In the last five years alone, female-owned small businesses have grown by 18%. As the business world strives for greater equality, so too does the realm of finance.
Women are increasingly calling on financial advisers to help with everything from planning for the future and getting into the world of investing.
While it may seem that good advice is relevant to everyone, the truth is that women often have different challenges, goals and needs than male clients. Understanding this is important and it can help you ensure that you are providing the biggest benefit possible to your clients.
It is expected that by 2025, more than 60% of the UK’s wealth will be in women’s hands. There’s a growing number of female clients looking for financial advisers who can help them reach their financial goals. With even more potential clients out there, this development represents a significant opportunity for advisers.
Making the most of this opportunity requires advisers to carefully consider the ways that women’s financial goals may differ from their male counterparts. Understanding the common challenges that women face will help you build strong relationships with your clients, so they trust you to offer the most tailored and pragmatic advice for their unique situation.
But is being aware of their challenges enough, or do you need to make some more substantial changes to your approach?
While the overarching financial goals of women are likely to be the same, the routes taken to get there often vary substantially. Protecting and transferring wealth, saving for retirement and maintaining a certain lifestyle are usually the headline items, but the success of the strategies you suggest will all come down to the fine print.
Here are some examples:
Women tend to leave the workforce for extended periods of time more frequently than men. Childbirth is one obvious reason and also leads many women to reduce their workhours or stop working completely.
The Covid-19 pandemic has also led to a quarter of women in the US to consider downshifting their careers or leaving the workforce, according to the World Economic Forum. These gaps can often make it harder for women to progress in their careers as well as leave them with a reduced income. In the UK, women are also twice as likely to leave their job to care for family members.
According to the Office for National Statistics (ONS), in 2019 in the UK the average life expectancy for women was 83.1 years compared to 79.4 years for males.
Women also often tend to retire earlier than their male counterparts, meaning they need to make sure they will have the right level of income. When this fact gets added to gaps in employment and the gender pay gap, it is common for women to enter retirement with less saved than men of a similar age.
ONS figures show that, while falling, the difference between average hourly earnings of men and women in the UK in 2020 was 7.4% for full time employees in the UK.
This means that the average woman, even those in C-suite and leadership positions, will be earning less than male counterparts in a similar role. This can have significant impact on what wealth management strategies are appropriate.
When investing, female clients could also have a different attitude to risk. Now, obviously every individual is different and generalisations about entire groups are often of limited value, but a growing body of research shows that women take a different approach to many male investors.
Female investors may spend more time researching investment choices, take on different levels of risk and hold on to investments for longer.
The growth in female clients is something to be celebrated by financial advisers. Not only could it mean more clients, but the wider social benefits are helping to make society more equal and meritocratic. But there are some fundamental issues with the financial advice industry that need to be addressed.
Currently, around 70% of UK financial advisers are men and 30% are women. This could be a factor discouraging more women from seeking out the help of a financial adviser.
Understandably, some female clients may feel more comfortable discussing their financial challenges with a female adviser. This could be especially true if they are seeking advice as the result of a divorce or the death of a partner.
Another factor that could be impacting the inclusivity of the industry is the way it presents itself. There has long been a feeling that much of the financial literature or marketing materials produced by financial advisers is aimed predominantly at men.
As more families break from the traditional conceptions of gender roles, the advisers who begin communicating in a way that is more reflective of reality could be best placed to take advantage of this market opportunity.
And it is worth remembering just how big this opportunity is. According to the ONS, 65% of the UK’s wealth will be controlled by women by 2025. Many of these individuals will want help, and you need to make sure you are ready.
So, what exactly do you need to do to make sure your business is as inclusive as possible? While understanding the need for a different approach is an important first step, are there any concrete strategies that financial advisers can follow?
Here are a few things that you should be considering:
You likely already go out of your way to make sure you don’t make hasty assumptions about your clients, but it is important to remember this core tenet of great service with regards to female clients. Effective financial advice has always been about the individual and their goals, rather than their gender.
If the stock photos you use for your brochures or website seem to show men in control, you could think of undertaking a minor rebrand. The aim is not to simply replace the men with women but to make sure you are accurately representing society as it is: racially diverse, modern and with an increasing number of young people and women looking to take control of their finances.
As well as the images, the language you use is important. There are a number of small tweaks you can make to your website for example that could help. How about adapting the homepage to include services that may appeal to women or including some short testimonials from a diverse range of clients?
Society is always evolving, but the need for expert and understanding financial advice is something that will never go away. Finding the right financial adviser has never been so easy for clients, so make sure that your door is open and you are ready to take part in an exciting period of change for the financial advice industry.
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