When Shelly Brockman, Potomac’s Education Associate, entered the industry 20 years ago, she remembers how wives were rarely involved in client meetings; advisors solely worked with the head of the household; and most of the time, the breadwinners ended up being the men.
This is nothing new. Women born in the Greatest Generation, as well as Baby Boomers often found themselves deferring financial decisions onto their partners (specifically in a male/female household), removing them from having a say in their long-term financial plan or financial health.
Fast forward to today, the investor landscape is finally shifting as more women are taking control of their finances; however, outdated assumptions still permeate throughout society, especially when it comes to female investors.
Not only are assumptions like “women investors don’t have significant investable assets” or “women investors don’t enjoy managing their wealth” false, but they reinforce why the advisor community has historically underserved them.
Women make up more than 1/3 of millionaires, and their wealth is on the rise. By 2030, women are expected to control as much as 30 trillion in assets.
They aren’t just a niche market; it’s a market that advisors should pay attention to. A majority of women believe if they had a financial advisor to help them invest, they would be more confident about their financial future.
Even though they have the money, there is still a lot of hesitation because of self-doubt; as women acquire more financial knowledge, there will be fewer roadblocks to assert themselves in financial conversations.
It starts with the advisor understanding how women invest so that women can be assured in their investment choices. Since advisors already know that women tend to be risk-averse, moving past simplistic conversations about budgeting and being frugal is necessary.
Investors need to feel comfortable asking questions and advisors need to be there with forthright answers. It goes without saying risk-averse strategies tend to align with how women handle money—and Potomac knows a thing or two about risk management, as built to conquer risk is in our name.
Fidelity’s 2021 Women and Investing Study found that women, now more than ever before, are taking an active role in their financial future; 67% of women are now investing outside of retirement, 71% of them millennials.
This study also showed 9-in-10 women were planning to take steps within the next 12 months to help their money grow. (Advisors take note, women are ready for action.)
“Advisors are looking for ways to better support women in the investing conversation, but it’s never been part of their training; marketing to women is a lot different than marketing to men, and the more we can get into normalizing the conversation, the closer we’ll get the female investor to being where they need to be,” said Brockman.
When asked what financial life skills they wished they had learned earlier, the number one thing women said was “how to invest and make the most of my money.”
It’s a pivotal moment for advisors as new wealth opportunities arise. If advisors don’t put new methods in place for the influx of women investors, they will begin to seek advice elsewhere.
Roboadvisor platforms like Ellevest have been designed for women, incorporating an investment algorithm that factors concerns women face, such as career breaks, longer average lifespan, etc., to help meet their financial goals.
From a financial literacy perspective, Ellevest and other women-centric roboadvisors have demonstrated an ability to engage women through mass communication—putting information out on social media or a website.
Women can have all their questions answered (and in anonymity) while building a relationship with the advisor platform. However, no matter how good a robot platform is at messaging—in the end, it lacks personal moments.
Every woman has a different financial story. There’s a reason that when big decisions are made, like buying a car or a house, people do it with someone they trust.
“Whatever the case, people should sit down and actually go through their specific situation with someone; it’s why we have the disclaimer that every client is different,” Brockman said.
There is a myriad of components when it comes to financial information for women. As financial advisors know, there are no cookie-cutter financial plans out there. And this is where advisors can outshine roboadvisor platforms.
The decisions women make on how they invest and where they invest will directly impact their future: plans to retire, provide for their children’s education, or even leave money to a charitable organization.
Having a financial planning program allows women to have easy access to their financial achievements, while also providing tools to make asking financial questions easier with the advisor.
It’s the reason we have our UMA Union financial planning tool; it speaks to everybody about their money—what’s its purpose, what’s it intended for, and what will become of it in the future.
In a time when women will hold a major stake in the economy, acknowledging the importance of being able to communicate with a woman, in her own language, and in her own terms is what will make you stand out as an advisor—standing up and saying, you know we’re going to do things differently because this stodgy old industry needs to change.
“We’ve come a long way over the past 20 years,” Brockman says, “but it’s only the start. It’s going to take the entire financial community, men and women alike, to be more inclusive and supportive of these conversations, not only at the client level but as an industry as well.”
Disclosure: This information is prepared for general information only and should not be considered as individual investment advice nor as a solicitation to buy or offer to sell any securities. This material does not constitute any representation as to the suitability or appropriateness of any investment advisory program or security. Please visit our FULL DISCLOSURE page.