By Aaron Loo, Head, Retail Banking, Standard Chartered Bank Malaysia
Women are risk-averse, more loyal to their wealth managers, and prefer to invest based on how much returns they can get in the long run. Their needs are simple when it comes to investments. Therefore, slow and steady wins the race for women, and they are less likely to upset the cart by switching wealth managers.
A 2017 report by EY titled ‘Women and wealth: The case for a customised approach’ has debunked the long-held belief of women being investors who follow the heart, rather than the mind. In fact, the report stated that 67% of women globally feel misunderstood by their wealth managers and that figure is closer to 80% when you look at feedback from women in Singapore, Hong Kong and China.
This means that across the world, wealth management solutions for women are being created without considering the very complex needs of a segment that is fast growing as major contributors of wealth in the world today.
The Chartered Financial Analyst Institute estimates that the global income of women - currently at USD13 trillion - will grow to reach USD18 trillion in the next five years.
So, what does it take to reach out to women and help provide them with wealth solutions that won’t leave them feeling - as the EY report showed - “patronised” and “unwelcomed” in an industry that is “male-dominated” and “full of jargon”?
It’s all about the experience
First, when we use the word ‘experience’, it’s not about how many millions the wealth manager has made for other clients, or that he or she has 30 years of experience under their belt. Experience in this sense means every contact with their chosen wealth manager should be clear and consistent, as well as truthful and transparent to earn her trust.
Women value accurate account information, high-quality and frequent contact, and prompt response to their queries from their wealth managers as the most important considerations in determining what a good client experience is. The use of digital communications channels too, while convenient, is not nearly as important as the human touch.
This is an important consideration for wealth managers to have a successful relationship with their female clients and to avoid the risk of alienating them.
Context, context, context
Once you’ve gained their trust, understand that women are goal-oriented, and achieving their personal aims is the key to their choice of investments. In contrast, men are more likely to gravitate towards market performance. Therefore, women are more likely to switch wealth managers to achieve their ambitions.
Consider the context within which women make their investment choices, because research shows that firms that take the time to understand a woman’s personal investment goals and translate that into a detailed and conscientious plan will be well rewarded with her loyalty.
Whatever those personal goals are – saving for her child’s education, starting a business or paying for their further education – understanding why she wants to grow her wealth is just as important, if not more, as showing her how she can do it.
Help, not hamper
Women face a unique set of challenges when it comes to wealth creation.
Research by TalentCorp shows female labour force participation peaks at ages 29 to 34, but it declines sharply after this childbearing age. Of the women surveyed, 93% want to return to the workforce after taking time off for their families, but more than 60% find it difficult to do so.
From an investment standpoint, a setback in income means a setback in wealth growth, and thus, wealth managers need to behave less like financial planners and more like financial coaches. Less time should be spent on discussing market performance and more on how to achieve financial health even in times of trouble. They should deliver personally valuable advice that will help buffer their female clients in times of market volatility or personal upheavals.
In conclusion, the approach towards creating wealth management solutions to women must be considered, conscientious and compassionate – a solid plan with a deep understanding of her personal financial goals which will help unlock her full investment potential.