Women’s wealth is growing: advisors need to keep pace

Despite this massive shift, women are traditionally underserved by a financial services industry that has long geared its products and marketing toward men. The industry is also overwhelmingly staffed by men, particularly in the advisory segment, where men are estimated to outnumber women by more than 4-to-1.¹ 

But research shows that women tend to have a different experience with money than men and often take a different approach to setting financial goals.² Advisors who want to seize the opportunity of this evolving market should ensure their service approach takes into account the needs of women investors. 

A different experience with money

To be clear, every investor is unique, and the last thing an advisor should do is assign a set of assumptions to every female client who walks in the door.  

But it’s true that women often have a different experience with money. For instance, women are more likely to have taken time out of their careers to raise a child or care for a family member. This can affect earning potential, the chance to build up retirement savings, and often has a cost in lost career advancement.

There are also differences with the messaging girls and boys receive at a young age about money, and this can affect their approach to finances as adults.

Studies show that women tend to be more deliberative and more averse to uncertainty in their investment choices than men. They also tend to be less focused on investment performance, or rate of return, than men are. Instead, women often put a higher priority on long-term goals such as early retirement or place a higher value on ESG and community-related factors.

Because women have a longer life expectancy, longevity issues may be more of a focus, including ensuring they have enough saving for retirement and managing higher healthcare costs in old age.

Despite these differences, the extreme gender imbalance in the financial advisory industry means women are much more likely to end up working with a male advisor than a female one. 

Resetting assumptions

With around CAD$4 trillion in assets expected to be under the control of women by 2028,³ firms and advisors should ensure they’re listening to and understanding the needs of women clients. Doing so will be crucial in order to meet the challenge and opportunity of this asset shift going forward, particularly as younger women investors are much more likely than previous generations to lead family financial decisions.

"Doing so isn’t just polite, it’s part of the job, as communication with both clients is a requirement of know-your-client regulations."

It's also important to ensure gender-based assumptions aren’t creeping into interactions with existing clients, such as with heterosexual married clients. While it may be natural among couples for one partner to take on more responsibility in money matters, advisors need to avoid talking past the female spouse, even if she may not initially participate in the conversation.

Doing so isn’t just polite, it’s part of the job, as communication with both clients is a requirement of know-your-client regulations.⁴ This means ensuring both spouses are involved in a conversation and making sure you get assent from both on decisions.

The cost of failing to appreciate the needs of female clients can be significant, as women who don’t feel heard by their advisors are more likely to find someone who better suits their needs. In the case of widows, 70% switch advisors within a year of their spouse’s death, suggesting they feel underserved as a client.⁵

Tap the talent pool for a stronger team

Looking beyond the advisor-client relationship, financial advisory firms can take a look at their hiring practices, particularly as industry faces a wave of expected retirements over the next few years.⁶

While the ranks of female advisors are growing, hiring in financial services greatly lags the proportion of women who major in business and math-related degrees and who would presumably be good candidates to join the profession.⁷

This not only represents a largely untapped talent pool, but it’s also a way to bring fresh perspectives from colleagues with different backgrounds and insight into how to best serve a growing female client segment. This is particularly important as research shows people tend to prefer advice from advisors they can relate to. 

With the substantial wealth already controlled by women set to balloon over the next several years, an increasing number of female clients will be demanding advice that addresses their needs and financial goals. Advisors who want to help manage that wealth need to make sure they keep pace with the changing face of wealth.

For more information about our women and wealth program, please connect with your Manulife Wealth practice management team.

1 Progress slow for women's representation in advice channel, report finds | Investment Executive 2 Seeing the unseen 3 IF_2019-03xx.indd 4 Know-your-client and suitability determination for retail clients | Canadian Investment Regulatory Organization 5 https://www.irionline.org/wp-content/uploads/legacy/default-document-library/272669_0121_women-and-investing-white-paper_final_021021-update_digital.pdf 6 https://advisorlegacy.com/2024/11/14/40-of-advisors-set-to-retire-in-the-next-5-years/ 7 https://www.aei.org/carpe-diem/chart-of-the-day-female-shares-of-ba-degrees-by-field-1971-to-2019/#:~:text=For%20the%20other%20two%20of,the%20lowest%20share%20since%201987