Gender inequality has long been an issue in the workplace and beyond. For instance, in the financial advisory space, women make up the minority at approximately one in every five advisors. But amid every crisis lies great opportunity. These are exciting times for female financial advisors and wealth managers.
The growing trend of women in power, as well as the wealth transfer from baby boomers, benefit female advisors. Widowed and divorced women tend to switch their wealth relationships to new financial institutions. Although there is inconclusive evidence that women prefer to work with other women, studies show they base their decisions on well-built relationships—a fact that women can take advantage of
All of this comes against the backdrop of a significant shift in wealth control that we expect over the next decade. The future for female advisors is truly promising.
Relevant Trends To The Growth Of Female AdvisorsThe growing trend of more females with more power and wealth is attributed to many components, including the wealth transfer from baby boomers and a leadership style predominantly found in women. These, in turn, are augmented by the rising number of female financial advisors we see today.
Wealth Transfer From Baby Boomers
According to the Federal Survey of Consumer Finances by McKinsey & Company, around 70% of U.S. affluent-household investable assets are controlled by baby boomers. Of those investable assets, about two-thirds are held by joint households where women take on a more passive role—they let the husband dictate where to invest their funds.
In the United States, this implies greater control of wealth in the future by women due to two things. One is the expected longer lives of women compared to men. And two is that women tend to marry older partners. In the same study, it was also found that divorced women account for even higher rates of switching financial advisors. More than the switch in financial advisors due to death, divorcing is an indomitable part of the decision to shift.
But regardless of cause, there is opportunity in the impending large transfers of wealth and the imminent stream of new female clients seeking new advisors.
Relationship-Based Decisions
But do female clients prefer to work with female advisors? While this is unproven, there is evidence that women choose advisors based on relationships and trust more than men do, as also pointed out in the McKinsey study. Now, this is an element that female advisors can leverage.
Team-Focused Leadership
As for leadership style, women tend to be more inclusive in decision-making activities, bringing in each team member where everyone’s strengths shine. In contrast, men tend to be more solitary. Of course, this is a generalization the men are trying to break. Nevertheless, the team-focused approach and inclusivity are more effective for business success.
In a Deloitte 2021 Global Human Capital Trends report, they found that focusing on teams—rather than leaders—is the key to excellent business performance. Similar findings have been found elsewhere. Ray Dalio’s meritocracy policy is another example. Due to the leadership style predominantly observed in women, this can be an advantage for female advisors.