Tackling unconscious gender biases in wealth management
Attitudes towards managing finances have changed dramatically in the past few decades for the majority of individuals and for the better. Even so, the gender gap within the industry continues to be an area long overdue for change and a more modern equilibrium. While seismic shifts such as this, require the entire ecosystem to take a hard look in the mirror, advisers must recognise their paramount role and challenge their understanding of female investors’ needs.
Women are taking control when it comes to money, and it is about time. They are more empowered than ever to manage their households’ finances and are far more financially literate than previous generations. This is resulting in female investors aggressively building wealth. However, a barrier for women seeking wealth management advice is their perceived lack of knowledge and confidence in making big financial or investment decisions, therefore deterring them from seeking help.
Holding a third of the world’s total wealth – around $12 trillion – women are still being largely underserved by advisory firms. This is despite a renewed focus by many of these firms to deliver on the customer experience within the new normal of the pandemic.
International Women’s Day provides the perfect opportunity for the financial advice sector to reflect on how they can better serve and engage female clients. With $12 trillion at stake, there is both a strong moral and business case to learning how to better attract, engage and retain female clients.
Lack of representation
So, what are the practical methods advisers can take to attract female clients? First, they must tackle the lack of female representation in firms and break down unconscious biases that remain.
In the UK, female talent makes up around 15- 20% of the wealth management workforce, according to Alpha’s Gender Equality Committee research. This is obviously far from reflective. The first port-of-call in addressing this inequality is simple: hire and grow more women, not just in supporting roles, but in the front of house. Giving advice and creating an empathetic dialog were desired by female clients. Advisory teams should be balanced where female investors get a well-rounded team who understand the variety of dimensions and considerations present in their lives, both current and future.
This should go beyond announcing extravagant initiatives or targets, but actually decompose the structures set in place that prevent female talent from ascending within or applying. This relates even to the language used in job advertisements, making sure they do not project the stereotypical qualities of men. This isn’t an easy task, with Total Jobs finding 478,175 words in job postings which carry gender bias, with male centric words like “lead”, “competitive” and “confident” for leadership roles.
The outdated stereotype of finance being entirely male-centric must be dealt with and replaced with an environment that more truly reflects a wider, modern society. This is both beneficial for the client and the firm, as some women feel more confident and take more control when working with female advisers.
Meet the middle women
When holding conversations with female investors, there are three general camps noticeable: the new young professionals, the middle women, and the wealthy women. To succeed in a highly competitive market, firms should also focus on ways they can attract middle women, in addition to the wealthy women.
These middle women are massively underserved, and many of whom with the right advice, will grow to become wealthy women. These are new entrants to the world of investing and growing wealth and require financial advice that is centred around to making smart decisions, standard tax considerations and moving forward with investment choices. They are not necessarily in need of sophisticated structuring and jurisdiction management, but nor do they need to be taught the basics like how to get out of debt and build saving habits. Financial advisers must challenge approaches already in place – where off generic mainstream content isn’t overly helpful, but deeply personalised service isn’t required or sustainable for the advisors. This is opposed to the wealthy women segment, which is geared around high-net-worth services such as advice on ways to retain wealth, ventures to pursue, and legacy planning.
Some of the problem lies with the lack of confidence to invest. In a world where men take the lead in investing their money, it’s no surprise women feel intimidated to take the leap. Middle women are ideal candidates to attract and grow with – they have good paying jobs, have cleared their debts, and have established saving habits. Advisers must approach potential female investors showing support and guidance, reassuring them that every investor starts somewhere.
Firms that offer a hybrid digital and human experience are well placed to win this cohort over. The digital aspect gives them control over their interactions and educates them, while the human touch provides a personal service that ensures they not only feel valued but stay loyal as they increase their wealth. This can seem expensive and time consuming in the short term, but the return on investment is worthwhile – better client retention, engagement, and loyalty. Also, it creates a higher chance of referral and leads to more acquisitions for the business.
A recent study by Merrill Lynch found that advisers still operate under unconscious and implicit biases, which works against them when trying to connect with female investors. Types of preconceived bias include believing that all women are the same, women are less knowledgeable about investing and that they need simplified financial advice.
Many advisers do not realise that these thoughts affect the level of advice and planning they offer female investors, as they operate under the mindset that women require someone to upheave their plans and take over for them. This makes potential female investors feel alienated and explains why 73% of UK female clients feel their advisers cannot empathise with their lifestyle, according to a 2019 market review by Boyden. From conversations with female investors, what is found is that many require partnership. They do not want or need someone to take over their portfolio. They do want a coach to assist them and acknowledge that they are capable of making good decisions.
This unconscious bias is also present in meetings between heterosexual couples and financial advisers. Merrill Lynch experts found advisers (including female advisers) spent 60% of couples’ meetings focused on the man. Ultimately, this demonstrated that advisers clearly favour men as the decision-makers over household assets, even if this is unintentional. This is despite the fact that younger generations of married women, often 45 and under, are twice as likely than older married women to make the financial decisions in their families.
Advisers should take these biases seriously, work to create new balanced habits, deploy training to correct them, and put in place a client service and communication framework that is inclusive of female clients and spouses.
The need for empathetic financial wellness
A McKinsey 2020 report found that women are one of the worst affected groups from the current pandemic, making up 39% of global employment but accounting for 54% percent of job losses.
As schools close and family members fall ill, many have shortened working hours or stepped down from positions to take on caregiving responsibilities. Thus, female clients want more support throughout their family’s financial lives. It is critical for advisers to bring the same empathetic environment they would face-to-face, across various digital channels.
This is possible using highly scalable digital tools, to help clients set and hit multiple goals that span beyond just finance and create a more holistic picture. This would cover planning for unexpected events, general financial wellness, and life goals. This allows clients to measure the progress of their plans, adjust goals, organise important documents securely and have an entire financial picture. The net effect of this approach for the adviser is a far stronger relationship, as the investor feels their entire financial life is being considered and taken care of.
Choose to challenge
International Women’s Day offers a chance for an open dialog and a moment of reflection. For the financial advice industry, it offers a chance to look ahead and make plans to build better businesses.
BCG 2020 research estimates that women will control £68 trillion of global wealth by 2023. For those forward-thinking financial advisers, there is a massive revenue opportunity. The answer lies in providing the right service – empowering women through a mixture of high-touch human support with self-service digital options to allow them to control their own financial future.
But this can only be achieved if financial advisers themselves choose to challenge how they engage and serve female clients. Those that do will help to improve financial equality through a sound business case.