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Is your wealth manager in tune with their female clients?

Wealth management — indeed the whole financial services industry — was created by men to serve a predominantly male clientele. Not only were men historically the household earners and entrepreneurs, but they typically made the long-term financial decisions.

That’s changing, slowly. Household wealth is becoming more equally shared between men and women in partnerships, marriages and during divorce, according to a 2021 report for WealthiHer, a group which supports female investors.

Meanwhile, an opinion poll in the latest Own Your Worth from Swiss bank UBS finds that although in more than half of US couples the woman still defers to the man on investment decisions, in more than a quarter (26 per cent), the woman now takes the lead in financial matters, up from 21 per cent four years ago.

The fact that women live on average five to seven years longer than men means they are more likely to inherit when their spouse dies. With the ageing of the postwar baby boomer generation, the richest cohort of all time, many more of these widows, who may have previously left financial matters to their husbands, will control substantial wealth.

Arguably even more significantly, the increasing presence of women as senior professionals, entrepreneurs and wealth generators in their own right has been very much on the radar of wealth management firms in recent years.

This is understandable. Their share of created wealth grew faster than men’s between 2016 and 2020, according to another recent UBS report, and the female share of global investable wealth is set to account for 35 per cent by 2025, up from 33 per cent in 2020.

Women are by no means invisible in UK wealth management. Clare Francis, head of savings and investments at Barclays, and Netwealth’s chief executive Charlotte Ransom agree that the number of women with earned wealth is increasing and estimate a roughly 50/50 split between the sexes for clients in their respective organisations; but as Francis adds, “many of those are married couples, and relatively few women take the lead role”.

So how far are wealth managers really delivering what female clients need in the 21st century?

As far as helping women after the loss of their husband is concerned, not very well, it seems. Even wealth firms themselves admit support for widowed clients leaves much to be desired.

In a poll for FT Money by Savanta, the research company, 25 wealth firms said that — on average — they did the job “very well”. But asked how the broader industry performed, their answers were much less positive, with eight saying the job was done “inadequately” and 16 saying “adequately”. Only one said “well” and none said “very well”.

More generally, says Victoria Ross, a financial planner at the wealth management group Progeny, financial services have historically been product- and investment-driven; but “as the enduring investment and pension gaps show, this approach hasn’t been serving women, for a variety of reasons”.

It’s not a matter of whether particular investment products are themselves right or wrong for women. The point is that women’s work/life balance tends to be more complex than men’s because of maternity leave, childcare juggling and later often parental care obligations.

This can mean part-time working or time out of employment, and impacts salary, career path and pension savings. “They also tend to live longer, so their constrained or disrupted financial opportunities are all the more important to understand and cater to,” adds Ransom.

However, suggests Ross: “the direction in which financial planning is developing, into objective and goals-based life planning, has more to offer women.” She says women tend to take advice when faced with a “life event”, as opposed to being driven by the urge to make money for money’s sake.

This observation is echoed by other experts. As Carla Morris, wealth director at Brewin Dolphin, observes: “For women, investment performance tends to be the means to an end, rather than the sole focus.” And that end is likely to involve the whole family, including children and grandchildren.

The 2022 UBS Own Your Worth report also flags up the importance for many women of a ‘values-based’ approach, whereby their money is used to further a cause or make a positive impact for their family and more broadly.

Ross suggests this means they may well be keen to help their family tax-efficiently with lifetime gifts, as opposed to simply thinking about inheritance.

In the same vein, the report found nine out of 10 female investors in the US believe money is a tool that can be used to help achieve their purpose, while two-thirds of those leading in financial decisions hold ESG investments.

“There is opportunity for advice firms who can focus on both a values-based approach and increasing wealth for the whole family,” comments Ross.

There are other things that wealth managers can do to boost their appeal to female clients, including ensuring a diverse team of advisers. As Ransom points out: “Big city offices and predominantly male teams can be very off-putting.” 

At Barclays, for example, Francis reports that the wealth management team is looking to improve its diversity to ensure good adviser fits for a broad spread of women clients with different backgrounds, sources of wealth and levels of financial confidence. “The adviser relationship is very important, so choice is vital,” she says.

For instance older clients with inheritances who have historically left the finances to their partner tend to thrive with a strong supportive relationship, according to Morris, while younger entrepreneurs are often time-short but keen to understand the financial rationale behind wealth planning.

Women who have had previous bad experiences with men — whether they are emerging from a toxic marriage or have been patronised by a previous adviser — may favour a female adviser. But that’s not a given.

Ultimately, there’s no rocket science involved. Women need to feel comfortable enough with their adviser, male or female, to be able to ask “silly” questions. They want informative, educational, jargon-free explanations about financial concepts and plans; and they want honesty.

“I often meet women who have experienced very poor transparency with advisers who believe that these clients won’t notice a lack of detail in answers to their questions, often around costs and charges,” reports Ransom.

Wealth managers who hit the right balance can help build financial confidence among female clients — not to mention earning financial rewards from a growing wealth pool. But it’s set to be a long journey.

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