Changing demographics mean that high net worth women investors represent an opportunity today's financial advisors can't afford to overlook. Women now control an estimated $22 trillion of wealth in America, a figure that's set to swell to almost $29 trillion over the next 40 years. In this landscape, attracting and retaining female clients will become increasingly important.

But when it comes to understanding what financial wellness means for women, there's work to be done. According to New York Life Investments (NYLI) research, over a quarter of high net worth female investors believe financial advisors struggle to relate to women. What's more, over a third said they feel patronized by advisors, while more than a quarter said advisors push women out of financial conversations either consciously or unconsciously. Those perceptions make a difference. Close to 10% of women changed advisors in the last two years, while 17% said they're thinking about changing advisors in the coming year.

Holding on to those clients and working with more women investors in the future requires advisors to understand the financial obstacles women face. They must then learn how to embed that understanding into holistic financial strategy.

Women Face Different Obstacles to Financial Wellness

Sixty-two percent of women told NYLI that they have unique needs and challenges in investing. Yet advisors don't always recognize or acknowledge those differences.

Consider retirement planning. In the United States, women have a longer life expectancy than men, which means they need more retirement savings. Throughout their careers, though, women are paid less than men, making it even harder to build up adequate long-term savings. On average, women make only 82 cents for every dollar earned by a man, according to the American Association of University Women (AAUW).

Women are also more likely to face career interruptions to care for family, further reducing their lifetime earnings potential and making retirement savings an even steeper climb. These factors precipitate other knock-on effects. According to the AAUW, women have more difficulty repaying loans, for example, and also receive less in Social Security and pensions.

A Customized Strategy Support Women's Financial Wellness

Given these obstacles, it's not surprising that 56% of women told NYLI that retirement savings was their most important investment goal. That said, another 31% of women said ensuring financial independence was their top priority; this was especially the case for women who were recently divorced or widowed. Meanwhile, 23% of women surveyed said that managing day-to-day expenses was a challenge, and 31% said they struggled with understanding their risk tolerance.

The takeaway? Building strong relationships with female clients requires advisors to put aside assumptions and work to understand each client's specific challenges and needs. "I want my [advisor] to take the time to understand my situation and map things out for me," one respondent told NYLI.

Of course, financial wellness requires a sound financial strategy. And in NYLI's research, two-thirds of women ranked investment knowledge as a top factor in choosing a financial advisor. But to equip female clients with strategies that make them feel true trust and security in their financial well-being, advisors need soft skills as well, from empathy to communication.

When choosing a financial advisor, women prefer someone attentive who takes the time to understand their individual interests, goals, and challenges, then develops a customized strategy. More than half of respondents said that understanding their specific financial needs is very important. Women clients also expect advisors to take their concerns seriously and treat them with respect. These are the kinds of factors advisors need to account for in supporting women's holistic financial wellness.

Creating a strategy that ensures a client's comprehensive financial wellness starts with a strong relationship. Advisors need to consider financial challenges that are unique to women while also assessing individual preferences and goals.

Insights presented in this report are derived from 2019 & 2020 studies conducted by NY Life Investments in partnership with RTi Research.

"New York Life Investments" is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company.

The information contained herein is general in nature and is provided solely for educational and informational purposes.

The writer of this report is a freelance writer and not affiliated with New York Life Investments.


By subscribing you are consenting to receive personalized online advertisements from New York Life Investments.