Why are wealth managers still always talking to the husband?

Women are wealthier than ever before

(Raina + Wilson)

(Raina + Wilson)

Anton Tucker had an epiphany after his divorce a decade ago. He realized that single women, like his now ex-wife, have money. That revelation may sound self-evident, but it was a pivotal moment for Tucker, TriDelta Financial’s executive vice-president.

Before his divorce he had a few female clients, but he’d spend most of his time with them dealing with the “nuts and bolts” of financial planning. He’d ask how many children they had, how much money they made and other basic questions—the same approach he’d take with his male customers. His divorce convinced him that he needed to work harder to connect with women. So he started asking his female clients questions about their lives—what their health was like and whether they had strong relationships with family—and inquired about their long-term goals. “It was all the emotive issues related to how they live their lives,” he says.

His more personalized, holistic approach paid off. Today, single women—divorced, widowed and never married—account for 20% of his client base. That’s up from virtually none in 2003. But while Tucker saw the merits of appealing to female investors years ago, much of North America’s male-dominated wealth management community is only now beginning to figure out that women are holding an increasing amount of assets and should make up a greater percentage of a firm’s customer base. “It’s a market that is still very much untapped,” says Tucker.

According to a report by the Boston Consulting Group, women decide how more than 27% of the world’s assets are invested, and that figure is rising. The report also points out that between 1980 and 2008, the number of women in the global paid workforce has doubled to 1.2 billion, while the income gap between men and women has narrowed. While many women inherit money from death and divorce, a growing number of women are becoming wealthier on their own. A Bank of Montreal survey estimates that today 15% of America’s millionaires are women who have earned their wealth themselves.

Yet while women may be getting wealthier, BCG found that most female investors have had negative experiences with wealth management firms. In 2010, company researchers interviewed 500 women around the world who had at least $250,000 in assets about how the wealth management sector treated them—and the results weren’t pretty. Women were overlooked, under-served and weren’t treated the same way as men. More than 50% of the women surveyed said that men get more attention, better advice and better terms and deals. Most advisers assume women have a low risk tolerance, the report found, so they offer only a limited range of investment options. Some women also felt that advisers didn’t pay attention to significant life events that affected their investment needs, such as marriage, the birth of a child or divorce. Women often bring in less money when they’re on maternity leave, for instance, and a lot of advisers failed to recognize that, says the report. “This sense of subordination was repeated time and time again in our interviews,” wrote the authors of the report. “The problems that cause women to feel like second-class clients are deep seated.”

Many financial advisers seem to have a 1950s-era outlook: that men are the breadwinners and are the ones who handle the family finances, says Bob Sewell, president and CEO of Bellwether Investment Management. Sewell says he’s been in meetings where an adviser would automatically engage the man even when it was clear that the female spouse was at least an equal partner in the family finances. [adspot]

When he worked in the banking sector, Sewell talked to advisers about changing this way of thinking. “We said that making traditional assumptions about who the decision maker was would be done at their peril,” he says. When he started Bellwether he made a point of marketing his services to more female clients. At first, just 2% of his clients were women, but that’s up to 15% today. Part of that growth has been through word of mouth, but he’s also used Google Adwords to target female clients and has held seminars with divorced women.

It’s been a slow process, but Nan DasGupta, partner and managing director at Boston Consulting Group Canada, says that firms are finally starting to actively target female clients. She estimates that about 5% of total wealth management assets shift from men to women every year. Canadian divorce rates are still hovering at around 50%, and women are outliving men by about five years. They’re also making more money than ever before. It’s the female investors, she says, who will be the ones determining which firms get these assets. “They’re the ones most dissatisfied,” she says. “They’ll be the ones influencing where money goes.”


While the industry has reached a “tipping point,” says DasGupta, there’s still a lot of work to do before the percentage of female-owned assets increases. The first step is to start treating women differently, she says. The experience has mostly been a patronizing one, with male advisers making incorrect assumptions about risk tolerances and underestimating how much money women have, she says.

DasGupta, an investor herself, says that women, first and foremost, want to be treated with respect. They’re also often seeking more clarity around investment options, and they want the focus to be less on short-term returns and more on long-term needs. They also want meaningful, two-way communication, rather than lectures. Tucker says that too often advisers walk into a meeting, do all the talking and then leave, thinking their mission’s been accomplished. That won’t cut it with women, he says. He recalls one situation where a client began crying in response to some of the more difficult questions he asked about her life situation. He wasn’t trying to be nosy; he wanted to know her current financial circumstances and if anything could change them in the future. It turns out she was planning to leave her partner. “She said the discussion delivered a clarity that she had been struggling with for years,” he says.

While women may want different things from their advisers than men traditionally do, DasGupta points out that taking a more holistic approach to financial planning will benefit everyone. Many of the issues that have kept women away from advisers have also turned off men, she says. That’s one reason why more financial firms are taking a more integrated approach to planning, rather than focusing simply on investments. “It’s about getting to know your clients well and catering approaches to what clients need,” she says. “Many men will benefit from this type of experience too.” [adspot]

While the research doesn’t indicate that women necessarily want female advisers, a more diverse adviser group would go a long a way to encouraging more females to invest, says Jennifer Reynolds, president at Women in Capital Markets, an organization that encourages more women to join the financial sector. A 2012 Bureau of Labor Statistics survey found that 21% of personal financial advisers are women. That’s not enough, says Reynolds. The industry needs to be made up of people who reflect the customer base.

Fortunately, she’s also starting to see more female investors and advisers in the financial world. “There’s been a lot of talk about this for many years, and we haven’t seen the numbers change dramatically,” she says. “But there’s a renewed interest to address these issues.”

While it still may take a while before women and men invest equally, there’s no question that females will make up a much bigger part of the investor pool in the future. Tucker thinks that about 40% of his clientele will be women in the next decade. “This is a trend,” he says, “and we’re listening intently to what women want.”

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