Representing half the planet’s population, women are a diverse but powerful demographic. 80% of global purchasing decisions are already taken or influenced by women and their influence is set to grow. The fact that women are living longer than men, as well as the fact that more and more are returning to the workforce—and founding businesses—means that women’s share of global wealth is expected to grow from 40 to 60% in the future.
This represents a striking opportunity for banks and financial providers but also poses challenges. The current financial advisory model has, in general, been designed by men, for men. Women’s investment behavior is very different. If organizations are to capture a share of this increasingly powerful market, they need to understand what makes this demographic distinct, determining their specific needs, demands, and expectations.
On the hunt for better advice
The first major difference between men and women when it comes to investments is that women are more likely to seek out financial advice in the first place. But they want their wealth management advice to be delivered in a specific way. They want productive and meaningful communication between them and their advisor—a two-way flow of information featuring regular touchpoints and frequent check-ins. This allows them to ensure that they are on track with their goals.
But this kind of transparent and personal communication is currently lacking. A study by Accenture shows that only 35% of women speak to their advisors on a quarterly basis. Women are struggling to build the trusting relationship that they’re looking for.
Importantly, this level of trust is more important to women than men. A third of affluent women say that they would work with investment professionals that they trust—10% more than men. Those organizations that adjust their value proposition to build greater trust with female clients will be able to take advantage of this notable gap in the market.
Women’s investment decisions are based on different considerations than those of men. Men are often driven by a desire to simply improve their investment performance. Women are more interested in investments that help them meet their life goals. These goals may be quite different from those of men because a woman’s life journey is, itself, different, featuring issues such as maternity leave, flexible work to accommodate childcare and longer life expectancy.
A dislike for risk
Women’s risk tolerance in investments is also lower than men’s. However, this seems to work in their favor, with women enjoying a 2% higher ROI than men. And when it comes to investment opportunities, they’re more interested in philanthropic giving and sustainable investing than men. Given this notable difference in investment behavior, providers need to approach women’s wealth management with a different mindset if they are to meet women on their terms and deliver a winning customer experience.
Trust the facts
What initially appears to be low-risk tolerance may simply be a preference for fact-based investment. Women want all the information before making an investment, rather than relying on gut instinct. Once they have all this information, their investments are actually very similar to those of men—and they’re done with a greater degree of confidence, having reduced perceived risk by means of research. This careful risk analysis, along with women’s greater diversity of holdings, is the reason why their investments are often more successful than men’s.
Women & wealth whitepaper
Unblu’s Women & Wealth Whitepaper examines what it is that women want, what they expect from their wealth management provider, and how organizations can better meet their needs. By understanding women’s investment behavior, we can discover the challenges facing providers and learn how advisors can use new digital tools to meet the needs of this increasingly powerful demographic.