Bridging the wealth gap with female clients

Wealth management is a thriving industry, providing critical advice and planning for clients on their road to retirement. However, many women looking to plan for their financial futures have not felt understood or represented.

Despite women controlling one-third of total U.S. household financial assets – more than $10 trillion – only 35% of affluent women use a financial advisor to manage their household finances, according to a LIMRA 2023 survey. Given that women are projected to control about $30 trillion in financial assets by 2030, now is a great time for financial advisors to prioritize both attracting, and retaining, female clientele.

The underlying disparity – gendered pay gap

Both men and women experience similar needs in retirement, but their concepts of financial planning can often be systematically different.

On both sides of financial planning, women may not feel seen or represented. The Pew Research Center reported earlier this year that the gender pay gap has barely closed in the past two decades – with women earning 82 cents per dollar compared to their male counterparts. At a baseline, men have historically had more wealth than women, and have built intergenerational relationships with financial planners. As a result, men have been encouraged to build and diversify their portfolios and plan for long-term success, while women were often left out of the equation entirely.

As women still grapple with workforce barriers around gender, pregnancy or child care arrangements, it can be challenging to obtain advice in a way that meets their unique needs. Female advisors might have an edge here, given they may experience similar issues, but the CFP Board reported that at the end of 2022, only 23.6% of certified financial planners were women.

And the ongoing relationship between women clients and their advisors remains rocky:  For example, Morgan Stanley reports that 70% of widowed women who shared a financial advisor with their spouse fired them within a year of their spouse’s death. This implies that a personal connection with these clients was likely never formed despite the intimacy of the prior, shared advisory relationship.

Take your mom’s advice and prioritize communication 

Like men, it’s important to women to live with dignity, meaning they can sustain their lifestyles after they exit the workforce. This is why saving for retirement remains top of mind. As women often face more financial repercussions from remaining unmarried, or being divorced or widowed, financial advisors should begin supporting female clients early in their careers, helping them build comprehensive and tailored financial plans that consider their retirement and legacy goals.

LIMRA found that when women look for a financial advisor, they prioritize professionals who: listen to concerns, are transparent about compensation, communicate regularly, and offer education and explanations. It may seem simple, but advisors leaning too heavily into industry jargon can be the make-or-break of a successful partnership — this applies to everyone!

Although issues such as market volatility, inflation, rate hikes and more, impact men and women the same, the difference in how financial professionals approach the unique needs of female clients is key.

A symbiotic relationship – women and their financial planners

Financial planners benefit from gaining new clientele when they tailor their approach to women. And their female clients benefit too. In fact, 73% of women who hire a financial advisor have a financial plan, while only 31% of women without a financial advisor have a plan in place, according to the LIMRA survey.

I myself didn’t necessarily go looking for a male or a female advisor but ended up choosing a woman for a few important reasons:  We established a deep bond of trust over time, she stays in regular communication with me and, finally, her track record of strong performance continues to reinforce my confidence in her and the plan we have built together.

Financial planning requires a personalized touch, and if done successfully, it can result in a productive long-term relationship for advisor and client alike. The basis of any successful relationship is communication. Women are looking to have up-front conversations that allow them to gain the benefit of your knowledge and expertise as a financial professional—if you can bridge the gap.

Jackie Morales is chief operating officer at Security Benefit. Contact her at [email protected].

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