As a growing number of female high-net-worth investors look for investment advice, financial advisors have an opportunity to adapt their businesses to address high-net-worth women’s investments and financial goals, along with what they expect from their advisors.
In the recent webcast, Gender Diversification For Advisors Serving High Net Worth Executives, Laura Gregg, Director of Practice Management and Advisor Research, FlexShares ETFs managed by Northern Trust, took a look at a recent survey of high-net-worth investors and found that both men and women exhibit diverging behaviors that financial advisors may not be accounting for.
Overall, FlexShares found that executive investors have a lot in common, no matter their gender. For instance, wealth creators rated themselves far above average on financial activities, such as when they create a legacy philanthropic plan, create a legacy plan for future generations, manage philanthropic giving, manage investments, manage debt for tax benefits, balance savings and investments, plan retirement, and create or manage budgets.
Survey participants also revealed that those working with an advisor were more likely to rate themselves as more knowledgeable and capable of managing their own portfolios.
However, men and women executive investors also exhibited divergences. For example, women on average rated themselves between a 7 and 9 on almost every measure of financial acumen while men on average rated themselves between an 8 and 9, with quite a few rating themselves a perfect 10 on a variety of measures.
Men and women high-net-worth investors exhibited varying degrees of risk tolerance. Men were more likely to create a more conservative risk profile, and among those who are risk takers, a greater percentage of men revealed an aggressive risk preference. On the other hand, female executive investors exhibited a greater tilt toward the moderately conservative, moderate and moderately aggressive risk profiles.
Their financial goals diverge, which indicates that financial advisors should also meet these different expectations. For instance, women’s top financial goals include being prepared for the worst, planning fore retirement and philanthropy. On the other hand, men’s top financial goals include providing for the future generations, having an advisor they trust and taking care of dependents. This also goes to show that the two group’s relationship with their advisors is different as 20% of women considered leaving their advisor in the last year, compared to 39% of men.
Additionally, the survey showed women cope better with a work-life balance. The results showed that 32% of men felt guilty when they work and are not at home, compared to 21% of women. About 32% of men felt guilty when they were home and not working, compared to 20% of women.
The survey findings don’t align with typical gender stereotypes. Consequently, as financial advisors consider the ramifications between high-earning male and female executives and professionals, they should reconsider assumptions about their high-net-worth client service models, segment beyond asset levels, reconsider portfolio construction but still remember their male clients.
Financial advisors who are interested in learning more about ways to meet shifting financial goals of investors can watch the webcast here on demand.