Stephen Parnell | Tue May 24 14:45:00 EDT 2016
Which gender is more commonly associated with business and finance? I’m guessing most people think of the male gender when it comes to money, given that men have historically out-earned women, been represented in higher numbers at business schools and are traditionally positioned as the breadwinner in a marriage. Because of this general, albeit old-fashioned, mindset, financial advisors may find themselves catering more to the male gender. Don’t let yourself give into this habit—instead, make it a habit to spend more time prospecting and engaging women investors as clients. There are several reasons why, but here are my top four:
1. Women are storming the business world.
Statistics suggest that the gender gap is becoming narrower every day. It is expected that by 2022, women will earn 148 college degrees for every 100 earned by men.1 Between 1997 and 2014, the number of firms owned by women increased by 68%, which adds up to twice the rate of businesses owned by men.2 As of 2012, 29% of women were out-earning their husbands, a number that presumably will continue to increase.3 What all of these numbers mean is that women are becoming more educated, more entrepreneurial and more financially independent than ever before, making women an important demographic for financial advisors looking to expand their business.
2. Women wealth holders are becoming more common.
In a previous blog post, I shared even more data that shows the wealth potential of women. Currently, women control 51% of personal U.S. wealth ($14 trillion)4, and they stand to inherit $42 - $110 trillion over the next 30 years.5 Moreover, it is projected that by 2020, women will control $22 trillion of personal U.S. wealth.6 Taking such expectations into account, women represent a significant opportunity for financial advisors, given that they are and will continue to be the wealth holders and are statistically expected to live longer on top of that.
3. Women make great clients.
Recent research shows that financial advisors generally find women investors easier to work with than men.7 According to this study, women are more likely to acknowledge when they don’t know something; they are more patient with their investments; and they take fewer risks. Women investors also tend to focus on longer-term, non-monetary goals; they are more likely to ask for direction; and they take more time to be thorough in decision-making. Not only that, but women are also found to be more likely to make referrals,8 which could lead to a host of new prospects. Overall, women are engaged in the financial planning process, are likely to heed the expertise of their financial advisor and might just recommend a good advisor to other—this makes for a win-win relationship.
4. Women represent an untapped market.
Despite what all the statistics may say, women still remain underserved by financial advisors. Whether their husbands handle the financial planning, whether the financial advisor ignores them in meetings or whether they just don’t know where to find sound financial advice, women tend to feel somewhat overlooked in favor of their male counterparts.9 Therefore, the financial advisor who gives women the same time, respect and service as they do men is the financial advisor who will have a better chance of winning their important business. Considering how much economic power women have shown to have, women investors are a market opportunity that has yet to be saturated.
In short, financial advisors should really be paying more attention to women investors. Those who do so have the potential to grow their business and secure long-standing clientele, while those who don’t are at risk of missing the boat.
1 No commencement speaker will mention the huge gender college degree gap for the class of 2013 favoring women, www.aei-ideas.org, May 2013, most recent data available used
2 Women Launching 1,200 New Businesses a Day, New Research Shows, www.americanexpress.com, most recent data available used
3 Breadwinner Moms, pewsocialtrends.org, May 29, 2013, most recent data available used
4 Business Insider, 4/7/15
5 Administration on Aging, U.S. Department of Health and Human Services, A Profile of Older Americans: 2012, most recent data available
6 Business Insider, 4/7/15
7 U.S. News & World Report, “Are Women Better Investors Than Men?”, 09/15/15
9 Women: The Underserved Client, article (http://www.onwallstreet.com/opinion/women-the-underserved-client), 10/1/12, most recent data available