Want to Grow Your Business? Learn How to Engage and “Woo” Women Investors

Before we discuss women clients as a rapidly rising investing group, let's take a quick look at the statistics that reflect the changing times. The latest Women, Money and Power Study highlights increased financial independence among women. What else is new, right?

Even though, many women still feel a bit uncomfortable initiating financial planning or discussing their retirement objectives, 43% of women say they are the primary breadwinner in their family, up from 34% in 2021. Quite a significant difference, as you can see. Furthermore, 33% of women are currently working with a financial advisor, up from 26% in 2021 as stated by U.S. News.

As more women are taking control of their finances, wealth management professionals should develop a fresh approach and a nuanced understanding of their unique preferences. After all, female investors present a massive opportunity to the financial services industry.

According to Blackrock, women investors tend to be loyal clients and great sources of referrals. Over a lifetime, women make an average of 26 referrals to their financial advisor, compared to 11 referrals made by men. What’s more, 72% of women who found their advisor through a referral had relied on recommendations from other women. This means that financial advisors who are determined to take their practice to the next level, should figure out how to attract and build relationships with women clients. Turns out, there is a greater shift in the wealth management industry and financial companies are increasingly more committed to exploring how to serve women clients.

The information above sounds quite uplifting, but issues remain and that’s something every financial professional should keep in mind. As stated by Merrill Lynch, there is a study suggesting that there is unconscious bias against women investors which underscores the need for financial advisors to re-evaluate their behaviors and embrace fair treatment. Even if the bias is subtle, it needs to be addressed and rectified, and every client should be treated equally – regardless of their gender.

As wealth management professionals start “delving” into women’s behaviors to understand them better, they will discover that women, in general, often appreciate a positive, goal-oriented, and benefit-driven approach rather than “a language of risk” – traditionally men’s preference. In addition, Merrill Lynch recommends that financial advisors working with women should fully focus on their client’s unique experiences, needs and objectives. In fact, there is a huge and growing need for highly personalized advice. An individualized service for women should take into account how their gender has impacted their lives, careers, stories and aspirations.

Why effective communication is key

Due to the fact that there is a strong desire among female investors to learn more about finance and investing, financial advisors should take time to improve their communication skills (New York Life Investments). Research shows that women place a high value on communication and education, especially when their advisor understands where they are coming from and is genuinely sympathetic to their concerns. An advisor should understand that some women may be new to investing and have a lot of questions, some of which can be basic. Therefore, it is important to keep in mind that female investors need someone who would truly enjoy teaching and educating them, sharing their knowledge, patiently addressing their fears, turning complex and technical details into easily digestible information, and doing whatever it takes to encourage and empower them.

Another interesting detail to keep in mind is that female investors usually prefer working with female advisors. Here are the numbers to support these claims. 43% of women clients would rather work with a woman, or have at least one woman on their advisory team (54%). Interestingly, these numbers have increased since 2019. Does it mean that male advisors are at a disadvantage and will be excluded from lucrative opportunities – at least, most of the time? Not necessarily. As long as they tweak their methodology, become more attuned to women’s specific needs and show genuine compassion and empathy, they will be able to turn the odds in their favor and boost their practice with the support of female clients.

Final thoughts:

As stated by Morgan Stanley, women are increasingly managing more wealth than ever before. Even though some female investors still feel a bit uneasy about their finances, more and more women are investing with confidence and across complex asset classes. They even influence major policy decisions and financial markets as corporate shareholders and corporate board members. It’s been an amazing transformation, and that’s something every financial advisor – male or female – should be aware of. As we all know, wealth management and finance have been historically male-dominated professions. Just a few decades ago, female investors were being overlooked, dismissed, or patronized by many wealth management professionals. Sadly, many financial advisors viewed them as less financially confident or savvy, less sophisticated and more risk averse. As more women take charge of their finances, the industry will probably continue to evolve, and we will see a more inclusive and empowering environment for all investors. What happens when financial advisors start embracing this shift? There will be endless opportunities to boost their earnings and help women thrive. Talk about a win-win scenario!

FREQUENTLY ASKED QUESTIONS

1. Why is it so important for financial advisors to understand women’s unique needs and preferences?

Now that women are increasingly earning more money and taking control of their finances, addressing their specific needs, preferences, and aspirations will help financial professionals boost their earnings and take their businesses to the next level. Adjusting their approach and welcoming female investors to their practices will make all the difference in the world for wealth management advisors.

2. What is the best way to engage with female clients and fulfill their expectations?

When servicing women clients, financial advisors should communicate clearly, show empathy, be patient, and address unconscious biases that, sadly, are still present in the male-dominated dynamic. By being genuine and sympathetic (after all, some women are still a bit uneasy about their finances), financial advisors are more likely to establish solid connections with their female clients and provide the service they deserve. In addition, advisors should stress the importance of education, which usually leads to more informed decisions.

3. What is the impact of unconscious bias in financial advising?

Unconscious bias can be subtle, but it still exists and can potentially undermine relationships. In fact, it can preclude wealth management professionals from fully understanding and embracing their client’s needs. Recognizing these biases ensures that all clients, male and female, receive fair treatment and highly personalized service. Every client deserves that, and every financial advisor should deliver.