Despite controlling more than half of all U.S. wealth, women remain underserved and wholly underinvested. The data surrounding women and investing tells two starkly different stories. On the one hand:
- Nearly all women (96%) either share in or are in charge of their financial decisions.
- Women control 70%-80% of all consumer purchasing
- Women are projected to inherit 70% of the coming “inter-gender-ational” wealth transfer.
Yet while women earn and manage more wealth than ever before, and are set to inherit and earn even more, they invest 40% less, on average, than men.
Understanding women investors
To better understand women, their relationships with financial advisers, and the degree to which their financial goals were being met, we conducted a study of more than 800 women across the U.S.
We identified four distinct segments of women who exhibit different investment needs, challenges, and life circumstances, yet share similar experiences of being misunderstood, neglected and under-educated during the financial advisory process. These are:
1. Suddenly single: Women who have separated, divorced, or been widowed in the past five years. This group expressed the most risk-aversion, and more than half said they might not work with an adviser again.
2. Married breadwinner: These professional women are the primary source of income for their household. Yet almost half of them felt patronized by their adviser, and only about half, 52%, had the sense that advisers understood their life goals.
3. Married contributor: These women’s primary contribution to the household tend to be non-financial, and nearly a third feel excluded in conversations with financial advisers.
4. Single breadwinners: Women living alone or as a single-family unit. Just over half felt they had confidence in their knowledge of the markets and more than four-in-ten noted that they felt that their advisers treated women differently than men.
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Adviser relationship matters most
For most of the women in our study, the quality of their relationship with their adviser — how much time their adviser spent with them, how engaged their adviser was, whether he or she listened to their needs, and how well he or she understood their specific situation — was by far the most important criteria by which they evaluated him or her. Indeed, about two-thirds of women changed advisers specifically because of poor relationships.
Importantly, more than half the women we spoke with (55%) shared their experiences with their advisers among friends and family, so a poor relationship with one female client could lead to difficulty reaching her broader network. Conversely, a positive relationship with a female client can be especially fruitful: research suggests that the average woman will make 26 referrals to their adviser, more than double the average number of referrals from male clients (11).
To engage better with female clients, advisers must offer more than investing expertise. They need to enhance their relationships, doubling down on their interaction and engagement with female clients. They need to recognize the particular features that unite women investors and those that distinguish them, and tailor relationships to these unique needs and challenges.
Advisers should look for tools, data, and insights to have better conversations with women clients, to ask deeper questions, to bring a solution to them at the right time. In this way, they can better embrace the varying and idiosyncratic challenges of women, and in turn develop practical road maps to support and empower them.
Data is only one part of the equation. The real key is an awareness of the issue that leads to changed behaviors.
For women — seek out well-rounded, thoughtful advisers who can build stable relationships that enable you to feel more confident about your investments and valued for your unique needs.
For advisers — it’s critical to be invested in building, sustaining, and nurturing relationships with female clients. Women represent an enormous and growing addressable market with significant assets. A more effective approach can help you grow your business — and create a pipeline of valuable referrals.
Jennifer Tarsney is director, practice management, at New York Life Investments.
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