Women are becoming an emerging force in the investment world. With increasing financial independence and growing wealth, women investors now account for over 30% of total U.S. personal wealth. However, the investment industry has been traditionally male-dominated and does not fully understand women’s unique needs and preferences. To capture the huge business opportunities brought by female investors, the asset management sector must take actions to attract and retain female clients. This article analyzes the current situation and characteristics of women investors, and provides suggestions for financial advisors to better serve this demographic.
Women investors are risk-averse and goal-oriented
Abundant research shows that women investors tend to be more risk-averse and prefer passive investment strategies compared to men. The top priority of women investors is capital preservation. They focus more on achieving financial goals like retirement planning or children’s education. Women also favor diversified portfolios and are wary of ‘hot’ sectors. Moreover, women investors exhibit patience in investing and hold assets for longer periods. Hence, financial advisors should avoid recommending overly risky products to female clients and pay more attention to their personal goals when designing investment plans.
Women want holistic financial advice
Unlike male clients who often only care about investment returns, women expect advisors to take a holistic approach that covers family, career, and social responsibilities. Women appreciate advisors who understand their entire life picture and provide guidance on managing wealth across business, personal, and family finances. Advisors should adopt more frequent and substantial communication with women clients to gain a thorough understanding of their needs.
Sustainable investing resonates with women investors
Women investors show great interest in sustainable and values-based investing. For instance, 64% of women factor environmental, social and governance (ESG) criteria into their investment decisions. They care deeply about issues like healthcare, retirement security, education and climate change. Therefore, advisors should actively provide diversified ESG investment options to cater to women’s preferences. Sustainable investing can help secure female clients’ trust and loyalty in the long run.
Lack of gender diversity hurts advisor credibility
The financial advisory field suffers from a severe lack of gender diversity. Women clients often complain that the sector does not fully understand their demands and decision power. According to surveys, only 39% of women investors have a female advisor, and senior leadership in most wealth management firms is dominated by males. Without sufficient female representation, many financial institutions fail to offer adequate products and services to growing women investors. Hence hiring more female advisors and promoting women into senior roles are instrumental to success.
Digital tools facilitate women’s investment participation
Technological solutions can break down barriers to women engaging in investing. Online investment platforms allow women clients to conveniently research markets, access investment products and manage portfolios. Also, digital advisory services provide goal-based and customized investment recommendations. Leading fintech firms are leveraging automation and data analytics to serve women investors in a more personalized way. Wealth management companies should collaborate with fintech partners to improve digital offerings and user experience for female clients.
Women are an increasingly important customer group for the investment industry with unique preferences and needs. Financial advisors must ditch outdated gender stereotypes and make concrete efforts to better attract, serve and retain female investors. Adopting a holistic and personalized advisory approach, focusing on financial goals, providing sustainable investment options, enhancing gender diversity, and leveraging digital tools are key success factors to tap into women’s wealth.