The rights and roles of women have undergone significant change over the last century, and we continue to witness the ever evolving and growing presence of women’s power in society.
More recently we’ve seen women increase their representation in the workforce, become equally represented in the Senate, as well as outnumber their male counterparts in domestic university attendance.
We’ve also seen changes to the dynamic of family households, with increasing numbers of women becoming breadwinners or co-breadwinners, and a growing number of men taking on household and/or parenting duties.
As the role of women in society continues to shift, so too does their asset position and opportunities for wealth building.
However, women still face a number of challenges that work against them when it comes to building wealth and financial security. Issues such as the gender pay-gap, lower levels of financial confidence, an increased likelihood of having time out of the workforce and a longer life expectancy, all continue to impact on women’s ability to save, invest and accrue wealth.
These challenges lead to an increased importance for women to have a financial plan in place, that they feel confident in and are committed to, to assist them with achieving their goals and objectives.
This highlights an important opportunity for financial advisors to ensure their advice process caters to engaging women in financial planning and investing for their future.
There are a number of reasons why financial advisors should be considering the value of female investors to their business.
They are about to become significant wealth holders
Most established financial advisors have heard about ‘The Great Wealth Transfer’, which will see a significant transfer of wealth between generations in the coming years.
What they might not know is that according to research¹, it is women that are set to inherit the majority of this transfer of intergenerational wealth, which will result in this market segment holding an increased portion of the country’s wealth.
They will tell the world how great you are
We all know the value of word of mouth referrals to a business.
With research showing women are typically more likely to refer than their male counterparts, they can present as a great marketing tool for financial advisors who are looking to grow their business.
They’re more likely to be the surviving spouse
Where financial advisors have a segment within their client base that the male spouse is engaged but the female spouse is unengaged, it’s worthwhile ensuring both parties are actively involved in the process in order to increase trust, build loyalty and increase the longevity of the relationship.
This is particularly important for retirees as women tend to have longer life expectancies and are therefore more likely to inherit the family wealth, as well as have longer term financial needs.
How to engage women in investing
Women have a set of needs and characteristics that are unique to them, and it is important for financial advisors to understand this when providing advice to ensure that they are engaged with, understand, and have bought in to their financial plan and investment goals.
There are a number of strategies that financial advisors can use to help with engaging women in investing.
Defining a purpose
Financial advisors need to have a clear framework in place that supports women to have a well-defined purpose when investing.
This involves defining what wealth means to them, what their values are, and what’s important to them, and using this as the basis for developing their investment strategy.
This process creates a ‘why’ behind the strategy, which can lead to greater buy-in and commitment.
The importance of education
One of the biggest barriers for females investing is a lack of education and confidence.
This presents an opportunity for financial advisors to use education as an engagement tool to support women on their investment journey and get them invested.
Financial advisors can leverage tools such as written, video and in-person educational content to engage current and prospective clients and help build confidence and knowledge around investment terminology and topics.
For those willing to take it one step further, content could also cover niche topics such as divorce, spousal loss, single parenting, career breaks and re-entering the workforce, but with a female focus.
Understanding the challenges and nuances faced by women
The life stages and cycles of women are very different to men.
While men are more likely to benefit from consistent and compounding growth in income, career experience and subsequently, wealth. On the other hand, women are more likely to be detrimentally impacted by wage, wealth and retirement gaps.
This is because women face a unique set of challenges throughout their lifetime that impact their ability to build wealth.
The most obvious and critical challenge is time out of the workforce with women taking approximately 12 years out of the workforce on average. While raising children is the most significant contributor to time out of the workforce, women are also more likely to take on caregiving responsibilities to parents with two thirds of care provided to older adults being provided by women.
Another challenge facing women is that they are more likely to live longer than men, meaning women are more likely to enter retirement with greater financial needs and lower net wealth.
Given their uniqueness, it’s important for financial advisors to understand and empathise with the challenges and nuances specific to their female clients and adapt their strategies relative to these. This helps to create a relationship where women can feel heard and understood and as though their investment strategies have been created with their personal needs in mind.
It’s clear that women represent a demographic that is on the move. They also have the ability to overcome challenges, build wealth and achieve financial security, particularly when partnered with a financial advisor who understands their needs and are equipped to engage, educate and support them on their investment journey.
This article was written based on the ‘Women, Wealth and Well-being’ presentation by Paula Gigler, BlackRock, at the XY Adviser All Licensee PD Day.
For further information, client resources and a range of engagement tools, including details on BlackRock’s Model Portfolios for Women, you can access the BlackRock Advisor Centre’s ‘Women, Wealth and Well-being’ resource centre here.
¹Boston Consulting Group as of December 2019, Boston College Center on Wealth and Philanthropy, National Center for Women and Retirement Research
Important Information: This material has been created with the co-operation of BlackRock Investment Management (Australia) Limited (BIMAL) ABN 13 006 165 975, AFSL 230 523 on 23 Feb 2023 Comments made by BIMAL employees here represent BIMAL’s views only. This material provides general information only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL’s Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.
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