With pay equity a focal point of Women’s History Month, it’s easy to skim over the gap in financial services and investment advice for women. Even though data shows that women’s wealth is growing (despite the persistent wage gap), their financial services needs are chronically unmet—something that’s especially true for single women and widows.
This is a missed opportunity for advisors. Consulting firm Oliver Wyman estimates the financial services industry would unlock a potential $700 billion revenue opportunity by addressing service gaps and creating new products and services focused on women’s needs.
It’s time the industry closed the gap, and the first step is to better understand the unique characteristics of this underserved demographic.
Women’s Wealth Growing—Along With Appetite For Financial Advice
Women now control 40% of the world’s wealth, are more likely to have self-made wealth, and represent 40% of the world’s entrepreneurs. And single women and widows are in a unique position as the sole deciders of their household investments and spending.
In its recent Q1 2020 Streetwise Report, E*TRADE found that while 89% of women say they have moderate to extensive experience managing their household investments, single women are more likely than the general population to say that a lack of financial literacy (and industry jargon) hinders their ability to invest. In fact, less than half of single women say they are confident about making the right financial decisions for their portfolios (Source: E*TRADE Financial Corporation, E*TRADE Financial Q1 2020 Streetwise Report).
If this sounds like a disconnect, it’s not: Single and widowed women face a Gordian knot of financial challenges and long-term needs, including higher student debt, lower wages, longer lifespans and higher medical bills. In this context, it makes sense that single and widowed women are more worried about financial security.
Perhaps that’s why single women are also more open to financial advice than the general population (Source: E*TRADE Financial Corporation, E*TRADE Financial Q1 2020 Streetwise Report). So, what can advisors do to meet these needs?
Key Takeaways
Start by abandoning a one-size-fits-all approach. A few things to keep in mind as you try to connect with this audience:
A unique segment of the market requires unique financial strategies. Oliver Wyman notes that traditional wealth planning assumes income will grow at a steady rate each year, but that’s not true for most women. Although women now hold the majority of college degrees and jobs in the U.S., representation and pay equity gaps widen at the top: Women comprise only 38% of middle management, 22% of the C-suite and 5% of CEO roles. Women also take more time off work for caregiving, and suffer a “motherhood wage penalty” for doing so: Oxfam estimates the value of women’s unpaid care work across the globe at $10.8 trillion annually. Women’s wealth follows a non-linear flow of accumulation and deaccumulation.
Women clients prefer working with gender-balanced teams. Better serving single and widowed women clients may start with gender diversity at your firm. According to Oliver Wyman, 77% of women prefer a gender-balanced team of financial service providers. As of January 2020, however, only 2% of all assets were managed by women. Having women on your team could be a critical factor in attracting and retaining female clients and the increasing share of global wealth they control.