Female clients need special treatment: report

Over the next decade, Canadian women are expected to control close to half of all financial wealth. This trend comes as a result of greater professional responsibilities and an increase in entrepreneurship among women, and an incoming transfer of wealth, according to a recent report entitled Women and Wealth, conducted on behalf of Investment Planning Counsel.

The report, developed by New York-based Strategic Insight, reveals that women possess larger amounts of wealth than ever before, and that 90% of women will become sole financial decision-makers in their lifetime.

Two-thirds of financial advisors surveyed — 85% of which were men — say they don’t view women clients differently from male clients. Yet the report indicates that this belief may be misguided.

While men and women often have similar fundamental needs, such as a desire for sustainable income, the report suggests that women represent a distinct investor segment that requires a tailored approach to providing advice.

Although not all women investors are the same, many share the following characteristics, which make them distinct from male clients:

> Women seek financial security over prosperity
Women are often more interested in becoming financial secure than in investment performance, the report says.

“Men will often fixate on performance, on returns and on making a decision quickly, whereas women will take time and their concerns are more around debt reduction and secure outcomes,” says Paul Wylie, senior vice president for business development at IPC Private Wealth.

This tendency among women is likely due to greater concerns over the financial impact of current or potential singlehood, as well as concerns about becoming a financial burden to family members, the report says.

One way to provide more assurance to women clients is to develop clear and thorough communication that is free of industry jargon, Wylie says. “The key is to build a foundation with female clients and it has to be built around rapport and trust first.”

> Divorced women need special advice
Only 30% of divorced Canadians believe they are reaching their retirement savings targets, and divorce can have a particularly devastating financial impact on women.

“One of the key items is that divorced women need an increase of more than 30% in income just to maintain their standard of living,” Wylie says.

The divorce process itself is an added financial burden, the report says, with legal fees ranging from $7,000 to $70,000.

Divorced women are less likely than men to remarry or enter a common-law relationship, making them a faster-growing demographic, the report adds. According to Statistics Canada, there were 1.1 million divorced women in Canada in 2016, an increase of 63,000 since 2012.

> Women are likely to change advisors after the death of a spouse
Widowed women are a growing demographic group, especially within Canada’s aging population. There is only one widower for every four widows, the report says.

Financial advice has been a predominantly male profession historically, and many advisors have developed stronger connections with their male clients, resulting in weaker relationships with these clients’ female spouses, Wylie says.

This tendency could be one reason why 70% of women clients change their advisor within one year of the death of a spouse or partner. Despite these statistics, the report indicates, women are typically loyal clients once a relationship has been established. So, advisors would do well to invest in relationships with women clients.

“It’s important to build meaningful bonds,” Wylie says. And that means getting to know your women clients’ unique needs and finding ways to build the relationship further, such as taking steps to help improve the client’s financial literacy.

The report adds: “Helping elder women to avoid a decline in their living standards is both a responsibility and an opportunity for financial advisors.”

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