Should advising female clients be a key strategy for 2023?
Research suggests that by 2025, 60% of wealth in the UK will be in female hands but 70% of women will change their adviser within a year of their partner dying. Is this a threat or opportunity for advisers?
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As 8 March is International Women’s Day, it would be remiss not to look at the importance of women in relation to wealth transfer and some considerations for financial advisers.
If we believe the research from the Centre for Economics and Business Research, in only two years time 60% of the wealth in the UK will be in female hands. This is mainly as a result of the current transfer of wealth to female babyboomers. In the US, women have been identified as the fastest growing segment for financial services. However, it’s not just boomer wealth behind this. A recent report from the Pew Research Centre indicated that efforts to address the gender pay gap are beginning to come to fruition. In 1980, women aged 25-34 earned 67 cents for every dollar earned by their male counterparts. This has now risen to 93 cents and in 22 metropolitan areas including New York, L.A. and Washington DC, women under the age of 30 are now earning the same or more than their male counterparts.
This all looks positive so why, according to the recent Schroders Adviser Survey, do only 5% of adviser businesses have a strategy for retaining and attracting female clients? There is both a threat and an opportunity here for advisers. 70% of women will change their adviser within a year of their partner dying.1 This is a threat to those looking for an exit strategy and seeking to maximise valuations where retention of boomer assets is vital. However, for those advisers who have a strategy for female clients – what a significant opportunity!
So what is the solution for advisers looking to develop a strategy for retaining and attracting female clients? I don’t believe that it’s simply a case of putting a female adviser into their business to engage with women who may inherit wealth from their partners with the aim of stemming outflows. I think it requires a broader proposition that addresses the specific advice requirements that women can have. So where to begin?
Here are some suggested steps:
1. Does the business have a problem?
A very quick audit can help. Identify clients in an ‘at risk’ age group e.g. 70 plus and consider the following:
• Do I genuinely deal with both partners or just the man?
• If the female partners were to leave the business with the assets, what’s the worst case scenario on depletion of assets under management and fee income?
2. Should I have a segment for women?
A recent survey by AKG indicated that 98% of advisers were looking to grow their business with 63% looking to increase clients numbers by 20% or more.2 Interestingly when asked about the target segment for growth 54% responded ‘males with families’ and only 42% said ‘females with families’. Perhaps a rethink is required here?
3. What is my proposition?
Women are often seen as risk averse and lacking in confidence - a symptom of this is that 55% of all cash ISAs are held by women.3 However it’s important not to stereotype - 50% of landlords in the UK are female and the rise in women entrepreneurs in later life is visible with a 132% rise in women over the age of 65 opening business accounts. For those women who do lack confidence about investing, this can often be a case of not feeling that they know enough to make the right decisions. Time devoted to understanding their concerns and providing appropriate education is time well spent.
The specific advice requirements that women may have include:
• Care costs: women outnumber men in care by 3:1 and once there, stay four times as long4
• Wealth transfer: women are more likely to pass on wealth in their own lifetime, keen to give financial assistance to the wider family
• Sustainability: many women would invest more if the impact of their investment aligned with their personal values5
• Trusted adviser: 89% of women in a recent survey said they wanted holistic advice and 65% would pay a 20% premium for in-person advice6
4. Are you ‘open’ for female business?
Sadly the AKG research also identified that females are more likely to turn to friends and family or banks and building societies for advice and guidance on financial matters. So how to attract them? As a starting point, look at your website. A very quick analysis[7] of adviser websites indicated the following:
• Only around 50% had images of women
• None of the websites mentioned the word woman
• 15% had case studies involving women only
• None had testimonials from women
One last thought, if women were to invest at the same rate as men, $32 trillion would be available globally7 – maybe an opportunity not to be missed!
To find out how Schroders can support you, contact your usual Schroders’ representative or call our Business Development Desk on 0207 658 3894.
[1] Centre for Economics and Business Research (CEBR)
[2] AKG Research Paper 2022; NextGen or LostGen? The need to develop new client acquisition strategies
[3] HMRC 2022; cash ISA subscriptions in tax year end 202
[4] Taking the Reins: Female Clients and the Transfer of Wealth, Schroders
[5] Schroders Global Investor Study 2021; 55% of women would invest more if the impact of their investment aligned with their personal values
[6] Simon Kutcher research
[7] Schroders research, December 2022
[8] BNY Mellon
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