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Industry Spotlight > Women in Wealth

Advisors Stereotype Female Clients Without Realizing It: Merrill

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Women are invisible no more when it comes to financial matters — and advisors of both genders may be giving them short shrift without even realizing it, according to a study by Bank of America Merrill Lynch of advisors and investors that was released today.

Seeing the Unseen: The Role Gender Plays in Wealth Management explored not only advisor behavior and language, but how women experienced financial relationships and some of the changes already taking place. The study included a survey of 4,000 investors and observation of real advisor-client meetings.

Despite the fact that “women’s experiences have undergone a series of tectonic shifts over the years as they’ve made enormous gains in economic power,” the study found “gender bias still exists in financial advisory relationships, but the perception and effects differ among women.”

In fact, nearly one in 10 female investors had reported a “negative experience with an advisor based on a gender stereotype.”

When researchers talked to advisors, “it was clear that they understood the kinds of negative experiences that women encounter, but the financial advisors had a hard time recognizing such behavior in themselves,” according to the paper.

But watching the advisors in action showed they were guilty of making gendered assumptions.

In meetings with clients, both male and female advisors “committed miscues” in assuming that 1) the man is the decision maker in the relationship, 2) women are more risk averse, 3) a couple’s finances were merged and jointly invested, and 4) the woman in the couple was less knowledgeable about investing than the man.

Indeed, the study found these assumptions were often untrue in reality, particularly for younger women.

Younger married women reported more involvement with the family finances than older married women. In fact, married women under 45 are roughly twice as likely (63% vs. 37%) as older married women to be a financial decision-maker in their family, the study found.

Also, women younger than 55 are 4.5 times as likely as older women to consider themselves knowledgeable about financial products and services, 60% more likely to feel comfortable discussing financial topics, and 1.5 times as likely to manage their own finances. They also are three times more likely to make financial decisions on their own.

Eye Contact and Language

The study also found using eye tracking analysis, advisors (both male and female) focused more than 60% of their time on the man when meeting with a heterosexual couple.

And this can kind of behavior could mean the difference in keeping a client or not. Men were more apt to complain after experiencing a negative stereotype than women (18% vs. 12%), but women were more likely to change advisors following a negative experience (35% vs. 30%).

On the flip side, a satisfied female client is good for business. For example, 70% of women reported they were likely to recommend their advisor, versus 65% of men, and 40% were likely to follow their advisor to a new firm, versus 30% of men.

Another interesting finding was women who had male advisors were more likely to defer to their decisions, while women with female advisors were twice as likely to make their own financial calls. In addition, women were 2.5 times more comfortable taking risks when dealing with a female advisor than a male advisor.

Language also played a part in the study, in that female advisors more often used positive, upbeat words than their male advisor counterparts, who used more risk-oriented language.

“The time for wealth management to catch up to and fully address the financial experiences of women is overdue,” according to Andy Sieg, head of Merrill Lynch Wealth Management. “By shining a new light on the stereotypes that still exist, we hope these insights will help the industry at large take a more informed approach to confronting them, and to best serving women throughout their financial lives.”

The study used a variety of study techniques, including eye tracking, heat mapping, and lexical and ethnographic analysis. It also held one-on-one interviews, focus groups, online surveys, and observed real meetings between advisors and clients.

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