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What prompts women to manage finances, especially later in life? Two common triggers are the death of a spouse and divorce.
The average lifespan of a woman is about five years longer for a woman in the U.S. than a man and about seven years longer than a man worldwide. In America, men live to age 76, while the average woman will live to age 81. Meanwhile, the breakup of a long-term marriage is part of a demographic trend that pushes women’s financial independence. Though divorce rates overall have decreased for the last 20 years, the average age of people who divorced in 2022 is 46 for men and 44 for women. Plus, Baby Boomers’ divorce rate is increasing, with adults 55 to 64 experiencing a 46% divorce rate.
Still, other reasons women find themselves assuming primary responsibility for household finances are:
- They are steadily closing the wage gap separating them from their male counterparts; and
- They are more likely than men to depart the workplace to raise children, care for aging parents, or both.
U.S. News & World Report says the financial services industry has a name for this phenomenon: Women in transition.
Whether they’re left to handle the family finances or choose to take control of their household assets, some will be challenged to meet day-to-day expenses, let alone save for the future. In either case, financial literacy for women and effective financial planning for women is a key opportunity for financial advisors now and in years to come. If women aren’t part of your target audience, here’s why they need to be.
Financial Planning for Women – An Overlooked Group
As the number of women managing finances continues to grow, so will the opportunities for advisory firms to market to these women. Check out this startling fact: 80% of widows will switch financial advisors within a year of their spouses’ death. Plus, wealth manager UBS feels many financial advisors “are still inept to helping women who are clients.” Ouch.
Therefore, it should not be surprising that they turn to outside assistance or seek other opinions on investment decisions and retirement planning. Fortunately, this exodus is preventable.
It’s as simple as welcoming women as clients, creating marketing strategies specifically for your female audience, building relationships with all household members, and hiring female advisors that many of these prospects are searching for. In doing so, you will stand out from the firms that choose not to evolve.
The Future is Female
Stop and take a few minutes to review your current client list. Does it include a significant number of single women? If not, you are neglecting a steadily growing client base. If you don’t recognize the changing environment, you are doing a disservice to women and your business future. Here are some statistics to consider:
- Women control more than a third of total U.S. household assets
- The upcoming generational wealth transfer benefits women more than men due to their longevity
- Even with a concerted focus on retaining and attracting women clients, women simply want other things than their male counterparts.
If your current client base is strictly male, you’re probably used to interacting with them as the traditional head of the household and primary breadwinner.
So, get ready to adjust your mindset because women have different needs than men. Many articles explore how women and men differ in working with a financial advisor. For example, women are generally more relationship-focused and less transaction-oriented than men.
According to Forbes,
- “Forty percent of women surveyed said advisors treat women differently, often ignoring or dismissing what they have to say.
- Sixty-two percent of women said they have unique investment needs, and financial advisors don’t understand those needs.
- Women are 2.5 times more likely than men to share their experiences with a financial advisor than with a friend or family member.
- Women assume a financial advisor is knowledgeable about investing and make the decision to hire a financial advisor more based on whether they believe there is a personal connection.
- Women feel advisors charge too much in fees, mostly because they don’t understand the fee structure charged by advisors. Many gave erroneous answers when asked how much they were charged for investment advice.”
But there’s good news! As a financial advisor, you can take this information to heart and make real changes that can elevate your business and help increase financial literacy for women. How can you connect with and convert more women to your financial services business?
- Listen more and talk less
- Gain a clear understanding of your member’s specific needs and concerns
- Demonstrate your expertise in financial matters
- Avoid the use of financial jargon, and don’t ignore their concerns
- Help your prospects feel more confident about their finances
- Educate your clients and empower them
- Communicate effectively and build relationships based on trust
- Build trust by acting in their best interests
Women and Money – Steering Women to Finance
Perhaps the best strategy to position your firm to serve women clients is to hire women financial professionals. You’ll see that many female clients will feel more comfortable working with another female. Finding women advisors is challenging due to a lack of women pursuing financial services. In fact, only 15-20% of all advisors are female.
Why? Part of the problem could be misconceptions about the financial industry among women. The consensus is that it is all about math, picking stocks, and not a career suitable for a family or a balanced life.
Furthermore, financial services companies aren’t promoting themselves as a place for women to build and sustain careers. This is despite the fact wealth management and asset management generally offer women more flexibility to achieve professional success and work-life balance than investment banking.
It Pays to Diversify
The bottom line? Women are managing finances and seeking the assistance of financial advisors that can help them reach their goals. If your business isn’t a blend of men and women, now is the time to find ways to hone your skills and make yourself more adept at reaching and handling women investors.
There are many ways to reach women investors, including financial seminars, educational workshops, and ongoing webinars. Our marketing solutions are designed to help you reach the right prospect at the right time. Set up a free consultation with our experts to get a personalized plan for growing your business.