The Business Case Behind Advising Women

Women are becoming the primary stakeholders in their families and that means they’re making major financial decisions — and inheriting large amounts of wealth — over the coming years. 

In fact, total financial assets held by women in the US are expected to triple to $30 trillion in the decade through  2030, according to McKinsey & Co. The research found women live five years longer than their male counterparts, meaning wealth managed by men commonly passes to their surviving spouses — often women. Combined with increased labor force participation and the ongoing Great Wealth Transfer, the future of the financial services industry will be driven by women. 

But, as women’s overall assets increase, so does their desire for tailored financial guidance. To best support female clients, advisors must account for gender-specific needs and priorities. For example, women are more inclined to risk aversion and charitable giving, and family dynamics play a much larger part in their decision making. Behavioral finance strategies that consider emotional, psychological and social influences are also key. By understanding the totality of the client’s behaviors, in both life and investing, advisors can provide personalized, well-rounded advice. 

More Than Management

Women also tend to prioritize collaborative relationships grounded in open and clear communication. As a result, creating a welcoming and accessible environment must become a top priority for financial advisors. Thoughtful questioning combined with active listening can also help to build trust and gain a better understanding of the values that are driving the client’s actions and behaviors. 

To accommodate this growing demand, advisors need to be aware of the unique needs and interests of female clients. This includes taking a more holistic approach. Advisors should: 

• Take a Holistic Approach: Female clients often seek guidance that extends beyond managing investments. This includes financial planning and assistance with family finances and goals like managing student loan debt, saving for a child’s education, real estate financing and estate planning. 
• Assess Priorities: Many women prioritize wealth protection and risk management over chasing gains. This means a heightened emphasis on retirement security and legacy planning. When proposing investment opportunities, consider where risk makes the most sense and clearly explain all potential outcomes. Avoid over-generalizing by assessing risk appetite on an ongoing basis as it can change based on age, personal circumstances and the macro environment.  
• Engage in Collaborative Decision-Making: Affluent women are more likely than men to use financial advisors and pay for in-person guidance, according to McKinsey. They typically look for collaborative relationships and express interest in co-creating their wealth management strategy. 

Women-Owned Wealth. To best position your business to take full advantage of the 200% projected growth in women’s wealth over the next 25 years, advisors need to build emotional connections and trust with female clients. Additionally, 94% of women prefer their financial advice to come from female advisors. To appeal to the growing demographic of female clients, consider adding more female advisors to your team. Having a diverse group of colleagues maximizes your firm’s appeals to a broader audience and creates an environment of diverse thought and experience. 

Working with female clients is not just an immense growth opportunity, but also incredibly rewarding. Take the time now to prepare your business for the impending growth in women-owned wealth.