Given the age and importance of the investing industry, and the constant innovation it is exposed to via fin-tech, one would expect some rethink to have occurred in the basic value proposition of the core offering itself: the investment product.
Yet, my initial search has not revealed any exciting or even mildly interesting value propositions beyond the tired “peace of mind” or “be secure in your retirement” pitches. Granted, there are quite a few approaches and ventures that are looking to revolutionize the how of investing, but few seem to be taking a look at the core “what”.
The reason this becomes important is that there is a huge segment of the market, i.e., affluent women, that has cash that could be deployed to everyone’s benefit; yet, a key missing link is a value proposition that both offers what this segment wants and bridges the gap from their fear to action, suggesting that there is a big prize waiting to be captured by the right offering and player.
Based on my research to date, here are six possible investing value propositions to attract more affluent women into investing products, based on what they value and/or predicated on addressing some of their deepest fears.
Note: the depth of change required to the product features may vary from none to a lot, but much value can be gained even by small efforts to change the approach and appeal to women with money.
Six new investing value propositions:
Financial independence investing:
While traditional investment and wealth management propositions focus on long-term financial security, typically in “retirement”, women have a different version of this need: they want to not only be secure in retirement, but financially independent as soon as possible.
Two complicating factors are the interruptions they take for other non-career reasons such as child-rearing or care of family members, and the increasing prevalence of the gig economy.
But behind these truths is the underlying subtext of financial anxiety. Creating an offering that positions investing as the strategy and lever that multiplies their ability to achieve independence on their terms will go a long way in removing the innate dread and fear involved in investing.
The key is to position investing as a lever, with as many parameters of the offer as possible giving her control and agency over her life choices and life path.
Values-based investing
Women look to express their selves, their priorities and values in a lot more dimensions of their lives than men do.
Designing offerings that position investments as just another product that offers her the opportunity to express core values makes it a more natural and less fearful avenue of commercial activity for her.
The caveat, and this is a big one in the current context of the financial services industry, is to be able to pull it off in a way that truly integrates these values in the offering, and is not merely a “packaged in pink” version of every other product that doesn’t really live up to the description and the promise – a move that can potentially backfire very badly.
Applications range from the easy, which include repackaging products that already exist, such as impact investments, to the truly revolutionary, for example, offering the opportunity for women to create their own products based on a values-based filtering mechanism.
Gender lens investing
This is a subset of the previous category, and is called out because there is already a robust set of offerings in the market today, making it even more attractive as a first step for a provider.
What increases the attractiveness is that women consistently express gender diversity and gender balance in the companies they are investing in, as a key value. Yet there is a big disconnect between what they would like to do on this front, and what they are actually doing in practice.
While the barriers may go beyond availability, simply highlighting products that already satisfy this need would be a no-brainer first step in bringing more affluent women into the investing fold.
Time-saver investing
One of the biggest gripes, pains and complaints of women the world over is the intense paucity of time they face across every dimension of their lives.
Yet, any early attempt at dipping their toe in the waters of investing is likely to suck up inordinate amounts of time they don’t have, for vague rewards they don’t see or care about (e.g., “beating the benchmarks”). Add to this their innate lack of confidence in investing, and you have a recipe that is almost guaranteed to ensure women never invest.
Passive index-based investing with a simple asset allocation formula is nothing new in the investment world. These kinds of broad-based, passive and low cost investing strategies are not only “safe”, in the sense that they don’t involve deviating from what the market experiences, but are also very proven strategies to provide a feasible path that even the most time-strapped, bandwidth-stretched yet cautious woman can hang her hat on.
For a provider struggling to initially engage a wealthy woman, positioning the triple advantages of low time commitment, broad industry credibility, and the ability to enter the market in a “baby-steps” approach should be highly appealing. But the key will be the time-saving aspect, without having to give up a lot of performance upside.
Triple return investing
I first learned of this concept in the book “Harness the Power of the Purse“, by Andrea Turner Moffitt (You can read my thoughts on this book here). The main idea is that women look for returns beyond just the financial: they also care about personal returns and social returns.
While not all of them may be willing to trade financial returns for an increase in personal or social return, there can be no doubt that helping them recognize and make these trade-offs can be hugely empowering.
An investment offering can be designed to provide not only a financial return, but value in terms of a personal return (e.g., by providing personal meaning from their investments) and a social return (e.g., by delivering the opportunity to make a difference in society on an agenda they care deeply about).
Such a value proposition, especially if it allows her to see the trade-offs involved, will likely be immensely empowering and attractive as well.
Stair-step investing
A big challenge creating a barrier to entry is the complexity and overwhelm factor in the field of investing. While there is a ton of material to help the lay person learn about the topic, this abundance is also the problem: women who are already stretched thin for time and mind-share, and hobbled by fear and a lack of self-confidence, will find it all too easy to just give up.
On the other hand, a full service wealth management solution is also likely to face hurdles, and not just because of the gender-deaf approach to clients that the industry has been accused of.
The big challenge is also one of trust, women’s innate need to thoroughly understand what they are getting into, and their need to research and learn more before committing to new products.
A simple way out of this dilemma would be to create a simplified ‘stair step” offering to investing that presents and overcomes a single barrier at a time. This method is well known in behavioral science, as the principle of escalating commitment.
They key is to ask her to do something small and non-threatening, and to use that foot in the door to then draw her to bigger steps that she now feels more confident taking.
The stair steps need to be designed for the specific audience and their needs, and could be as simple as breaking down the investing activity into setting up a taxable account, setting automatic investing, and then stepping into passive or broad-based investments that are simple to explain in sixth-grader language (a huge value).
Conclusion
The key insight from all this discussion is that investment offerings suffer from the same malaise that most complex technical products do, namely, an over-emphasis on features versus taking a benefits lens.
By repositioning the lens to focus on what jobs the affluent woman needs her investment activity to do, a whole new market can potentially be opened up.
The prize is so big and the all-round benefits so unquestionable that there is really no excuse for not trying.