Financial services firms leave billions on the table by overlooking women investors

The wealth management industry has been leaving billions of dollars’ worth of potential revenue on the table by failing to tailor its products and services to roughly half the population.

A comprehensive report from consulting firm Simon-Kucher & Partners showed that the unique needs and investing perspectives associated with women cost the industry about $14 billion last year.

“To realize the full revenue potential of this client segment, financial institutions must invest the resources to understand their differentiated needs and design segment-specific experiences,” said Leonie Kriett, director at Simon-Kucher.

“Falling back on gender stereotypes such as women being less equipped to handle finances, are not confident about their investing decisions, or lack financial acumen will limit success,” Kriett added.

The report is based on a study earlier this year of nearly 1,000 investors in the U.S. and Canada who have annual incomes of at least $150,000.

In addition to underscoring the market potential, such as the fact that women’s wealth in the U.S. and Canada grew 180% faster than men’s between 2016 and 2021, the report details distinctions between how women and men view and receive investment information.

For example, along the lines of enablement programs, the research shows that women want education, training and tools that help them with long-term planning. Men, on the other hand, tend to be more tactical investors looking for ways to respond to current market conditions.

The problem is the financial services industry has historically catered to the tactical investing universe by offering things like lists of the 10 stocks to buy now.

The researchers suggest if more suitable products and services had been available that empowered women to invest as much of their wealth as men did, up to $14 billion in additional fee revenue could have been available to financial institutions in the U.S. and Canada in 2021 alone.

“Consistently, we see women placing a higher value on attentive service, personal relationships, and access to a trusted financial adviser,” said Simone Schuettel, director at Simon-Kucher.

“Personal fit with an adviser is critical to success,” Schuettel said, as are “hyper-personalized experiences and interactions on digital channels.”

For financial advisers, this should be seen as positive news, assuming they are ready and willing to adjust the way they approach the market of potential clients.

Despite their rising economic status, women are investing 22% less of their wealth in financial instruments than their male counterparts.

The study found a number of indicators to suggest that women remain an underserved client segment in wealth management. There is a lack of segment-specific experiences, inadequately tailored enablement programs, and mismatched products and services.

Yet the appetite for advice is there.

According to the study, 65% of women who invest are willing to pay a 20% premium for in-person advice, and 30% more women than men want to receive financial advice in person.

Women said exposure to financial information such as through self-study and webinars, risk protection, and access to long-term financial planning and budgeting tools would empower them as investors.