3 mistakes advisers make about high-net-worth women

3 mistakes advisers make about high-net-worth women
The industry has served executive women based on outdated assumptions about their goals, risk appetite and investment aptitude
SEP 11, 2019
The secret is out. Despite a growing number of entrepreneurial women and those climbing the corporate ladder, this group's access to tailored financial advice has lagged. Our industry has overlooked high-net-worth executive women and served them based on outdated assumptions about their goals, risk appetite and investment aptitude. Given that women control an increasing amount of wealth globally, it's critical for advisers to reconsider how they address this group. Though we often hear of women coming into wealth after divorce or through inheritance, not all HNW women are recipients of a wealth transfer. Many women are creating their own wealth and may have considerably different wealth management expectations than other HNW women. To help advisers navigate changing wealth creation patterns, FlexShares surveyed a national cohort of 461 HNW women — and men — who contribute 50% or more of household income. We asked about their investment and lifestyle goals and what they valued most from their financial adviser. Our findings challenge three pervasive myths about women in particular. [Recommended video: How advisers can be a gamechanger for women investors]

Myth #1: Women aren't interested in investing

When asked to rank their general investment knowledge on a scale of 1 to 10 (10 being the highest), the mean response for HNW executive women was a 7.3 out of 10, compared to 8.1 for all respondents. We also asked respondents to rate their ability to handle a range of financial management tasks on a 10-point scale. Women rated themselves between 7 and 8 out of 10 on almost all categories, including: • Planning for retirement (8.3) • Appropriately balancing contributions (8.2) • Effectively managing debt for optimal tax benefit (7.9) • Effectively managing own investment portfolio (7.7) [More: Rich women increasingly call the shots, wealth heads say]

Myth #2: Women are afraid of risk

"Women are risk-averse" has been an industry commonplace for decades, but results from our study tell a different story. Men were more than twice as likely (31%) to rate themselves as conservative investors than women (14%), indicating they prefer the lowest level of risk when seeking investment returns. At the other end of the spectrum, men identified as more aggressive but by a narrow margin (11% versus 7% for women). Lump in those who rated themselves as moderately aggressive, and it was almost a dead heat!
Investor profiles
The results also show that women value the importance of managing the delicate relationship between risk and return. Women ranked risk management a 7 out of 10 in importance, and 77% said it was important for advisers to utilize portfolio management tools. [More: Sallie Krawcheck wants women to take control of their money]

Myth #3: Women are not loyal to their adviser

We often hear that women leave their advisers after a divorce or the death of their spouse. While this may be true for the broader female population, our survey found that significantly fewer executive female respondents (20%) than men (39%) considered leaving their adviser in the previous 12 months. Executive women were also more likely to describe the experience with their adviser as being personal (88%) compared to men (75%). Pink is a color, not a service model. Executive women bring a multifaceted perspective to the adviser-client relationship that defies stereotypes. Taking a "think pink" shortcut to managing female clients won't produce effective outcomes. To build lasting relationships, leave your assumptions at the door and take the time to really get to know what these women want by asking them. Laura Hanichak Gregg is director of practice management and advisor research at FlexShares Exchange Traded Funds

Latest News

FINRA eyes fraud 'speed bump' rule doubling hold to 10 business days
FINRA eyes fraud 'speed bump' rule doubling hold to 10 business days

FINRA's proposed rule filing would create a new 10-day fraud delay and nearly triple the maximum hold period for exploited senior investors

MAI Capital pushes into Atlanta with Waypoint Wealth deal
MAI Capital pushes into Atlanta with Waypoint Wealth deal

Fueled by a recent shot in the arm from private equity firm Carlyle, MAI adds a $490 million Atlanta RIA as it keeps building out its national footprint.

Georgia advisor gets maximum – 20 years – for $400 million Ponzi
Georgia advisor gets maximum – 20 years – for $400 million Ponzi

“Todd Burkhalter organized what is likely the largest Ponzi scheme in Georgia history,” said one FBI official.

Carson taps Osaic recruiting veteran as independent channel expansion continues
Carson taps Osaic recruiting veteran as independent channel expansion continues

With experience from Goldman Sachs and TD Ameritrade, the RIA's newest SVP hire adds to a recent wave of executive departures from hybrid Osaic.

Mesirow acquires part of flexPATH in second retirement deal of 2026
Mesirow acquires part of flexPATH in second retirement deal of 2026

Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income