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Understanding the female investor

08 March 2022 by National Bank Investments
Two women discussing financial strategy.

Women investors are a not-so-niche market that, by today’s standards, is incredibly underserved. With almost $1,000 billion in wealth transfer currently in Canada, women are set to control half of all financial wealth by 2026¹.

Crucial trends are emerging in this market

Here are some facts:

  • More women are choosing to stay single longer.
  • More marriages are dissolving, resulting in financial strain for single mothers.
  • Wealth is being inherited from deceased parents.
  • Women outlive their male partners, and must manage the wealth left behind by their spouses.

It’s a fact: most women will, at some point in their lives, become the sole financial decision-maker for their households. It's time for them to have a financial plan based on their goals to protect their wealth today and in the future.

Women relate to wealth differently than men do

Women tend to relate to their money differently. They do so by establishing goals and meticulously choosing where to house their wealth, less so on continuously outperforming returns.

Traditionally, the advisor's pitch has been focused on performance: how much the investor has made so far and what they should do to grow their returns without really looking at what it all means.

Women tend to have a different relationship with money. They generally choose to invest based on their personal goals and life events, and less on an ongoing quest for higher returns.

They are concerned about whether they will be able to pay for their children's university studies, travel the world, retire when they want to, or leave a portion of their estate to their future grandchildren.

The success of advisors now depends on that of their female clientele

The challenge is to establish a trust-based relationship with the clientele. To do so, one must know how to listen. It's not about how well you understand a portfolio, it's about how well you listen to the specific financial needs and interests of your female clients. Why would an investor call you for advice after inheriting some money from a relative, for example?

The advisor pitch hasn’t seen much change

For many years, women have been excluded from financial conversations, particularly in the context of a marriage. Should we be surprised that even today, in the age group that includes three quarters of widows, i.e., women over 65², there continues to be a lack of financial literacy? Not knowing the vision and aspirations of one party is detrimental to the process of planning and developing a sound retirement plan for both. Sound retirement planning should not just consider him, they should also consider her. The numbers don’t lie: following the death of or divorce from a partner, 80% of women leave their financial advisor ³, not to mention that women in Canada live on average four years longer than their male counterparts.

Women have a different perspective on risk.

Female investors vote with their money–they want to know what they’re investing in. Well-informed women tend to have a similar or slightly higher risk profile than men. Knowing what they are getting into gives them confidence to make informed investment decisions.

Dipping into alternatives investments

The advisor who listens will leverage this diversification opportunity to contribute to his female client’s dreams.

Because women have a different take on risks, alternative investments are becoming increasingly popular among high-net-worth investors. They prefer diversifying their risk and playing a longer-term game. Though alternatives investments are still an emerging asset class, investing in real assets (which already represent approximately 30% of that $1,000 billion in wealth transfer) can help these clients consider and even achieve their dream of buying an income property in Greece, among other things.

An advisor who listens will leverage this diversification opportunity to contribute to his female client’s dreams.

This could also be why women have been so loyal in the uptick to responsible investing initiatives: returns aside, how are this company’s employees treated? How many women are on its board of directors? These are all issues that interest them. A study by The Responsible Investment Association reports that over 60% of women surveyed believe that it’s important for their advisor to be knowledgeable about RI trends4.

What it takes to be a successful advisor

The answer may seem rather simple: listen. Active listening, however, enables you to summarize the discussion and check whether you have understood your client’s goals and concerns. Open up the discussion, don't limit yourself to discussing only numbers and don’t hesitate to ask questions if you need more information.

Adopting a holistic approach to serving women investors and building a strategic advisory team will help foster new ideas to attract and retain this new clientele, which is increasingly knowledgeable. Set specific goals over a given period of time, such as the number of newly acquired female clients, growth in the assets of existing female clients, or an increase in the number of referrals made by female clients.

All the efforts invested to better understand and identify the specific objectives of each female investor and help facilitate their achievement will guarantee their success as well as yours.

¹ The changing face of wealth in Canada and its implications for financial advisors, IPC Private Wealth.
² Source: IPC Private Wealth.
³ AdvisorAnalyst.com. Suddenly Single: How to Plan with Female Clients. October 2019. 
4 Responsible Investment Association. Millennials, Women, and the Future of Responsible Investing, April 2016.

Legal notes

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