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Industry Spotlight > Women in Wealth

How Providers Can Better Target Female Investors

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Relatively little differentiation exists across financial services’ products and platforms to target female investors, according to a new report from Cerulli Associates.

The report explores investors’ portfolio involvement in relation to gender, highlighting nuances that exist among women, which can help providers develop strategies to market products and services tailored to meet their evolving needs.

“There is opportunity for providers willing to commit resources to target this unique demographic,” Cerulli senior analyst Shaun Quirk said in a statement. “Especially as females play more prominent roles in the financial planning process.”

The report identifies several instances in which women and men have different investment strategies and viewpoints.

Only 31% of women surveyed said they needed little advice when investing, compared with 49% of male respondents.

Women were also a lot less likely to always look for new investment opportunities and take calculated risks to make money when investing.

Cerulli looked at investor portfolio involvement in relation to gender, exploring the notion than men tend to be more involved than women in the investment process.

It found that 57% of men surveyed expressed a desire to be involved in day-to-day portfolio management, compared with 42% of women.

However, the data also showed that women want to be more involved once they have accumulated more than $1 million in investable assets.

Cerulli said providers may be able to strengthen current and prospective relationships with women by designing information vehicles for them at the point they want to be more involved in managing their assets.

“Some industry professionals suggest that women are more likely to implement long-term, goal-oriented investment strategies that do not require day-to-day trading,” Quirk said.

As a result, some women cede related investment activities, including portfolio allocation and security selection, to an investment professional.

“With this in mind, providers can position planning tools and holistic wealth management solutions that align with their female clients’ views on portfolio management,” Quirk said.

A quarter of women surveyed said they relied on an investment professional or advisor to make most or all investment decisions, versus 17% of men who said this.

Some industry observers think these advisor-directed relationships tend to occur at upper income levels, Cerulli said, but the data showed that 25% of advisor-directed female investors had investable assets in the $100,000 to $250,000 range.

This indicates the importance of cultivating relationships with these women as they are just starting to accumulate wealth, according to Cerulli.

Moreover, younger women are much likelier than their older counterparts to educate themselves before speaking with an investment professional. Eighty-two percent of female investors 30 to 39 years old said they conducted research, compared with 38% aged 60 to 69.  

Retirement Planning

Women and men have very similar goals for their future financial well-being, according to Cerulli research: ensuring a comfortable retirement, protecting current wealth levels and improving household cash flow. Typically, neither group earns enough money in their early years to both save for retirement and cover everyday expenses.

However, women face two unique challenges: longevity and a persistent gender wage gap.

A 45-year-old woman today will live three-and-a-half years longer than a similarly aged man, according to the Social Security calculator, which means she will need more money in retirement. And according to the U.S. Census Bureau, women employed full time earn 79 cents for every $1 earned by a man employed full time.

Cerulli found that 39% of women will depend on Social Security payments as a main source of funds in retirement, while only 30% of men will do so.

This makes it critical for advisors to include Social Security early on in education and planning dialogue with clients because many will rely on it as a primary source of funds in retirement, women more so than men.

Cerulli said investors need to understand concepts such as joint distribution optimization and survivor life benefits.

Having brought these things to clients’ attention, advisors can then turn to other significant issues for women such as long-term care.