Women increasingly constitute a higher proportion of a wealth manager’s client base now than in the past. With that, comes the issue of whether women’s wealth management needs to differ from men. Alison Ebbage finds that preconceptions on what women want needs updating.
Differences do exist in the way that women think about managing their money compared to men. Yet the differences are not as pronounced as once thought.
The products that women invest in are typically geared to solving specific long-term problems – rather than playing the market, which is often linked with male investors.
Kate Sayre, a partner at Boston Consulting, comments: “Generally, women want to solve specific problems or fulfil needs in relation to specific life events such as education or retirement; men look first to the product.”
Sayre adds that women are more intent on understanding the risk-return profiles of a particular product and that woman are less likely to be distracted by short-term performance.
Janet Tarbet, a senior private banker for the Entrepreneurs Client Group at Coutts, notes that women tend to be much more involved in family financial planning than they used to be and consequently their voice needs to be heard by advisers.
Given that a third of Coutts’ client base is female, and in the past three to four years some 19% of new clients are female, this highlights the importance of addressing women’s wealth management requirements appropriately.
Oey Bie Lan, a relationship manager in Singapore at HSBC Private Bank, says: “HNW women tend to focus on capital preservation and have a moderate investment risk appetite or tolerance. They are usually satisfied with a reasonable performance return.”
This is borne out by research from Barclays, which indicates that women’s approach to risk differs from men.
This showed that 49% of men are prepared to take higher risks for higher investment gains, with just 31% of women saying the same.
The Barclays research added that just 33% of female investors describe themselves as risk takers, compared to 49% of male investors.
A key theme to emerge from interviews with senior private bankers is that although the number of HNW women is rising, there is no real need to compartmentalise on gender as the investment profiles of both sexes vary only a little.
Women’s needs similar to mens
Arjuna Mahendran, head of investment strategy for Asia at HSBC Private Bank, says: “There are a growing number of HNW women, particularly in China, who accumulated their wealth through their own efforts, as successful entrepreneurs or professionals.
Their needs are generally not much different from their male counterparts, though variations exist depending on how they achieved wealth.”
Charles Hoffman, a partner at HSBC Private Bank, says: “There is undoubtedly an emotional intelligence element and a soft skills factor when dealing with any client.
“On the other hand, it could be an entrepreneur with high levels of knowledge and high-risk tolerance, or an entrepreneur with low-knowledge levels.”
Focus on trust, not gender
This underlines how wealth managers need to treat all their clients as individuals, as gender differences tend to have subtle impact on the wealth management requirements’ of men and women.
This is supported by Scorpio Partnership’s ‘Futurewealth’ research project, which found only minor differences in the decisions that men and women make.
“It’s about nuance and women expect firms to try harder – they reward this effort with their loyalty,” says Cath Tillotson, a partner at the Scorpio Partnership.
Tillotson advises that wealth managers should look to their female customers as a benchmark for their overall service delivery.
Clear communication impresses
Clear communication and a lack of financial jargon are other ways in which wealth managers can impress women.
Barbara-Ann King, head of the female client group at Barclays Wealth, says that a woman is more likely to ask for clarification or further explanation.
“The financial industry has more jargon than most and if you have a client that understands what is being discussed, then ultimately the client-advisor relationship will be richer and the wealth manager will retain that person long-term,” says King.
Being able to empower HNW clients – whether it is men or women – to make fully informed decisions is obviously fundamental in private banking and wealth management.
This requires many different touch points, in addition to relationship managers who understand the busy and demanding lifestyles of their clients.
Personalising wealth management products
King says: “The amount of touch points is important. Being able to access things like online guides at all hours is important – our clients are often busy. The social dynamics are changing and women realise that knowledge is power, especially if wealth is self made, but do not always have much time to devote to managing their affairs.”
In an age of rising competition, when wealth managers and banks increasingly recognise that ‘one size does not fit all’, the importance of personalising wealth management products is more important than ever.
Minor differences do exist in the investment attitudes of men and women. Banks need to expect female clients’ knowledge as the rule, rather than the exception.