Industry Spotlight > Women in Wealth

Advisors’ Missed Opportunities With a Key Client Group: Women

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Studies seem to pose varying viewpoints on how much wealth women control in the U.S., but no matter which you reference, women can be said to control between one-third and one-half of it. Even though men are still wealthier, the number of wealthy women is growing twice as fast in the U.S. as the number of wealthy men, yet advisors manage a very small percentage of women’s assets compared to men’s on average.

It’s not that women don’t need the help. The fact is, there is still a large gender gap when it comes to women’s financial knowledge—one that has significant implications for why they aren’t seeking advisors’ services or even saving enough for their futures.

The gender gap our recent Financial Finesse research has identified shows some evidence particularly interesting for advisors. First off, there was a large gap in women’s knowledge and confidence about investing:

  • 64% reported having a general knowledge of stocks, bonds and mutual funds (versus 84% of men)
  • 25% said they felt confident their investments were allocated appropriately (versus 42% of men)

Another big gap was found in women’s knowledge and confidence about basic money management, since this has an ultimate impact on their ability to save for retirement:

  • 63% of women said they have a handle on their cash flow so they spend less than they make each month (versus 80% of men)
  • 46% of women have an emergency fund in place (versus 61% of men)

This gap is of significant concern since women face more significant financial obstacles than men in planning for retirement and other long-term goals to begin with.  Women have longer life spans than men (three to five years on average) which means they must amass even more for retirement.  They also earn less on average than men, typically receive a lower monthly benefit from Social Security, and have higher health care costs throughout their lives. Yet women are behind in virtually all areas of financial planning as well as overall financial knowledge. With these obstacles they have even more significant planning and investing needs than men. Those needs are not currently being met which means there is an opportunity for advisors to reach a larger potential client base of women if the problem can be solved.

Gender Gap Consequences

The consequences of having a large gender gap in financial literacy are simply too dire to ignore, both from a directfinancial perspective and from a longer term cultural perspective.

How women’s lack of financial savvy directly affects advisors can be broken down into two key areas:

Issue One: Women Feel They Can’t Retire and Thus Need Advisors’ Help to Do So

This issue has the potential to be a major societal issue that could have a lasting impact on our economy if not solved. Women need advisors’ services to invest and plan for retirement to ensure they are prepared. But today, women are significantly more likely to delay or forgo retirement than men.  Sixty-one percent of women age 50-64 indicated they plan to delay retirement versus 45% of men. This number may actually be an underestimate based on the fact that women tend to be much more conservative investors than men. This leaves them vulnerable to choosing investments that don’t grow sufficiently to fund income needs in retirement.

On top of that, most women will be widowed or divorced before they die, which means most women will need to take care of themselves financially at some point in retirement. Women are currently relying too heavily on their spouses to fund their retirements and manage their assets instead of seeking financial guidance for their own assets.

Those women who are investing invest far too little to meet their future needs. Our research found there was actually no gap in how many women versus men were saving in their 401(k) plans and that both genders were woefully underprepared for retirement. Women facing the challenges they do in retirement need substantially more than men and are already behind in their knowledge and confidence in handling finances.

Issue Two: Women Don’t Become Clients Because They Aren’t Saving Enough

Almost half of the workforce is made up of women today but only 12% are confident they’ll be able to replace 80% or more of their income in retirement. Women aren’t saving enough to have a substantial asset base for an advisor to manage, yet they need to save even more than men.

Moreover, due to the unique financial challenges women face and the gap in their financial knowledge and confidence levels compared to men, women are much more prone to financial stress than their male counterparts.  According to our latest study on financial stress, women are three times more likely to face overwhelming financial stress than men—another costly proposition for themselves and their advisors since clients who are uneducated and highly stressed with finances are more risky to manage.

Strategies for Advisors Can Use to Reach Women

Seventy percent of women in a recent survey said they want to get advice but don’t know whom to trust. Advisors can

bridge the gap and build lasting trust with female clients and potential clients by providing regular education that takes a step back from the minutiae:

  • Default communication and education efforts to a standard that reaches women as much as men and successfully helps them understand financial planning aspects that are key to their ability to save. When advisors shift to a holistic and ongoing education program that looks at all aspects of financial planning, not just investing for retirement, and puts everything under an umbrella of how they relate to personal financial goals, both women and men are influenced to change their behavior. Our studies at Financial Finesse with corporate retirement plan participants have shown that the more interactions an employee has with benefits education, the more they save in their retirement plan, with the average employee saving 11% after five interactions and the deferral rate increasing from there.

    Women are more likely to take advantage of benefits education at a rate of two to one and are more apt to make lasting changes in the way they manage their benefits and plan for retirement. To develop the best clients and grow the pool of potential clients, advisors should consider how their clients manage their money to meet key financial goals in their lives.

  • Shift from the traditional way of providing communication materials and education to clients. The traditional approach hasn’t worked because women can’t relate to it. It is no longer enough to simply explain stock options or hand clients homework for the weekend. These often come from a technical perspective that is far too meticulous for busy female clients who are often managing their households in addition to working. Women tend to learn in more collaborative and holistic environments, an approach that has been overlooked in the past. Below is a chart contrasting the traditional way advisors have communicated and educated clients about investing and asset management that has in the past been less appealing to women, contrasted with a holistic planning approach which resonates with women (as well as men, for that matter) to close the gender gap:

Traditional Approach

Holistic Planning Approach

Workshops or education done as a one-time event.

Ongoing education.

Technical communication/education: focused on details, stock options and investments rather than overall picture of client’s financial plan.

Holistic: incorporating all financial planning topics and helping women understand how their investment decisions will impact their ability to meet all other important life goals.

Transactional: usually Web or phone based rather than personal. Clients make important decisions with little relevance to other financial goals.

Personalized: communication/education is provided in a way that is specific to client’s specific goals, needs and concerns.

Self-service: employees receive information in a package to study.

Relationship oriented: Advisor or full-time independent educators provide ongoing education and are client’s resource for all financial planning related questions beyond just investing related questions.

Ignorant to women’s communication styles and needs.

Subtly marketed toward women when necessary and provided in a way that appeals to both women and men.


There are upfront costs to advisors who take on the role to help their clients with this type of approach to communication and education that provides clients with a more personalized, holistic process that ties financial planning to their specific financial goals. But until women understand why and how they should be investing for their futures, they will remain a largely untapped demographic to advisors. Even worse, they will remain in high danger of not being able to meet retirement needs later in life. When you look at the opportunities and benefits of shifting the traditional approach, doesn’t it seem worth it?

Here are some resources you can use to educate your female clients in particular on important planning and investing concepts:

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