The World Economic Forum’s recent Global Gender Gap Report notes that 85% of the 135 countries surveyed in 2011, Saudi Arabia included, have “made progress in the past year toward gender equality.”
A little closer to home, most especially in issues related to the financial advisor-client relationship, things don’t appear quite as progressive.
To put it plainly, when receiving investment advice, many women are fighting an uphill battle to be related to as being firmly entrenched in the financial driver’s seat.
That’s not to say financial advisors are actively diverting their attention away from female clients. It speaks more to an inherent lack of understanding on the part of advisors, mostly males, that women have a different set of expectations and requirements from the financial advice process than do men. Since females generally have longer life spans than males and likely will require financial advice for longer than men, it behooves advisors to pay careful attention to what their female clients expect from them.
What Your Peers Are Reading
According to the National Center for Women and Retirement Research (NCWRR), as many as nine out of 10 women will be solely responsible for their finances at some point in their lives, whether due to the death of a spouse or divorce. The NCWRR also says that women are widowed at an average age of 56, and one in four of these women are bankrupt within eight weeks of being widowed. Less than 15% of women who are married or living with a significant other feel responsible for planning retirement and only 41% of women participate in their employer’s 401(k) plan.
For many financial advisors, this should spell “practice-building opportunity.” Investment management firm Brinker Capital took a closer look at the way advice-directed investors, women in particular, perceive the way they’re being related to by their financial advisor to identify some of the major disconnects between what women expect and what they receive from their advisor relationship.
The research reflects input from 323 advice-directed participants—57% female and 43% male—working with financial advisors at 78 major financial institutions.
The result: Both client and advisor gender play critical roles in determining the relationship’s quality and outcome. Even more important, however, is the way in which female clients construe the manner in which their advisors relate to them because of their gender. This so-called gender bias strongly influences myriad facets of the client-advisor relationship, from initial selection to tolerance for underperforming investment decisions.
Let’s review some of the key findings.
For starters, about one in every four female clients appears to prefer working with a female advisor, while only one in every 10 men selects an advisor of the opposite sex. Other than making some fairly obvious inferences, it’s not entirely clear why women skew advisor selection to their own gender, but perhaps it’s rooted in the way women believe they’re going to feel about the relationship based on the experiences their same-gender counterparts are having with their own advisors. Moreover, 44% of females working with a female advisor said they were “extremely satisfied” versus 24% of women working with a male advisor who answered the same.
Part of the dichotomy, it appears, boils down to the way women say advisors understand (or don’t) their investing needs and help them build financial knowledge. To this end, 84% of women say their female advisors listen to them and understand their investing needs, compared with 15% of women who said their male advisors “sometimes” listen to them and understand their investing needs.