The wealth management industry has, for decades, been largely about catering to one specific type of individual: male, most likely somewhere in their 30s to 60s, married and with a traditional family.
It was assumed that this man would manage the finances for the household, with his spouse always relying on him to make the decisions. He probably played golf or frequented the local men’s club. And he had a consistent set of preferences about the financial advice he’d like to receive, focused primarily on finding which products will maximize returns, with little fuss.
Time has shown these assumptions to be dangerously outdated. We’ve come a long way since men exchanged financial advice in smokey rooms over a glasses of whisky. But equally, we haven’t yet seen an advisory model that works for women become the industry norm.
Male and female millennials are rapidly challenging the norms and assumptions we make about how people manage their lives and their finances.
More women delay or opt out of marriage, and when they do marry they will usually outlive a male spouse. This means women are single for longer, and necessarily are more likely to take charge of their finances.
Women’s earning power is increasing, as the imbalances in the composition of the workforce and wealth ownership start to slowly correct. And the traditional family unit, with roles split according to gender, is falling out of favor as a more flexible, egalitarian model gains popularity.
Today, women are one of the most important client segments for wealth management firms. But unfortunately, they’re not as satisfied with what’s currently on offer.
Women are 6 percent less likely to trust their financial advisor than men, and 6 percent less likely to be satisfied with the service they receive. Seven in 10 women using financial advisors considered dismissing them within the first three years of a spouse’s death.
And the bar of customer expectations is continuing to rise. Consistently across financial services, regardless of gender, we’re seeing customers demand a service that is personalized and tailored to their own financial situation.
For those firms who want to appeal to this crucial demographic, the task is this: correct the assumptions within the current advisory model that made it poorly configured for women’s needs.
This doesn’t mean making overgeneralizing assumptions about what women want, which would just repeat the mistakes of the old model. It’s about discovering the common patterns shared by this underserviced group and building an approach that can adapt to a wide range of segments, such as single professionals, newly divorced, newly widowed and entrepreneurs.
Accenture research has found female investors want and need financial support based on how it will affect their expectations for their future, rather than just product-pushing. They don’t want a flurry of information on products and performance; they want to see the impact of choices on them as individuals and their families.
Financial advisors should be more communicative and interactive. This is particularly important for those who are more inexperienced with wealth management. We found that only half (52 percent) of women feel confident in their investing ability—and they’re generally not afraid to admit what they do not know. Giving people that confidence, by making financial advice educational as well as informative, can enrich the experience and leave customers feeling empowered, where previously they might have felt out of their comfort zone.
Adapting fee structures can also be a useful way to expand your appeal. Not only are more flexible fee structures preferred by women, it’s also a useful way to encourage younger people to start engaging with wealth management at an entry level before they start to inherit or accumulate larger amounts of wealth.
Ultimately, women are fast becoming a highly lucrative and important group of people that wealth management firms need to appeal to. Whether its investing style or fee structure or the levels of communication on offer, women are calling for a service that is also designed for them.
Wealth managers who expand their thinking and their processes beyond what has worked for decades to one that will work tomorrow will be the ones to come out ahead.
Kendra Thompson is Accenture’s head of wealth management.