How Advisors Can Support Women's Growing Share of Wealth

Featuring

Carissa Lucreziano, CFP

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Text transcript

Carissa Lucreziano, vice-president of financial and investment advice with CIBC.

Women’s share of wealth in Canada and globally is rapidly growing. Women currently control 32% of the world’s wealth. It’s likely to continue to grow significantly in years ahead, so this poses an opportunity to the financial advice industry to better understand the mindset, needs, and expectations of this growing group of investors. Some firms in Canada and the U.S. specifically are tailoring their internal program to focus on emotional intelligence for their advisory networks across all segments to really dig deep and understand and connect with their female clients.

Women face five unique challenges throughout their financial life journey. First is the gender pay gap. Women tend to make about 87 cents per dollar compared to their male counterparts in Canada. There’s also a need for more flexible working conditions as stats show women continue to bear the responsibility for family priorities. In fact in Canada, women spend 50% more of their time each day on unpaid family work than male counterparts.

Maternity leave is another opportunity that we have for women, which is offered up to 18 months, though women usually are challenged with how long to take, the loss of income, what that could do to their career.

Also, women have longer life expectancy than their male counterparts at about 5.6 years and the challenge behind this is that women have to plan way in advance for this, but really plan for doing it alone. So managing the family’s finances, the family goals, as well as planning for the long term.

Last would be lower risk tolerance as women tend to be more risk averse, because there’s uncertainties, they also require more data before taking the plunge into investing. Women also tend to prioritize risk reduction and doing good.

For many women, wealth is a means to a number of ends. Because of their unique differences as discussed earlier, women are more likely to anticipate and plan for key events and life stages.

Women also seek to reach their goals with a higher degree of confidence. At times, this may appear as a lower risk tolerance, however, it’s often a gap for information. Although both men and women are willing to embrace risk, women tend to be more risk averse. Once they have the data needed to make an informed decision, their investment profile is similar to that of men. In fact, women are more likely to make investment decisions based on facts, not their gut. Women are more likely to invest on the basis of their values favouring funds that not only perform well, but also create a positive impact as opposed to investing solely for performance.

Advisors should also be aware of generational differences. Younger women are usually more financially confident than older women, and that translates to greater confidence, empowerment. An impressive 70% of millennial women, those born between 1980 and 1995, say that they take the lead in all financial decisions compared with just 40% of female Baby Boomers. This may be a result of higher education as 91% of affluent and high net worth millennial women obtain a university-level education compared to 80% of female Baby boomers.

The most important thing for advisors is to provide personalized support for their female clients. Women appreciate seeing a comprehensive view of their accounts, ideas for new investment vehicles that could suit their needs, and money saving tips tailored to their circumstances. A big opportunity for advisors today is to demystify the investment process and provide a feeling of clarity and comfort of how having an investment portfolio aligned to either short or long term goals can really make a difference in overall success of their plan. Women are looking for holistic advice tailored to their circumstances and focus on their needs. They want to look at different investment vehicles, tax and estate strategies to suit their unique needs. It’s important to think about shifting the mindset to investing. Advisors can really demystify that, as I’d identified earlier. Women really want a sense of what they can achieve over the long term, that visualization, that clarity. And building wealth investors who work with an advisor for 15 years or more, as mentioned earlier, accumulate that 3.9% times more in savings than compared to investors that don’t.