As women’s share of wealth grows globally, attracting and retaining female clients will be critical for the financial advice industry.
Women currently control just less than one-third of the world’s wealth, said Carissa Lucreziano, vice-president with CIBC Financial and Investment Advice, in a recent interview. But that number is “likely to continue to grow significantly in the years ahead.”
“This poses an opportunity to the financial advice industry to better understand the mindset, needs, and expectations of this growing group of investors,” Lucreziano said.
According to Lucreziano, women face five unique challenges throughout their financial journey, which make them more likely to anticipate and plan for key events and life stages. For this reason, she said firms in Canada and the U.S. have started tailoring programs for their advisory networks that focus on emotional intelligence “to really dig deep and understand and connect with their female clients.”
First and foremost is the gender pay gap. Lucreziano said women tend to make about 87 cents per dollar compared to their male counterparts in Canada. In addition, there is a need for more flexible working conditions, as women still continue to bear the responsibility to maintain family life, Lucreziano said.
In Canada, Lucreziano said women spend 50% more of their time each day on unpaid family work compared to men. Then there’s the challenge of maternity leave and its often negative impact on women’s careers.
Women also have longer life expectancies than men, so “managing the family’s finances, the family goals, as well as planning for the long term” also fall to them.
“The challenge behind this is that women have to plan way in advance for this, but really plan for doing it alone,” Lucreziano said.
Finally, women often have a lower risk tolerance than men and tend to invest based on their values, “favouring funds that not only perform well, but also create a positive impact — as opposed to investing solely for performance.”
“Women seek to reach their goals with a higher degree of confidence,” said Lucreziano. “In fact, women are more likely to make investment decisions based on facts, not their gut.”
At times, this may appear as a lower risk tolerance, Lucreziano said, but it’s often a result of misinformation. Once women have the data to make an informed decision, Lucreziano said their investment profile is similar to that of men.
Advisors also need to consider generational differences, as “younger women are usually more financially confident than older women.”
According to Lucreziano, 70% of millennial women said they take the lead in all financial decisions, compared with just 40% of female baby boomers. This could be a result of higher education, as she noted that 91% of affluent and high-net-worth millennial women obtain a university education, compared to 80% of female baby boomers.
So what does this mean for advisors?
“The most important thing for advisors is to provide personalized support for their female clients,” said Lucreziano. “Women appreciate seeing a comprehensive view of their accounts, ideas for new investment vehicles that could suit their needs, and money-saving tips tailored to their circumstances.”
She also said advisors have the opportunity to demystify the investment process and think about shifting the mindset to investing by providing clarity.
“Women really want a sense of what they can achieve over the long term — that visualization, that clarity,” Lucreziano said.
This article is part of the AdvisorToGo program, powered by CIBC. It was written without input from the sponsor.