Whether women are heirs, spouses, or single heads of households, advisors haven’t put in the time to figure out how to address their needs.WARCHI/iStockPhoto / Getty Images
No matter how you look at it, women are quickly amassing wealth – and that should be a wake-up call for Canada’s financial advisors, who have a tendency to overlook and underserve women investors.
Consider the following: A report from Boston Consulting Group published earlier this year estimates that women now control 32 per cent of the world’s wealth, and they’re accumulating that wealth at a compound annual growth rate that’s 2 percentage points higher than that of men.
Within Canada alone, a 2019 report from CIBC World Markets Inc. finds that Canadian women control $2.2-trillion of personal finance assets directly, a figure that’s expected to grow by more than 70 per cent in the next decade. A big reason for that is that women now constitute 61.4 per cent of Canada’s labour force, according to a report from Catalyst published last month.
Another factor to consider is that estimates suggest that approximately US$30-trillion globally will change hands generationally in the coming decades – and women will surely be recipients of much of that wealth.
Any of these figures on their own should make advisors realize that women are a growing market that they will need to learn to serve better. But while this is an opportunity, it also poses a problem because study after study shows advisors are missing the mark with female clients.
A white paper that Merrill, a division of Bank of America Corp., published earlier this year that explores the role gender plays in wealth management noted that advisors made an average of 10 gender-related “miscues,” such as faulty assumptions, per 30-minute meeting. According to one study, 70 per cent of married women fire their advisors within a year of their spouse’s death. Another found that half of female investors said their advisors are unable to connect with them on a personal level.
The problem gets worse when one considers Canadian women with full-time jobs make just 89 cents for each dollar earned by their male counterparts, with even wider pay gaps at senior roles. Add women’s longer lifespans and tend to peak earlier in their careers, and it’s clear that it’s even harder for women than men to save for a comfortable retirement.
Whether women are heirs, spouses, or single heads of households, advisors haven’t put in the time to figure out how to address their needs. That can include planning for their longer lifespan, help with taking control over an inherited account and a preference for a more personalized strategy – or simply how to treat them as full or informed participants in these discussions.
A survey by Broadridge Financial Solutions Inc.* conducted in June found that 72 per cent of Canadian advisors report having clients for whom they have no information about their heirs – and these clients' accounts make up 38 per cent of their business on average.
While women’s share of the workforce and economic output has been growing consistently for decades, they approach advisory services differently because there are still significant gaps between the roles assumed by men and women in society. One example is that women in Canada spend 50 per cent more time each day on unpaid family work than men.
Furthermore, the way men and women perceive their status often differs, even within couples. Married women have reported having sufficiently lower long-term savings and are earning lower competitive rates on their deposits than their spouses.
Fortunately for female investors, attention to their needs and issues is growing. Women want to know that they, their financial problems and needs, are viewed as unique and that they aren’t being given cookie-cutter advice. The most important thing for advisors is to provide personalized assistance.
Data from the Broadridge survey show that 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.
Although women are less confident than men in their ability to make good financial decisions and in self-assessments of their financial literacy, according to a recent survey by Acxiom Corp., their actual performance is typically better than that of men, according to various global studies.
These studies tend to show that women are better at setting money aside, and once it’s invested, trade with a much lower frequency. Advisors would serve these clients better if they demystified the investment process and gave women a better sense of what they can achieve through it.
These details suggest that women, in general, are looking for holistic advice tailored to their circumstances and focused on their needs rather than the comparative features of different investment products. Advisors in Canada have room for improvement here, with just 41 per cent reporting they definitely have an integrated, holistic understanding of their clients' entire holdings.
One area that advisors can adapt comes from their youngest members. Data from another Broadridge survey show that millennial advisors are twice as likely as their more experienced peers to offer clients personalized communications and money-saving tips. Advisors should inquire as to which communication channel their clients prefer. Only 39 per cent of women say they’re comfortable with advisors following them on social media compared with 63 per cent of men.
Advisors can clearly do more to meet the needs of women investors. That means listening more, respecting more, assuming less and providing personalized advice that puts the clients' needs at the centre of the investing process. That’s especially true in our now virtual world.
*Donna Bristow is managing director, North American Wealth, at Broadridge Financial Solutions Inc. in Toronto.