Female investors express less interest in both managing their own accounts and paying advisers to act on their behalf, according to the latest Cerulli Edge – US Retail Investor Edition. To better serve them, providers must seek opportunities to alter this dynamic.
One of the most notable differences between investors on a gender basis is the desire to be actively involved in day-to-day management of their portfolios. Only 41 per cent of female respondents voice an interest in this depth of engagement in their financial affairs, compared with 57 per cent of males. This result is even more pronounced at each end of the spectrum, with 25 per cent of males surveyed selecting “Strongly Agree” to wanting day-to-day involvement compared with just 15 per cent of females.
Females are also more reluctant to pay for advice to guide them through these topics. Barely half (51 per cent) of female respondents agree that they are willing to pay for financial advice, compared with 58 per cent among males. “This provides both a challenge and an opportunity to providers in the advice segment,” says Scott Smith, director of advice relationships. “As regulators are consistently elevating the role of transparency and disclosure in client relationships, investors are more likely to ask questions about advice fees and commission charges.”
With such a relatively high percentage of adviser-reliant female investors already concerned with their fee relationships, it will be crucial for providers to clearly and concisely express the value of their services. As the industry edges toward a greater emphasis on planning-based fiduciary relationships, the benefits of employing trusted advisers are becoming more material. Instead of simply recommending the “best” stocks or funds, advisers are increasingly adopting process-based planning, which creates an implementation timeline. By dividing this timeline into tangible milestones, advisers are better poised to communicate the value of each step, rather than trying to assess an ambiguous “wealth management” fee.
“When connecting their remuneration to specific responsibilities and outcomes, advisers could reduce the potential skepticism among female investors and create millions of mutually beneficial client relationships,” concludes Smith.