Can I be totally honest with you? “Gender equality”, “closing the pay gap”, “women empowerment” – key words we keep hearing, reading and hashtagging left and right – we sometimes forget the real purpose, meaning and action they require.
Ok, I know what you are thinking, is that really true? According to the Global Wealth Report 2018, it is. Listen. The landscape is ever changing. Powerful demographic, economic and technological changes are helping increase women’s financial strength and independence. With a growing rate of women’s participation in the labour market, wealth and income gaps are gradually narrowing. It is becoming more and more conventional for women to inherit wealth, which used to be mainly passed down to male successors as part of cultural traditions. In addition, more women are pursuing higher education, climbing career ladders and choosing to have families later. Even such factors as falling birth rates are in fact contributing to the growing wealth of women.
Here’s the kicker. According to the report by Chartered Insurance Institute, in the UK, 52% of women in their late 20s say they do not understand enough to make decisions about retirement savings, even though women continue outliving men and retiring earlier. The same report states that only 37% of women aged 18-24 feel very confident managing their money. Furthermore, for 1/3rd of women in their 30s, money wouldn’t last 1 month if they were to lose their main source of income. In general, women tend to feel less competent and confident when it comes to financial matters compared to their male counterparts.
And what’s worse? When it comes to the wealth management industry, according to a survey done by Ernst & Young (EY), women do not have a positive attitude towards it. Often, words such as ‘complicated’, ‘unwelcoming’, ‘patronising’, ‘full of jargon’, ‘untrustworthy’, ‘male-dominated’ are used to describe their view of the industry. 73% of female clients feel their private banker misunderstands them and cannot empathise. 62% of women in fact are willing to consider switching to another wealth manager. Astonishing, isn’t it?
Even so, the female client segment is growing already and is set to continue on the growth trajectory. However, it seems that the industry is not sufficiently geared to take on these clients.
So what’s the answer? There are three key factors that are important for women that will determine how successful financial institutions can be when looking after female clients.
First and foremost: Transparency and education. Transparency is a key priority for wealthy women and especially important in evaluating investment performance and fees. With increased regulation, the industry has already taken positive steps towards transparency, but much more is needed. As explored earlier, women tend to feel less competent when it comes to financial matters. However, they are open to admit their lack in expertise and are open to learning unlike their men counterparts. Therefore, and educational approach is an absolute necessity. Combining this with clarity of investment views, and transparency on performance and fees can be a winning formula.
The second aspect of finding the right solution: Goals and priorities. There is a need for appropriate training for advisors to help them understand their female clients’ goals and priorities as they tend to differ significantly from those of male clients. Women place much more importance on personal and family goals. They tend to prefer a more risk averse and long-term approach that takes into account their priorities. Giving advisers the tools and knowledge needed will ensure that female clients are satisfied.
Finally, the third aspect for a successful solution: Communication. There is a clear need for change in how and what information is presented to female clients. The information flow needs to be more in line with their expectations. EY’s global wealth management research report shows that clients are keen to shape and share the content they receive, and they still would like to retain access to human contact.
In a nutshell, transparency, knowledge-sharing, openness and flexibility will become key drivers in gaining the trust of female clients. Financial institutions have to let go of the old-fashioned way of thinking, they must embrace the new digital age and use it to their advantage in becoming more welcoming and trustworthy in the eyes of women clients.