When working with any investor, financial advisors must excel at client communication. Clients generally want to feel that their financial advisors hear, respect, and value them—especially women investors. Women now control more than half of personal wealth in the US, roughly $22 trillion. As wealth is transferred to more women over the next four decades, that number is projected to rise to nearly $29 trillion.
At this asset level, it's easy to believe that high net worth clients value investment performance over all else to ensure wealth growth. Clients do value performance, but communication is critical, too. According to New York Life Investments (NYLI) research, 59% of women said that taking their concerns seriously is one of their most important considerations when choosing a financial advisor. Yet 30% of women feel advisors are less likely to listen to investing ideas from a woman, and 28% feel advisors push them out of financial discussions.
These findings suggest that financial advisors must shift their client communication strategies to meet women investors' needs.
How Women Choose Financial Advisors
It's essential for financial advisors to understand the role client communication plays in how women select financial representation. NYLI found that not only do 83% of women clients choose financial advisors who treat them the same as their partners, but 94% also said they want an advisor who takes the time to understand their specific needs.
The survey additionally showed "Has my back no matter what" (88%), "Understands me" (87%), and "Aligns [their] interests with mine" (77%) are important or extremely important to women investors when choosing financial advisors.
Advisors should keep these preferences in mind when communicating with women clients. When they understand what characteristics women look for in advisors, they can adopt communication methods that help attract and retain these clients.
Women Who Feel Connected Stay
When they connect well with their financial advisors, women are more likely to trust them and continue working with them. But NYLI research found that 27% of women who left their financial advisors in the last two years did so because they felt no personal connection. They may also view a lack of affinity with their advisors as a client service issue; in fact, poor customer service caused 29% of women to switch financial advisors.
Many women want to discuss issues beyond money with their financial advisors to connect with them. Accenture found that only 35% of women talk to their advisors about retirement planning, and 48% talk to them about investment ideas quarterly or more often to make sure they're meeting their goals. When they discuss wealth management, they want to discuss their objectives holistically.
The Accenture report also showed that women want advisors who will talk to them about their "life pictures" and "financial journeys," not just their investments. Only 42% agreed with the statement, "I only care about performance, nothing else matters."
That means women are also interested in telling their financial advisors about their families, their values, or their thoughts about how their partner wants to manage their investments. Their concerns about caring for children and aging parents or how career breaks could impact their investments and savings are also important to them. Those and other human factors play a key role in how women think about wealth strategies.
For 96% of the women NYLI surveyed, taking their concerns seriously is an essential factor in how they choose financial advisors. Listening to clients discuss how their experiences and values factor into how they think about wealth management is an indispensable connection-building strategy. In fact, advisors who are empathetic and actively listen to clients may find women investors more open to communicating with them. Women investors may also be more satisfied with the service when financial advisors center conversations around their individual communication styles.
How Advisors Speak to Women Clients Is Critical
NYLI research revealed that while women investors want their advisors to be knowledgeable about investing, 93% said they would only work with a financial advisor who speaks to them in a language they understand.
Many women clients want their advisors to talk to them in plain financial language, using easily understood and applied financial vocabulary—but they don't want their advisors to talk down to them. Women investors may find it offensive when advisors explain concepts in a condescending way or embarrass them when they ask questions or attempt to understand something. It can silence women clients and make them feel invisible, even if it's unintentional.
It's important for financial advisors to tailor how they convey financial advice to women according to each client's individual preferences. NYLI found that 94% of women need to see their advisors as trusted partners to choose them and continue working with them. That requires that advisors use communication techniques that reflect what each client prefers.
While women investors care about investment performance, financial advisors who understand their unique challenges and preferences can communicate better and build stronger relationships with these clients.
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.