Wealth managers must 'tailor plans to meet women's goals'

Many female investors around the world feel misunderstood and unwelcomed by their wealth managers, according to a new research report on women and wealth.

A fresh study by consultancy EY called Women And Wealth found that many women see the investment industry as being male-oriented, and they commonly use terms such as "unwelcoming", "patronising" and "full of jargon" to describe the industry.

Globally, 67 per cent of female investors feel their wealth managers or private bankers misunderstand their goals or cannot empathise with their lifestyles.

The figure is even higher in key markets such as Hong Kong (86 per cent), Singapore (80 per cent), China (74 per cent) and Britain (73 per cent).

The report polled about 800 women with investable assets ranging from US$100,000 (S$142,000) to US$30 million.

It recommends that wealth managers should adopt a customised approach, citing gender-based differences in investing goals and styles. For instance, women's investment goals differ from those common among men.

Fulfilling personal goals is considered the most important investment priority by wealthy women (40 per cent), significantly ahead of market outperformance (31 per cent).

In contrast, male investors see pure performance as their leading objective (37 per cent) and consider personal goals to be of lower priority (34 per cent).

EY suggests firms that take the time to understand women's personal investment goals and to build those aspirations into a detailed financial plan for them could reap major rewards in terms of client loyalty.

Personal goals can be as varied as paying for childcare or eldercare, starting a business or funding education for children.

Market research into the preferences of wealthy women also suggests some striking differences when it comes to switching.

One recent study shows that women are significantly more likely to move between wealth providers than men are (62 per cent compared with 44 per cent). Not only are women more willing to switch wealth managers than men are, but also, they switch for different reasons. In contrast, women with wealth to invest place greater emphasis on a good reputation than male investors do.

"This implies that widely held assumptions about the loyalty of female clients might be dangerously inaccurate from the point of view of wealth managers," said EY.

Overall, women appear to assess wealth managers in a less transactional way than men do. Women investors are more interested in whether a firm can help them achieve their personal goals and how it plans to do so.

According to EY, recent studies suggest that women could control as much as half of the personal wealth in leading markets such as the United States.

In addition, in many countries, like Japan, women manage the household balance sheet even if they are not working.

This implies that providing women with a better experience could generate up to US$100 billion in additional revenue for wealth managers.

A higher proportion of women (35 per cent) than men (30 per cent) see a deep understanding of their investment goals as being central to their experience of wealth management.

Women also place a much higher value on security, accuracy and privacy than men do. Two examples are accurate account information (considered important by 20 per cent of women and only 14 per cent of men) and personal data privacy (important to 18 per cent of women and 12 per cent of men).

This means that wealth managers who view accuracy and security as low-value "hygiene" factors risk alienating women investors.

When asked to define good client experiences, women point to very different factors than men do.

For example, women identify accurate account information as the most important consideration (50 per cent compared with 45 per cent for men).

They also rate high-quality, frequent adviser contacts higher than men do, and place a greater value on getting prompt responses to their queries.

In terms of trust, female investors place greater trust than men do in advisers who clearly explain their investment decisions (27 per cent versus 23 per cent).

Studies show that women can feel less confident with investment terminology than men do - but also that they are more willing to admit to a lack of expertise and more open to being educated.

Advisers will also need to be coached on how to act as "financial therapists" for their female clients. Effectively, this means spending less time discussing pure investment functions and more time delivering personally valuable advice, said EY.

As a result, they might need to reassure clients through periods of market volatility and during challenging times in their lives.

Finally, the report indicates that women are far more inclined to rely on the advice of friends and family when making investment decisions - both now and in the future.

Women are also more likely than men to value advisers who build relationships with their other family members (25 per cent versus 20 per cent).

EY said: "It is clear that wealth management firms need to understand and identify these potential differences, and to tailor client experiences accordingly."

Lorna Tan

A version of this article appeared in the print edition of The Sunday Times on March 12, 2017, with the headline 'Wealth managers must 'tailor plans to meet women's goals''. Subscribe