Woman thinks differently about investment, say managers – 06/23/2023 – Market

The wealth management industry in the UK was for many years heavily male-dominated and largely geared towards husbands, who generally earned and managed the family finances.

This focus has been expanding in recent years, driven in part by the rise of female entrepreneurs and professionals and in part by the fact that women often outlive their husbands, which is why they often assume control of family assets when their husbands die and before it passes on to the next generation. While this has long been the case, the unprecedented wealth amassed after World War II has created far more wealthy widows.

Wealth management reports often cite the surprising information released by CEBR consultancy (Centre for Economic and Business Research) that by 2025, 60% of the UK’s wealth will be in the hands of women.

So wealth managers who fail to recognize the specific needs of a growing potential female clientele, or who assume that a “one size fits all” approach will do the trick, are likely to miss out on what could prove to be a rewarding field.

Data from the Financial Conduct Authority for the past year revealed that only 16% of financial advisors are women. Recent Schroders research found that only 5% of advisors have a differentiated strategy for attracting and retaining female clients.

It’s not about inventing something entirely new for female customers, but responding to the fact that women view money from a slightly different perspective.

Victoria Ross, a certified financial planner at Progeny, says women’s approach to investing tends to be different than men’s. “I believe objective, goal-oriented financial planning has more to offer women, as opposed to a purely wealth-building approach,” she explains.

As proof of this, she points to research by Progeny and YouGov on inheritance planning. “Women are more concerned about the amount of inheritance tax their children will have to pay and are less confident about leaving or receiving an inheritance, while men are more concerned about preserving their lifestyle after retirement. a goal-based approach that aims to increase the entire family’s wealth,” she notes.

Charlotte Tattersall, financial planner at RBC Brewin Dolphin, argues that initiatives targeting women are not an example of product differentiation. “The products and solutions are the same for all customers,” she points out.

The broader focus is on recognizing the different circumstances that may lead women to seek financial advice, how they may feel inhibited or uncomfortable about doing so, and the opportunities to inform and empower them.

Of course, there are many different types of female customers. Some are executives or businesswomen who are short on time or entrepreneurs interested in delegating tasks to others. Many want financial advice as they approach retirement.

But a considerable number of clients are either recently divorced or widowed and are struggling to make decisions that in the past were made as a couple or left to their spouse.

Rebecca Turnstall, chief investment officer at Rathbones Investment Management, works specifically with divorced women. “Most of them are in charge of their finances for the first time in their lives,” she explains. The more immediate task is to guide them through the practical financial issues created by divorce, but “it is vital to empower women who may not have much experience with investing, by giving them the knowledge and understanding to be able to engage with us.”

In this context, many leading and boutique firms understand the value of ensuring that female clients are served by female advisors. Sarah Roughsedge, who went further and opened her own firm specifically targeting women, explains why the female focus makes sense.

“My own experience with the financial services industry was characterized by an aggressive, almost entirely male environment that I found intimidating,” she says.

“I wondered how that kind of environment would affect women who are seeking advice, especially women who are going through a divorce, are grieving, or are just starting to manage their financial affairs and are feeling insecure.”

Among female wealth managers, there is a strong feeling that they are better positioned than men to empathize with female clients, because they too have had to simultaneously deal with a professional career, motherhood, caring for elderly family members and the impact of wage and retirement insufficiencies on their finances.

This view is borne out to some extent by a 2013 study by the US Insured Retirement Institute, which found that 70% of women looking for a financial advisor would prefer to work with a woman – although the study also suggests that for the remaining 30% , an advisor’s wealth management skill may be more important than their gender.

Especially for women who have recently been widowed, patience may be needed. “With them, the financial planning process often takes longer than normal,” Ross says, involving additional meetings, plenty of time for clients to reflect on choices, and “a lot of advisor-client communication to make clients feel supported.” “.

Tattersall agrees. She highlights Brewin Dolphin’s decision to change its culture to prioritize customer needs: “For example, we don’t charge extra if the person requires more initial meetings.”

Information is another priority for advisers interested in building a client base of financially confident women, Roughsedge said. “A lot of women don’t feel confident about investing. The wealth management industry needs to address this disparity.”

Tattersall notes that while women tend to be more cautious investors than men, “they will take more risks once they gain knowledge and understanding, which is why the right advice is so important.”

Some actions are being adopted in the area of ​​financial education. Rathbones, for example, offers a financial awareness course that covers the basics. “The goal is to give women a better view of how investing works and to do so in an environment where they can ask questions without being judged,” says Tunstall.

Ultimately, firms that recognize nuanced gender differences in attitude and confidence in investing are likely to be best positioned to attract female clients.

Translated by Clara Allain