Many studies over the years have pointed to the rocky relationship female clients have with their financial advisors. The common belief has been that a large number of women mistrust advisors and become very dissatisfied consumers. By one oft-quoted estimate, some 70% of widows fire their financial advisors when their husbands pass away.
But a recent study by Merrill Lynch shows quite the opposite: 70% of women reported they were likely to recommend their advisors, with 40% of them indicating they would follow him or her to another firm. Satisfaction among men who were surveyed was, in fact, lower, with 65% of men saying they were happy with their advisor, and just 30% of them indicating they would follow him or her to another firm.
But Merrill points out that those figures may belie underlying issues and assumptions about female investors that still exist.
“Women frequently reported that they expected to encounter some negative gender assumptions in working with a financial advisor, and frankly, they planned around such instances,” the Merrill report, called “Seeing the Unseen: The Role Gender Plays in Wealth Management,” said. “They expected they would need to proactively demand to be heard. They prepared more ahead of meetings. So while they’re happier than their male investor counterparts, they’re grading on a curve.”
The study observed an average of 10 gender-related “miscues” per 30-minute meeting with clients—the most common being that a male in a couple is the decision-maker. Merrill defines “miscues” as “any kind of behavior—most often a very mild signal—that one person is not accurately interpreting information from another person.”
The study was conducted by observing advisors’ and clients’ behaviors during recorded virtual and face-to-face meetings with the help of eye-tracking technology, speech pattern analysis, multiple camera angles and body language analysis to come up with a catalogue of these “miscues.”
The study provides a number of examples of such behavior, which it said was not intentional and was observed in male and female advisors. For instance, a female investor might be holding a couple’s financial documents, an indication she was the one who prepared for the meeting with the advisor, but the advisor goes on to explain a basic concept about investing to her.
Some other common examples of these mistakes include assuming a female investor wants direction, assuming a couple’s finances were merged and jointly invested, assuming women are more risk-averse and assuming that women know less about investing.
In response to the study, Merrill is making “structural” changes, such as removing the “primary” descriptor field from all of its jointly managed accounts and incorporating changes into its training program, according to Kirstin Hill, chief operating officer.
“This plays an important role in training—making the unconscious ‘conscious,’” she explained, “understanding where we might inadvertently have biases and make a conscious effort to address that.”
She said that Merrill has created a laminated “quick-card” with “three to five quick things to do at a meeting, like share eye contact between men and women and not to make assumptions.”
At least a quarter of women under 55 reported being very knowledgable about financial products and services, were very comfortable about making financial decisions on their own and were comfortable using a robo. Women over 55 years of age were less comfortable with these things.
This is a powerful suggestion, Hill said, that the long-held belief that women are uncomfortable with finances may really be a generational thing.