman is saying and learn to meet her unique needs, instead of generalizing about ‘women’s issues’.

Upgrading the Client Experience for Women

The Boston Consulting Group study offered one strategy to close the service gap between men and women. They call this strategy the four R’s – recognize, research, respond and refine.

  • Recognize – Leadership must recognize that women are an important and largely underserved client segment.
  • Research – Leverage internal and external market-research functions to pinpoint the specific issues that are most important to your women clients.
  • Respond – This doesn’t mean overhauling your entire service model. However, subtle changes in the way the relationship is managed can make a world of difference.
  • Refine – On-going evaluation of processes to ensure women clients are satisfied.
  • Be Proactive - The next time that top male client schedules a meeting with you, insist that he bring his spouse along. Remember, she is your client too.