Two new studies agree that female investors who work with advisers rely more heavily on them for holistic planning advice than men do. However, many women are reluctant to pay for that advice.
A study from the Spectrem Group found that 61% of women use a financial adviser compared to only 56% of men. And women who use advisers tend to rely more heavily on them for most of their financial needs, not just investing advice.
Women also place a higher level of importance on professional designations such as certified financial planner or chartered financial analyst than men do, 78% to 71%, the Spectrem report found.
Men are more likely to have done their own investing and they are more comfortable with making financial decisions without the assistance of a financial adviser, Spectrem found.
In contrast, women feel far less knowledgeable about financial products and investments than men and they are also more likely to be seeking security as their primary portfolio objective.
Nearly half of the men who do not use an adviser — 47% — said it is became they feel they can do a better job of investing than a professional. That is in stark contrast to the less than a third of women who feel that way. The women who currently do not use an adviser are more likely than men to identify as not having enough assets to warrant an adviser or not being able to afford an adviser.
As many women are less interested in being actively involved in the day-to-day management of their investments, it paves the way for a relationship with a financial adviser that they trust to take over many of those decisions, the Spectrem report concluded.
A separate study by Cerulli Associates also found that female investors are less interested in day-to-day management of their investments, but that they are also less willing to pay advisers to act on their behalf.
Only half of female respondents (51%) agree that they are willing to pay for financial advice compared with 58% of males, according to The Cerulli Edge— U.S. Retail Investors report for the first quarter of 2021.
“This provides both a challenge and an opportunity to providers in the advice segment,” Scott Smith, director of advice relationships at Cerulli, said in a release accompanying the study. “As regulators are consistently elevating the role of transparency and disclosure in client relationships, investors are more likely to ask questions about advice fees and commission charges.”
Instead of simply recommending the “best” stocks or funds, advisers are increasingly adopting process-based planning, which creates an implementation timeline, the Cerulli report noted. By dividing this timeline into tangible milestones, advisers are better positioned to communicate the value of each step rather than trying to assess an ambiguous wealth management fee.
“When connecting their renumeration to specific responsibility and outcomes, advisers could reduce the potential skepticism among female investors and create millions of mutually beneficial client relationships,” Smith said.
The Spectrem report agreed that female investors want advice on a broader range of financial topics, not just investments.
“Any financial professional who wants to work with female investors needs to be aware that these female clients will expect excellent communication and will rely upon their selected adviser for many decisions,” the Spectrem report found. “Women are also a bit more loyal and once they find their chosen adviser, they are less likely to change to another adviser, making them an ideal client.”
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