Financial Planning

Tailoring financial advice for women should be a priority for every advisor

Pat Magadla, Senior Business Development Manager, Old Mutual Investment Group

In a recent online survey commissioned by Old Mutual Unit Trusts, 60% of respondents said that when it comes to investment offerings, men and women should be advised differently. This finding brings to the fore an important conversation that the financial services industry needs to pay greater attention to, particularly as the country battles its post-Covid-19 recovery. 

Women have unique financial needs and, therefore, need nuanced investment advice relative to men. Factors that point to this need, include women generally having a longer life expectancy than men and the global wide issue of gender pay gap, which also befalls South Africa.

This paradox of circumstances means that women in South Africa need to engage more in integrated and fit-for-purpose financial planning. We also know that the economic position of many woman has regressed amid Covid-19, coupled with the responsibility of unpaid care work that women typically bear.

The importance of supporting the financial recovery of women is not only about being socially responsible, but also about future-proofing advisory practices considering that the face of wealth is fast changing. 

Women in the US control 33% of total household financial assets, which are in excess of $10 trillion. However, by the end of the decade, McKinsey & Company expects that US women will “control much of the $30 trillion in financial assets that baby boomers will possess – a potential wealth transfer of such magnitude that it approaches the annual GDP of the US,” explains the global consulting company.

When you consider the implications of this shifting landscape, it is very clear that financial advisors who want to remain in business will need to innovate and find new ways of engaging with women – who are the emerging investment power block. 

Age-old methods of consulting that exclude and alienate women will begin to have dire financial implications as advisors may find their client base dwindling. A white paper by Canadian marketers states that 70% of women change financial advisors within a year of their husband’s death as they seek out an advisor they feel more comfortable with. Among Canadian women specifically, the occurrence is at 80%. Of those that changed advisors, reasons cited included “experiencing belittling behaviours”, “not being taken seriously” and “receiving a ‘dumbed-down’ engagement”. 

The idea that women are not interested or can’t make sense of complex investment topics has gone unchallenged for too long. It is simply untrue, as many traits women possess lend to positive investor behaviour. Yes, women tend to process information differently and this can be incorrectly correlated to a disinterest in money. For instance, they tend to do more in-depth research, which can be misinterpreted as indecisiveness. Or be perceived as risk averse, when its due to fear of losing their hard-earned savings. Statistically, it’s been found that women tend to trade or switch their investment portfolios less, in comparison to their male counterparts, who run the risk of regular switching, in pursuit of the next hot tip. 

The inherent challenges and differences around gender are an opportunity for the industry to interrogate its approach to investing and packaging investment advice. I can’t overstate the importance of financial advisors understanding the economic power that women have as an investment group and thus making a concerted effort to explore this dynamic and authentically cater to this segment. 

As an advisor, I suggest taking a step back and asking yourself: what am I doing in my business to be more accommodating and to attract more female investors? Do I understand what female investors want? What assumptions and stereotypes do I hold about this demographic? And how can I better partner with them?  

Rather than discounting the signs, financial advisors who want to future-proof their businesses will reap the benefits of putting in the work by making their practices more pro-women investors. 

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