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Do Wealthy Women Need a Different Kind of Wealth Manager?

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Women control — not just have influence over — 27% of the world’s total wealth, A 2014 study from the New York-based Center for Talent Innovation found.

In the U.S., women control $11.2 trillion, or 39%, of the country’s investable assets, according to the center’s report, “Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth.” However, the study found that only 47% of the higher income and higher asset-owning American women (annual income over $100,000 and investable assets of $500,000 or more) had an advisor. Three-quarters of those surveyed under the age of 40 said they did not have an advisor.

Of those who do have an advisor, 67% said they “feel misunderstood” by their advisor. When it comes to how they use their wealth, the study’s authors found that in their global sample, “women look to wealth to provide a larger basket of goods, not just for themselves and their families, but also for society at large,” with 90% saying that “making a positive impact on society is important. They want both their time and their money to advance causes important to them.”

A study released by Pershing in March — “Women: Investing With a Purpose” — supported that finding. In a webcast on the study, Kim Dellarocca of Pershing asked, “Do women need to invest differently? Does their wealth management experience need to change because of their gender?” Part of Dellarocca’s answer is that for advisors working with women, “the planning conversation has to happen differently,” and that while traditional portfolio construction includes risk and diversification, many advisors “miss the emotional quotient of portfolio construction.”

Andrea Turner Moffitt, one of the Center for Talent Innovation report authors, spoke on the Pershing webcast as well, arguing that not only are “women not a niche market” who “hold a significant amount of assets, but they’re decision makers” and “wealth creators, not just spouses and inheritors.”

Moffitt, a managing director at Hewlett Consulting Partners, then highlighted the Pershing study’s finding that “diversity does matter; women don’t necessarily require a female advisor, but they want to see diversity” in the firms from which they get their wealth management advice. And in the end, she said, “trust trumps gender.”There’s another benefit for advisory firms that value diversity, according to Dellarocca, since “if you get it right for women investors you get it right for women advisors.”

Andrea Turner Moffitt, of the Center for Talent InnovationWhat should advisors do differently? One task is to help build women investors’ confidence, though Moffitt cautioned that the issue is “not financial literacy,” and that especially in the U.S., according to the Center’s study, “women are more financially knowledgeable than they give themselves credit for.”

During the webinar, Curtis Arledge, vice chairman of BNY Mellon and CEO of Investment Management, argued that due to the “tangible gaps that exist” in many women’s working income, “women need to invest earlier in life to reflect their longer lifespans. In addition to the greater need for medical care due to their greater longevity, and that in aging they “often have to do it alone,” Arledge said advisors need to account for women’s greater “exposure to inflation.” Advisors should “manage diversification” around a woman’s portfolio with the understading that her home will likely become a larger part of her portfolio. “Many women end up having no liquidity,” he said, which is one reason why reverse mortgages might be appropriate for many women.

The “Harnessing the Power of the Purse” study’s conclusions? “What women everywhere want […] is to be served, not marketed to. They want an inclusive environment — one where they feel welcome to ask questions and feel assured they’re heard and understood. Advisors who understand and honor a woman’s financial, personal and social priorities are likely to win her trust, satisfaction and loyalty.”

A free copy (registration required) of Pershing’s Women: Investing With a Purpose study is available on the Pershing site.

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