For the past five years, we’ve conducted our
Rebuilding Investor Trust studies to find what’s important to affluent investors, from their financial lives to their relationships with their advisory firms and advisers.
The fourth edition of the study opened our eyes to some surprising insights. One was that while more than two-thirds of investors have seen their portfolios go up, performance for younger and female investors has lagged.
What does this mean for financial institutions and advisers? There are clear opportunities to strengthen and grow relationships with today’s female investors, and here are four ways to do so.
1. Recognize the role gender preference plays in the adviser-affluent female investor relationship
Today, women have a choice and often seek out a female physician. It is not about being a better doctor, but how gender can influence style. Women are often better listeners, more reassuring and use shared decision-making. These same traits are why many female investors
tend to seek out female advisers. Unfortunately there hasn’t been a lot of growth in the number of female advisers.
Unlike the medical or legal fields — where one out of three doctors and lawyers are female — only one-fifth of advisers are female. That ratio has not changed even though many female clients prefer female advisers. In 2011, we found 31% of female investors had a female adviser. In 2014, that percentage was 72%.
It has traditionally been a male-dominated field and I believe that’s changing. A lot of women who have worked in the financial industry in the last couple of decades are transitioning and thinking about becoming advisers — and I predict we’ll start seeing a
shift as women take it on as a second career.
2. Understand the dynamics are different
Listen, ask questions, and don’t assume your existing approach works for everyone. Years ago, the predominately male-to-male dynamic between investors and advisers was about “how’s my stock performance?” While performance is paramount, today, clients are more concerned with the outcome of investing. It’s not just about the money, it’s about “my parents, my kids, healthcare, and my retirement.”
Women are really focused on the full picture, and now more than ever, are even more
likely than men to manage household finances. As with any client or prospect you have, take a client-centric approach as you communicate the value of products and services – regardless of gender – and ensure you’re clearly connecting your offering to how it positively impacts aspects of their lives – personal, family, health and fiscal, to name a few.
3. Realize it’s a two-way street
According to our study, women are less confident, more risk averse and have more concerns beyond portfolio performance. Those could be knowledge-based, including understanding the risk of not taking risk. They may not be working with the right adviser for their needs — and their time and focus could be devoted to other responsibilities.
But it is important to note that this is a two-way street. Women have a responsibility to take charge themselves and make sure that they’re in the driver’s seat, saying, “I want to know. I want to be advised. I want to be educated.” They are paying for advice and need to have a role in the relationship. It is not about blame but shared responsibility.
4. Inspire open dialogues
Marketers and financial institutions can help by giving their advisers the tools, information and training to support diverse segments of the population. Firms need to help advisers really understand the issues and what prospective investors are looking for. For example, creating an environment that is more comfortable and empowering and
facilitates a like-minded community having financial conversations might work better than sitting behind a desk, talking one-on-one with clients.
There is no doubt that the financial industry has made great progress, but there are always opportunities for improvement. It’s about dialogue, ongoing conversations and above all, listening.
Nancy Schulman is partner and executive director of strategy at Sullivan & Co.
