Untapped market awaits financial advisors

Special to MassMutual

By Special to MassMutual

Posted on Sep 19, 2018

This is a very good time to be a financial professional, what with assets under management growing rapidly and compensation on the rise. So it is worth imagining what the business would look like if the holders of some $14 trillion in wealth felt better served.1

It’s not an idle construct. Those wealth holders are women, and they are on track to grow that $14 trillion into $22 trillion in wealth by 2020, according to research by BMO Wealth Institute. Many of these women are also key financial decision makers: some 40 percent of women today are breadwinners, up from 11 percent in 1960.2 And in survey after survey, they say they want financial guidance but they do not like how it is currently provided.

“I hate being stereotyped because of my gender and age, and I don’t appreciate being talked to like an infant,” said one female respondent to a Boston Consulting Group survey on women and consumerism. “I would change how many financial service reps talk down to women as if we cannot understand more than just the basics when it comes to financial discussions. Being in the financial industry myself, I find these attitudes highly insulting,” said another.3

Unmet needs

When asking their clients how well 33 different industries served their needs, Ellevate, a network for women, found their users rated financial services dead last, according to Sallie Krawcheck, the network chair and former president of Bank of America.

“Women feel the industry talks down to them and doesn’t respect their needs,” she said in a 2015 speech .

In response, many women are voting with their wallets. When women work with financial professionals, they prefer them to be women, according to a study by Pershing.4 But fewer women even have professionals: while 48 percent of women were working with a financial professional in 2008, only 31 percent are now.5

Opportunities for financial professionals

The good news for financial professionals is that much of what women do want in an professionaly relationship dovetails with the trend toward holistic advising. For example, while men tend to think about investing in terms of performance and beating benchmarks, women are more likely to frame financial and investing decisions in terms of life goals like retirement.

Three quarters of women in a recent survey said it was very important to have enough money to allow them to maintain the lifestyle they want in retirement, compared to 65 percent of men.

Women were also more likely to prioritize not outliving their money. Those contrasting values for women and men suggest an opportunity for professionals who can partner with woman clients and help them develop comprehensive, long-term financial plans.

Numerous surveys also show that women’s financial knowledge is somewhat lower than men’s. That may be because of their upbringing: a survey by T. Rowe Price found that 50 percent of girls say their parents talk to them about money and personal finance at least occasionally, but 58 percent of boys report having those discussions.6 professionals who can provide financial education to female clients without condescension or jargon may find that it deepens the relationship. That could also be true if professionals offer to teach a client’s children about personal finance.

Women’s confidence with money and investing is another area where professionals may be able to add value. Various studies point to women having lower financial confidence than men: for example, when women answer questions about basic investing concepts like risk diversification and the power of compounding, they are far more likely than men to answer “I don’t know” if that is one of the options.7

The research also indicates women are also less likely to take financial risks, and they tend to rate their investing aptitude much lower than their ability to handle short-term money issues like managing debt or saving. That can actually help them when it comes to investing, since they are less likely to trade quickly and aggressively, but it may also keep them from investing for growth.

professionals who can help women turn caution to their advantage may be able to connect with them more effectively. This could include a discussion of the importance of buy-and-hold investing or an explanation of how long term investing reduces the variability of returns. (Liz Ann Sonders, Schwab’s chief investment strategist, published a blog post and graph making just that point.)8

Women do tend to set the bar high, for financial professionals and others. When 30 affluent women kept diaries of their ups and downs in the course of a week for a study by United Capital over half of the highs and lows seemed to result from women having high standards and expectations.9

professionals who can demonstrate the high quality of the service they provide may benefit from this.

The women’s diaries also indicated that a shortage of time was a bigger issue than a shortage of money.

“So frustrating is the hamster wheel that I live on..I feel like it’s constant lack of sleep, work work work work work, it’s like – never ending,” said one.

That lack of free time could make women averse to having repeated long meetings with professionals. But professionals who can efficiently provide financial education along with advice may find that it strengthens their relationships with female clients. In this vein, a smart digital presence could be key, especially for connecting with millennial and Generation X women. It could take the form of an enhanced online presence, regular emails on timely financial issues for women, or even webinars on key topics that clients could watch at their convenience.

Women genuinely want to work with financial professionals. A 2015 Fidelity survey of women with workplace retirement accounts found that 92 percent of them wanted to learn more about financial planning, and 55 percent wanted to do so by meeting with a financial professional in person.10

professionals who can make that meeting a success will find they have tapped into a potentially vast, and lucrative, market.

More from MassMutual…

Winning More Business Through Referrals

5 Reasons to Love Being a Financial professional

This article was originally published in September, 2016. It has been updated.


1 BMO Wealth Institute, “Financial Concerns of Women,” US edition, March 2015

2 Pew Research Center, “Breadwinner Moms,” May 29, 2013

3 Boston Consulting Group, “Women Want More (in Financial Services)”, 2009

4 Pershing, “Americans Crave a New Kind of Leader – And Women are Ready to Deliver,” 2014

5 Prudential, “Financial Experiences and Behaviors Among Women,” 2015

6 T. Rowe Price, “Parents, Kids & Money Survey,” 2014

7 Global Financial Literacy Excellence Center, “How Financially Literate are Women? An Overview and New Insights”, February 2016

8 Liz Ann Sonders, “Panic Is Not a Strategy – Nor Is Greed,” August 24, 2015

9 United Capital, “Is There a ‘Confidence Gap’ Between Men and Women?”, August 2, 2016

10 Fidelity, “Women Fit Women Study: Executive Summary,” 2015

The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel.