While folklore and homespun theories abound when it comes to understanding the needs of women, there is generally a dearth of data that can put actual numbers behind interesting and actionable insights. It was with enthusiasm that I recently discovered a fact-packed book, “Harness the power of the purse” by Andrea Turner Moffitt, who is a co-founder of the private investment membership group Plum Alley Investments.
Her impressive background in the finance business, coupled with her inquisitive study into the reality behind women’s investment needs and experiences comes together in an in-depth research study she led for the Center For Talent Innovation covering affluent women across six countries, that she outlines in this book.
The book packs a punch. Here are seven insights I took away from my reading, as well as thoughts on how financial services and investment companies can leverage them to better serve women investors:
#1: Women are the primary decision makers over approximately 18% of household wealth in the US
In the study, this amount is estimated at a staggering $5.1 trillion. When joint-decision making is added, that number becomes even larger at 39%, equating to an estimated $11.2 trillion in wealth.
#2: A significant proportion of female wealth is un-managed
The good news is that the U.S. has the lowest percentage of women (44%) that currently don’t have an advisor, compared to other Western countries studied (UK at 56%) and certainly better than the numbers in Asia (as high as 61% even in Hong Kong). The bad news is that this means more than two out of five affluent women has not opted to get professional advice. Why is this the case?
The primary causes relate overwhelmingly to these women feeling misunderstood, not heard, and not served well by the financial services industry, specifically the financial advisory industry. Broken down further, women cite a lack of trusted advisors, lack of values and goals-aligned investment strategies, lack of confidence and agency and lack of information and avenues to invest. This is truly stunning to see in a time of almost unlimited information and access to investment opportunities. So what gives?
#3 : Women express financial priorities significantly differently than their male counterparts
Women’s financial priorities often have a multi-dimensionality to them, encompassing areas that cover personal and professional areas, as well as family and social well-being. A key difference is the concept of career latitude, which will allow women to tread a wider array of professional paths than the traditional ‘one-size-fits-all’ model that’s unspoken but strictly adhered to in all conventional product design, marketing and advice practices and strategies.
#4: Women’s decision criteria are equally complex, and include more than just financial return.
Typical investment and advisory offerings tend to emphasize financial return, and with good reason. The challenge with tapping the wealth of affluent women is that they tend to demand a lot more from these products and services.
They not only want to understand the financial returns, but they are also interested in what kind of personal and social returns these strategies and products are giving them. Most importantly perhaps, they are willing to make trade-offs between these dimensions, but need to have a clear and objective understanding of what those trade-offs are. Merely assuming that they prefer one over the other will not be adequate to serving their needs.
#5: There is a significant opportunity to help women be better managers of their money by reframing wealth management as a lever of greater agency
One of the interesting conundrums I picked up while reading the books is that while women want to do better with their wealth, they also seem to not have the ability or willingness to devote time in their packed schedules to the management of money.
However, there is a key to solving this problem: women greatly value agency – the ability to act to advance their goals and values. This opens a door for the industry to attract greater mind-share from affluent women by accurately positioning time spent on managing wealth as an act of agency by the woman.
Exercising this power helps her improve the things she cares most about: career latitude, the ability to create impact, and provide for the things and people she cares most about. My sense is that taking this approach with women investors will also instantly transform the image of the provider as someone who is truly a champion of the woman’s financial interests, erasing some of the distaste women currently seem to feel about the industry’s perceived “sales-y” approach.
#6 Affluent women value three things greatly in financial services: a safe space to learn, expertise shared so they can save time, and products to meet their need to create impact.
A significant amount of pain and intense frustration expressed by the survey respondents comes through in reading the book: frustration with not being taken seriously, not having their different needs, decision factors and view of risk being respected and adequately addressed by the industry.
A key pain is the lack of confidence women seem to feel about money matters. Interestingly, low confidence does not equate to low financial literacy. However, because they express themselves with greater diffidence, the industry makes the mistake of assuming them to also have lower competence, with very unfavorable results for all concerned.
A simple solution is to create safe spaces that allow women to learn more about finance topics – with technology available today, it should not be hard to make this type of content easily and cheaply available on demand to customer, for example, through the use of AI or chatbots paired with robust content repositories.
On the need for creating impact, there is already a growing segment of the industry designing and making available sustainable investments. Impact investing, socially responsible investing, gender-lens investing are all related to this need for creating social impact. The only task that remains is making these available on a larger scale and with greater frequency to women investors.
#7: Contrary to conventional wisdom, women want to delegate only the worry and anxiety, but not the actual decision making on their financial life.
Any attempts to simplify financial decision-making for women by removing the need for her to make decisions (for example, on specific types of investment strategies) is likely to backfire because it violates two of their key needs: the need for agency and the need for respect. Given their dealings with the industry, women are particularly sensitive to any acts or approaches that might give them the impression of condescension, and taking decision-making power away from would fall squarely in this category.
However, they do have a keen appreciation for having their burden lightened by having a smart and qualified party doing the hard work of thinking through risks and situations and presenting options to them for their final decision.
If there is one key message that shines through this book, it is the following: the way to win with wealthy women investors is to integrate three key things into every offering, message or pitch:
Respectful and time-efficient engagement
An attempt to improve any offering along any, preferably all, of these dimensions is likely to yield rich dividends for both parties.
As a woman who can identify with all of the findings, I can only heartily agree!