That the wealth market controlled by women is huge is a fact well appreciated by now. There seems to be a new report coming out almost every month, with numbers and insights aplenty on what differentiates this market and what providers need to do to appropriately address this segment. For example, both Accenture and Ernst and Young have put out interesting insights on what differentiates this market from the mainstream wealth market.
Despite this focus and attention, it seems to be a frontier fraught with peril. There are at least three attempts that have not panned out as expected.
First, Citi launched Women and Co. in 2010 aimed at the women’s market. The archived material I have been able to find suggests that the intent of this initiative was to act as a feeder of affluent women for the bank’s wealth management business. That unit has since been closed down and folded into the bank’s broader social media platform.
LearnVest was another high-profile startup, while not explicitly targeting women, was still designed with the female customer in mind. The enterprise had a ~$150 million exit when it was bought by Northwestern Mutual. However, since the acquisition, the original thesis behind LearnVest has been quietly shelved into a broader educational platform to support its core wealth and advisory business.
A third, albeit smaller scale example, was WorthFM, started as an offshoot of the popular women-oriented financial newsletter, Daily Worth. This initiative has also been wound down a very short while after its launch.
The one big and promising venture to date, of course, is Ellevest, founded by Sallie Krawcheck, former head of Merrill Lynch brokers and former CFO of Citigroup. The venture has had successful funding rounds, and as of the latest ADV, has less than $200 million in assets under management, small shakes compared to the $10 billion managed by Betterment, a near-competitor. In other words, the jury is still very much out on Ellevest.
With that exception, most of the more sustainable efforts seem to be occurring at the individual wealth management firm level, with a focus on a specific segment of female wealth clients, bringing into question the scalability of these attempts.
The three pitfalls that can trip up a provider
A review of these players against the market itself suggests there are three major pitfalls that providers need to watch for, in attempting to serve this market:
#1: Mistaking style for substance
The tricky aspect of the women’s market for wealth is that they share key attributes in terms of the client service model. But the fundamental wealth management and advisory needs will still differ by income and asset level, and other demographic and psychographic markers, just as they do for men.
For example, women across the wealth spectrum appear to
- Demonstrate lower self-confidence
- Require a more information-intensive process and approach
- Care more about life goals versus performance goals when it comes to their investments
- Experience much more severe time constraints, impacting the bandwidth they have available for money matters
- Place a higher premium on the relationship aspects
But they will still need different solutions depending on their level of wealth and the complexity of their financial situation. An approach that conflates this style preference with the need for differentiated content is likely to backfire.
#2: Treating women as a monolithic segment
While this is related to the first point above, it is different in that beyond the traditional product or advisory service needs, this segment offers one additional layer of complexity: sub-segments such as single women and divorced women are likely to have very different needs and preferences compared to, say married women with children.
These nuances are more significant than they are for men, and call for better designed solutions. A provider that uses a single approach to market to or serve all these sub-segments is likely to appeal to none.
#3: Not understanding the longer road to confidence and agency
Regardless of the level of wealth, women may either have or believe themselves (wrongly) to have lower levels of financial literacy than their male counterparts. A smart provider institutionalizes the process of first assessing their client’s starting point on this road to financial literacy and self-efficacy, and then bringing their client along painlessly up the curve to the level they need to be at , to make prudent decisions about their wealth.
This is usually not as much an issue with men because men will either have the literacy or not admit to needing any education, obviating any such need for their providers to give it to them.
The balance here that is hard to achieve, is for the provider to be able to equip their female clients with the tools and knowledge they need, without either appearing to condescend to them, and without failing to acknowledge the need at all. Few providers are able to get this balance right at scale.
What are the implications for providers wanting to tap into this large, attractive market? A few gender-neutral measures can get the ball rolling immediately:
- Integrate client choice and a variety of formats for sharing / accessing educational and financial information across all clients: doing so will start to immediately serve the greater information needs of women without forcing them to raise their hand to ask for it.
- Introduce broader interaction modes for clients to keep in touch with their advisors: time-starved women will greatly appreciate and engage better when this option is available, in contrast to the outmoded once-a-quarter meeting in the advisor’s office.
- Provide broader life-goal oriented support, even if not immediately fee-generating, to help all clients and especially female clients address their most pressing priorities and anxieties when it comes to money and wealth management.
Longer-term measures will dive deeper into more tailored service propositions, but these three steps will deliver immediate wins to any provider serious about serving wealthy women.