$700 billion a year.
That's the amount of revenue Oliver Wyman estimates the financial services industry is missing out on by not meeting the financial needs and expectations of women. The finding is part of the company's Women in Financial Services 2020 report, which looks at the future of gender diversity in the financial services industry.
"Women are the single largest underserved group of customers in financial services," the authors write. "Evidence shows that approaches that may appear to be gender-neutral in fact default toward men's needs and preferences."
For instance, traditional wealth-planning strategies assume your income will steadily increase over the years but this is less common for women, who take more career breaks, than for men.
These gender-biased approaches create "unintentional blind spots in how the industry meets the needs of half the population," according to the authors. To rectify this, the financial services industry needs to rethink how it approaches and serves female clients.
Unfortunately, changing the way an entire industry thinks and operates can be a slow process. But there are steps individual advisors can take in their daily practice to improve how they engage with and serve their women clients. Doing so could mean claiming a share of that $700 billion missing revenue.
What Women Want From Financial Services
"As women earn and control an increasing portion of U.S. and global wealth, advisors must reconsider how they engage with this group or risk losing the opportunity to serve them," says Laura Gregg, director of practice management and advisor research at FlexShares. As Oliver Wyman's report points out, this will take more than just falling back on reductive stereotypes and "pinkified" marketing tactics.
"We often see that advisors employ similar messaging for all women regardless of their financial and personal circumstances," Gregg says. "The expectations of professional women are quite different than a woman managing legacy wealth or one that has inherited wealth through a transfer."
Treat Her as An Individual
"Women want to be treated as individuals, not as a category," says Julie Genjac, managing director of strategic markets at Hartford Funds in the Seattle area. "They have personal needs and interests that cannot be put into an age group or into a marital status."
"It's important to remember -- and demonstrate -- that the advisor-client relationship is about the female client. It is not about selling to her; it is about really knowing her and what is truly important to her," Genjac says. To connect with your female clients on a human level, she suggests sharing a bit about yourself beyond just your business self in return.
Dawn Doebler, principal and senior wealth advisor at The Colony Group in Bethesda, Maryland, recommends beginning "with a recognition of the significant economic power many women hold as primary breadwinners and inheritors of substantial wealth."
Women hold 40% of global wealth, according to Credit Suisse's Global Wealth Report 2018. While traditionally much of women's wealth has come from inheritance, the 2019 report found that this is changing as women's earnings and positions in businesses are rising.
"This puts many women in the position of having more responsibility around money management," Doebler says. "In some cases, women find themselves with more wealth than their mothers and grandmothers, which may mean they lack a female role model for how to manage their money."
Having no role model only further handicaps a demographic already confronted with societal taboos against talking about money.
"It's only through hearing their hopes and fears articulated by them personally that we can provide the right guidance for their particular circumstances," Doebler says. Guiding "their particular circumstances" is at the heart of what women want from their financial advisors.
Ask, Don't Assume
"To build lasting relationships, leave your assumptions at the door," Gregg says. "Don't assume you know what (she) wants or needs. Ask, and then listen to what (she) tells you."
A recent study of high net worth men and women by FlexShares debunked several commonly held misconceptions about women investors. For instance, women are not necessarily more conservative investors.
"Men were more than twice as likely to rate themselves as conservative investors than women," Gregg says.
If wealth managers were to invest women's money the same way they do men's, Oliver Wyman estimates wealth and asset managers could earn about $25 billion in new fees in the first year alone. This financial boon would only compound over the years as women's wealth grew.
The FlexShares study also found that women are not disloyal to their advisors -- executive women are more loyal than executive men -- and that it's untrue that women aren't interested in investing. This latter misconception can often be attributed to another assumption advisors make: that silence equates to disinterest.
Give Her Time to Process
Women tend to be less vocal than men in financial planning meetings, but her silence doesn't necessarily mean she isn't interested or has no questions, Doebler warns.
"Instead, it may mean she lacks the confidence to speak up or simply can't articulate what exactly she wants to know," she says. "Consistently encouraging questions and pausing to confirm everyone has clarity goes a long way toward helping women feel more confident, which often translates into stronger advisor-client relationships."
"It's also important to remember that women generally tend to communicate and process information differently," Genjac says. Just because she doesn't speak up at the moment, doesn't mean she is on board with a given strategy.
"More likely, she is assessing the impact and how it will affect those she loves, their legacy, and what is currently on their life's plate," Genjac says.
To accommodate this, Genjac suggests giving your female clients time to process ideas or concepts. Allowing this processing time will help her "feel much more understood," she says.
Coryanne Hicks is an investing reporter for U.S. News & World Report. She is an expert at investing strategies and theories, investor education, investing psychology and behavioral finance. Previously, she was a fully-licensed financial professional at Fidelity Investments where she helped clients make more informed financial decisions. She has ghostwritten financial guidebooks for industry professionals and even a personal memoir. She is passionate about improving financial literacy and believes a little education can go a long way. You can contact her at email@example.com.