With the global income of women set to increase to $18 trillion (£14.7 trillion) in the next five years, can wealth managers continue to afford seeing gender as the least important source of client differentiation?
Considering the amount of research and press releases sent out to mark International Women’s Day this month, the answer to that is no. However, recent EY research found that only 5% of firms view gender as a key driver of segmentation.
If established wealth managers continue to resist the fact that female clients have different needs, they could end up ‘ceding ground to new entrants’, EY warns.
Maybe surprisingly, UBS, one of the giants in Swiss banking, has taken note of the growing wealth of women across the world and has been working to improve its customer experience for female clients over the last two to three years.
‘A lot has been piloted inside and outside of UBS, and at the end of 2016 we made the decision that enough has been said, it’s time to act,’ said Olga Miler, managing director at UBS Wealth Management.
In January, the bank announced a five year plan to better serve female clients, which includes an education programme to increase the financial confidence of one million women by 2021.
‘We would like to have a look from top to bottom to make our practice gender bilingual and have customisation across the entire value chain,’ she said.
‘Within this five year plan we really aspire to revisit our processes and build things for the women themselves. We are looking at our product shelves to add more sustainability products. We are driving our focus to publish more research on how the cause of women can be advanced.’
In UBS’s studies over the years, Miler said that the bank has observed a number of differences between male and female clients. One of these is the nature of the dialogue.
‘Women aspire to have a personal conversation with their wealth manager, they appreciate if the advice they receive connects wealth management to their personal goals. They also appreciate if things are explained with clarity, transparency and non-jargon based language, so they can build trust with the industry,’ Miler explained.
EY’s research found that many women view the investment industry as male-oriented and unwelcoming. According to the Center for Talent Innovation, cited by EY, 67% of female investors globally feel their wealth manager or private banker misunderstands their goals and cannot empathise with their lifestyle. In the UK, this figure goes up to 73%.
The study also found that they place greater trust than men in advisers who clearly explain their investment decisions at 27% versus 23%.
Even when emphasising that gender needs to be taken into consideration, Miler does warn that generalisations should not be made.
‘We women are half of the world’s population, there can’t be a generalisation. We need to service women as individuals and appreciate that they have distinct differences in what they require. They can’t be served like a bubble of women.’
Emphasis on education
A former Wealth Manager cover star, Indre Butkeviciute set up Lily Advisory with a view to offering female clients a differentiated service. Launched as a women-only firm in 2015, the company has since then evolved as Butkeviciute (pictured) started learning more about the client segment she was targeting.
‘In the last six months when I started taking on new clients, I’ve been redeveloping the business overall, especially working with women who have gone through a significant change like inheritance or divorce.
‘A lot of the time they previously have not been actively involved in managing their financial affairs. Having to do it themselves is very challenging and cumbersome. What I noticed is they don’t want me to come in though and say “why don’t you let me manage your wealth for you”. What they do want is to be able to gain the knowledge and be finally in control and manage it themselves.’
That is why she is looking at offering wealth coaching rather than wealth management to these clients.
‘That seems to be something that is more appreciated. Help them understand the information, how they should be thinking about their wealth management and how they should choose a product.’
Seven areas of focus
EY’s Women and Wealth report recommended that companies build greater awareness of women’s needs into investment and enhance client their experience. It suggested seven specific areas to focus on:
• Goals and priorities: While avoiding generalisations such as ‘family comes first’ or preference for ethical investments, firms should try to understand the personal ‘so what’ behind investment goals and have regular contact and reviews with clients.
• Local and generational variations: Companies need to take into account how culture and age impacts women as well.
• Training and guidance: Wealth managers need appropriate training to understand female clients, such as coaching on non-verbal communication skills.
• Human-machine balance: Pointing out that a recent study found women may place more value on digital channels that also provide human contact – such as video conferencing – EY said wealth management firms need to strike the right balance between digital services and human advice.
• Transparency and education: Wealth managers should be able to give clear explanations as ‘studies show that women can feel less confident with investment terminology than men, but also that they are more willing to admit to a lack of expertise and more open to being educated.’
• Helping, not selling: Wealth managers should behave more like financial therapists, delivering personally valuable advice, rather than just discussing investment options.
• Digital communication: Digital communication should complement human contact and firms need to ‘talk less and listen more’. Brand awareness can be built among women through forums, networking groups and other online communities.