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Industry Spotlight > Women in Wealth

Advisors Fail Affluent Women, Spectrem Group Says

By Marlene Y. Satter

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Women are more focused on planning than investing, says a new study from Spectrem Group, and considering the amount of influence they have on the financial decisions made in their households, advisors should pay attention—and modify their behavior.

The report finds that, while women use advisors more often than men, their trust is harder to come by and they often feel that advisors do not devote sufficient attention to the issues that concern them most.

In the report, “Wealthy Women Investors,” Spectrem found that among the three groups surveyed, the mass affluent, millionaires, and the ultra-high-net-worth (UHNW), women make financial decisions based on their personal concerns, including the financial well-being of children and grandchildren and whether they will have sufficient funds for retirement. In addition, women are more likely than men to choose a financial planner, and much less likely to credit risk-taking as a means of achieving financial success.

Spectrem President George Walper (left) said that he hoped advisors would glean from the report’s results that they should spend far more time with their female clients or prospects focusing on planning—for retirement and for the financial well-being of children and grandchildren. That is more important to women than focusing on investments.

“The element of being oriented towards [women] preferring a financial planning model has been the case for many, many years,” Walper said. “Any time we contrast women to men, they like to do planning first and not worry so much about the precise investment allocation initially. What’s changed this time,” he explained, “is that they are becoming more cautious about the overall economic environment and worrying about their children having the same opportunities.”

Pre-crisis, he added, although women were still focused more on planning rather than on investments, “at the end of the day women’s investments would look the same as men’s.” Now, however, they are
more cautious.

The study also found that the UHNW women are more worried about running out of money than the millionaire segment, and have greater concern over their own health, having someone to care for them in their old age, taking care of elderly parents or suffering a financial catastrophe than either the millionaire group or even the mass affluent, who have considerably fewer resources.

Women at all wealth levels, the study found (see chart below), tend to worry more about having enough money in retirement than their male counterparts.

Walper theorized that the UHNW “might be more tuned in to how severe the economic environment really is, and the effects might be more severe in proportion for their children and grandchildren.”

When asked what he would suggest that advisors do, he said they should focus on the issues female clients are most concerned about: how they feel about the overall economy and their family situation, for instance. “Those are the topics they want to talk about and get an advisor’s advice. Planning must be much broader,” he added, saying advisors should “help clients plan for overall life issues rather than asset allocation.”

Even though that approach is not the one generally chosen by men, Walper conceded, “It would be hard to argue that anyone would not benefit from a much more planning-oriented strategy. We always kid around and say, ‘Who stops for directions first?’”

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