How to serve a growing market of women investors

Men and women have different financial situations

The wage gap gets the most press, and although it’s important, it’s not the whole story of women’s finances. First, in spite of progress closing the wage gap, earnings for most women of color lag far behind white and Asian women.² And beyond wages, women face cultural and health-related realities that have an impact on both their ability to earn and save and their need to earn and save. 

Realities that hinder women’s long-term savings 

• Women are more likely to take time out of their career—either temporarily, part time, or permanently—to care for a family member.³
• More women work part-time jobs.⁴ 
• Women have more student loan debt than men.⁵
• More women than men are divorced, separated, or widowed and head of a single-parent household,³ and divorce has a greater impact on women’s finances than men’s. 

Realities that require more long-term savings

• Women live longer than men—a 65-year-old woman today is expected to live 2.6 years longer than a 65-year-old man.⁶
• Women retire earlier (at age 65.7) than men (at age 67.9).⁷ 
• Women’s healthcare costs in retirement are $200,000 higher than men’s.⁸

The top financial worry for men is economic conditions—for women, it’s not having enough retirement savings.⁹

In spite of all this, when women go looking for financial advice, they are almost five times more likely to meet with a male than a female. Although more women are becoming financial professionals, they still only represent 18% of the profession.¹⁰

Women represent growing wealth and opportunity

But advisors who don’t learn to focus on women will be missing out in the coming years. As women are breaking more ceilings in executive suites and entrepreneurial ventures, the growth of their wealth is outpacing men’s wealth—with 6.9% compound annual growth expected in North America from 2019–2023.¹ And women are becoming more confident in their finances and investments, especially millennial women.¹

To address this growing market, the advisor community has some work to do on two fronts:

1. Developing product and service approaches that are geared toward the differing needs of women investors, and 
   
2. Hiring more women to the ranks of financial professionals. 

1 Develop a service strategy for women investors

There isn’t one product or service approach that will work for all women, just like there isn’t one product that works for all men. But there are important differences that you can incorporate into your strategy.

Financial planning and investments

• Because they’re more likely to have gaps in their career to care for family members or take maternity leave, women have more sporadic earning and saving patterns than men.
• Women tend to plan and invest with a focus on life events,¹ such as college savings and retirement. 
• Women tend to be interested in more than the investment’s performance, considering ESG and community-related factors as well.¹
• Longevity, living alone, and healthcare expenses in retirement weigh more heavily on women than men.

Service elements

• If you’re meeting with a couple, don’t assume the man is the breadwinner or decision maker.
• Women tend to prefer a financial professional who’s proactive about communicating with them about their investments.¹¹
• Women put more importance on professional designations such as CFP or CFA.¹¹

2 Hire more women as financial professionals

More and more women are majoring in business and math-related degrees, but their growth in financial services isn’t keeping up. Although 46% of undergraduate degrees in business, math, and statistics are earned by women,¹² only 18.1% of financial professionals are women. This does represent growth—it’s up from 15.7% in 2015⁹—but it doesn’t come close to matching the available talent or the client base.  

Financial advisory firms should take a look at their hiring practices, especially as they face a generation of retiring professionals, with 35% of advisors expected to retire in the coming decade.⁹  

• Are you recruiting candidates from diverse sources and universities? If you’ve been using the same sources, look for new ways of reaching out for diverse candidates.
• Do you offer flexible schedules? Women aren’t opposed to working hard, but as they’re still the primary caregivers, many require the ability to choose the hours they’re at a desk.¹³
• Are you visible in your community? Many women and recent college grads don’t pursue financial services because they’re not familiar with our industry.⁹ Community outreach can help change that. 

Align your service and recruitment strategies with your target markets

Advising women investors represents great growth opportunity for financial services firms. Developing a successful strategy to serve this market requires truly understanding the differences in their short- and long-term finances and goals, attitudes about investing, and expectations about advisory service. It also requires taking a look at diversity within the firm. Having more women in your ranks can help you with both your product and service development and with prospecting. With a better understanding of the differences between Venus and Mars and with more diversity in your ranks, you can do a better job of aligning with both.