The Industry Is Missing The Boat By Failing To Market To Women

The financial services industry is leaving enormous sums of money on the table by ignoring or failing to attract women as potential customers.

A recent study by global management consultant Oliver Wyman concluded that if insurers sold life insurance to women at the same proportion of their income as men, $500 billion in new written premiums could be created. Another $25 billion in new fees could be generated if wealth managers invested women’s wealth in the same way as men’s in stocks and bonds rather than in cash.

“Of all of the industries that are part of their lives, women report feeling most disconnected to the financial services industry,” said Patricia Hausherr, vice president of Global Atlantic Consulting. “At the same time, we have this tremendous shift in wealth to women, who now control two-thirds of the wealth in the U.S. So this is a segment of the market that offers a tremendous opportunity for all of us in financial services.”

Why this gender gap exists and what women want in a financial advisor were discussed in a recent webinar hosted by the National Association of Fixed Annuities. Perhaps one of the reasons the industry treats women differently than men, Hausherr said, is that men tend to be loyal to brands and products, while women attach more loyalty to people and services.

“So the message is loyalty can equate to profitability,” she said. “If you're looking to build referrals from your practice, women are a great place to go because if they like you, they will be out advocating for you. And women report actually referring two and a half times more than men.”

Leaving Their Advisors

Another alarming statistic, Hausherr said, is that 70% of widowed women will leave their financial professional within the first year of their spouse’s passing. Why? Three reasons, she said:

• Lack of attention or responsiveness from their financial advisor.
• An advisor’s misrepresenting or not understanding the client’s personal goals and aspirations.
• An overall communication breakdown.

“Oftentimes, invitations to events don't include the woman are not even addressed to them,” she said.  “Whether a woman is working inside of the home or outside of the home, maybe even she's a leading earner, an invitation to an event that doesn't include her is insulting,”

Hausherr pointed to two industries with examples of companies trying to bridge the gender gap, one successful and one not so much. She mentioned a major hardware retailer that began selling a line of tools for women, whose hands are generally smaller than men’s, but the retailer charged 50% more for the women’s tools than they did for the male version.

On the other hand, the real estate industry successfully recognized the opportunities in attracting women to the market.

“It wasn't until 1968 that women could actually purchase a home without having a male cosigner,” she noted. “Flash forward nearly 30 years later, and now we have single women purchasing homes at twice the rate of single men.”

'Created A Network'

The industry accomplished this, she said, by creating styles and features within homes that would appeal to women. The real estate industry also educated women on what it takes to purchase a home and obtain a mortgage.

“And lastly, they created a network of other professionals that are part of the home buying experience, whether they be mortgage agents, fixer uppers, window cleaners, whatever,” she said. “It might be professionals that are part of what you would need if you're buying or selling a home. And this is what became the key to how they turned the industry around.”

So what do women want in a financial advisor? Hausherr listed the following:

• Objectivity. No predetermined ideas about what a client needs or wants.
• Reputation and designations. Most women will research an advisor online, so a firm’s reputation is important. Women, perhaps more than men, think designations such as Certified Financial Planner as well community involvement are important.
• Transparency with costs. “Fees” do not resonate with clients. It’s best to use the word “costs,” which is a better way to explain the expense for professional expertise.
• No jargon. Just talk clearly about how strategies can be beneficial.
• Understand her goals. And be committed to achieving them.
• Women want a financial advisor to be responsive.

“Women report that money is really a means to an end,” Hausherr said. “Money is an opportunity for her to support the lifestyle that she wants to live. And she wants us to understand what that is versus just coming in and solving problems, which we like to do.”

Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].

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