Historically, the world of financial planning and investing has been male-dominated. Based on a variety of surveys, 75 percent of financial planners, 80 percent of brokers and an astonishing 93 percent of hedge fund managers are male. As a result, many of the services and even sales tactics developed by financial institutions to reach and attract high net worth individuals have been done so through this masculine lens.
Due to this male-centric outlook, many high net worth women report that they are not taken seriously by financial service providers and in some cases are completely ignored by providers who bypass them in favor of dealing directly with their spouse. As a result, many high net worth women have grown wary of financial providers and instead opt to go it alone or reach out to friends or family members for assistance with financial matters.
The financial services industry is finally beginning to get serious about high net worth women and the economic power they posses. Consider the following:
* According to the 2010-2011 Prudential Research Financial Experience and Behaviors Among Women study, 84 percent of married women are solely or jointly responsible for household financial decisions.
* Other studies report that women are expected to control anywhere from 60 percent – 67 percent of the wealth in the United States within the next decade. This is due to what is expected to be the largest transference of wealth in our country’s history. Many Boomer women will experience a double inheritance windfall, from both parents and spouse.
* The percentage of women whose income is greater than their husband’s in now 28 percent, having quadrupled since 1970, according to a 2010 release from the Pew Research Center.
Given these significant trends, more and more financial institutions are beginning to appreciate the financial power of women and are seeking new ways to reach this segment. To do so successfully, financial institutions must appreciate and address the fact that women have inherently different financial needs than men, such as:
* Women still typically earn less which impacts their net worth and ability to save a sufficient nest egg for retirement. According to the Report of the Fifth Annual National Survey on Retention and Promotion of Women in Law Firms put out by The National Association of Women Lawyers and The NAWL Foundation, women equity partners earn on average 85 percent of the compensation of their male counterparts. Other industries report similar discrepancies in compensation across the sexes.
* Working women are more likely than men to be away from the workforce at various intervals of their career to care for both children and elderly parents, by some estimates for an average of 11 years, thus reducing their income producing years and impacting their retirement savings.
* Women outlive men by approximately five years, requiring their wealth to support them for longer.
* More women require late-in-life care making insurance more critical.
* Women are more philanthropic and tend to give more of their money away.
* Around one in three marriages end in divorce, and divorce can further compound financial deficits for women.
In today’s increasingly competitive financial services marketplace, financial institutions who don’t appreciate the economic power of high net worth women do so at their own peril. By engaging women with products and services that meet their unique needs, financial providers can become trusted advisors who help women build their wealth for both their own personal enjoyment, and for future generations.
Submitted by Whitney Price, Union Bank