By 2026, women in Canada will control nearly 50% of all financial wealth, according to the Investor Economics Household Balance Sheet 2017 report. Women are earning more, starting more businesses and controlling more wealth. They also stand to benefit more than men from the massive intergenerational transfer of wealth. That’s because women typically inherit money at least twice in their lifetimes — once from their parents and also through divorce or widowhood.
Research also demonstrates women outperform men as investors. On average over the last decade, women investors achieved positive returns and surpassed men’s returns by 40 basis points, or 0.4%, according to Fidelity Investments’ 2021 Women and Investing Study.
Despite the growing economic power of women and their investing acumen, advisors can be influenced by biases or make assumptions about women as investors. “Break the Bias,” hosted recently by Advisor’s Edge and Investment Executive, helped identify common misconceptions and discussed ways that advisors can do a bias-free client discovery.
For advisors who want to grow their practices, women are the demographic to connect with. Research shows that women tend to look for five key attributes when evaluating a new or existing relationship with a financial advisor, so consider focusing on these areas.
What women want from their advisors
- Empathy
- Demonstrate that you understand who they are and what their priorities are. Use know-your-client conversations to dig deeper for insights into goals and what matters most to them.
- Be aware of where they are on their investing journey and how different life stages will influence their financial needs. Recognize that their financial needs may differ from those of men, as a result of earning less than men on average, leaving the workforce to be caregivers, and living longer.
- Integration/financial wellness
- In general, women like to see their full financial picture and want holistic advice tailored to their circumstances. If possible, review the client’s entire holdings and explain what actions are required to achieve their real-life goals and aspirations.
- Focus less on investment details and more on the impact on the client and their needs. For example, tie investment recommendations to their goals, and outline how their investments will affect their ability to achieve what’s important to them in life.
- Alignment with values
- Recognize that social impact is often an important consideration for female investors. Only 19% of women said they would invest in a company that wasn’t considered socially responsible, compared to 51% of men, according to one survey.
- Prove that you always put their interests first. This is the new standard under client-focused reforms, but be sure to demonstrate how you do this. For example, let them know you always consider the impact of costs on their overall returns before making an investment recommendation.
- Communication
- The most important thing for women investors is that their advisors provide clear and personalized communication. Speak to their unique financial needs and situations so they don’t feel they’re being given cookie-cutter advice.
- Women prefer a collaborative approach. Engage them in the conversation and acknowledge their opinions instead of simply disseminating information.
- Education
- Even though women tend to have good investing habits, such as being more disciplined savers and less impulsive than men, they may not feel as confident as investors. Recognize their self-doubt and help educate them.
- Encourage financial literacy without patronizing. Avoid jargon and acronyms, and instead demystify the investing process.
- Support their education by sharing interesting content and events relevant to their life stages and goals.
Women are accumulating wealth at a compound annual growth rate that’s 2 percentage points higher than that of men, according to a report from Boston Consulting Group. Along with the wealth, they’re acquiring financial decision-making responsibility and control. Clearly, this is a strong client growth segment you don’t want to overlook.
Susan Silma is head, regulatory business practices, with Sun Life Financial Investment Services. She is a lawyer and former regulator, and is passionate about integrating compliant practices into a positive advisor-client relationship.