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February 13, 2014updated 04 Apr 2017 2:30pm

Majority of women investors would stay with financial advisor upon death of a spouse: Russell

Contrary to a commonly cited industry belief that women are likely to leave their financial advisor after a spouse or partner's death, a large majority of female investors -- 93% in the "Silent Generation" age group and 78% in the "Generation X" age group -- indicated that they would stay with their current advisor, even after the death of a spouse or partner, according to What Really Matters to Women Investors, a study from global asset manager Russell Investments.

By Verdict Staff

Contrary to a commonly cited industry belief that women are likely to leave their financial advisor after a spouse or partner’s death, a large majority of female investors — 93% in the "Silent Generation" age group and 78% in the "Generation X" age group — indicated that they would stay with their current advisor, even after the death of a spouse or partner, according to What Really Matters to Women Investors, a study from global asset manager Russell Investments.

The study, conducted by Mathew Greenwald & Associates on behalf of Russell Investments, explores the financial needs and concerns of women in two age groups working with professional financial advisors: Generation X (ages 32-47) and the Silent Generation (ages 67-80). To deliver a holistic perspective on the issue, Greenwald & Associates also queried financial advisors serving female investors.

In addition to being loyal to their advisors, the findings suggest that women investors are more likely than men to focus on longer-term planning issues, which can align well with an advisory relationship. More than half (56%) of advisors said that they believe that their female clients have a longer-term perspective when it comes to planning, versus only 5% who say male clients take a longer-term view.

Jaylene Howard, consulting director for Russell’s U.S. advisor-sold business, said: "Undoubtedly, women are an attractive target client segment for financial advisors given their growing economic power. They can be predisposed to take a longer-term perspective, are assuming greater responsibility for investing decisions and value tailored guidance from an advisor. It’s clear that when they feel they are being heard and are on track to their investment goals, women are loyal clients who will often actively refer their advisors to family and friends."

The study found that a significant portion or women (54% Generation X and 64% Silent Generation) said they have recommended their advisors to a friend or family member.

Women taking an active role in investing decisions but lack confidence

More than half of respondents (52% Generation X and 63% Silent Generation) share the responsibility for managing their households’ savings and investments and nearly one third (29%) of Generation X and one quarter (24%) of Silent Generation women have even more responsibility than their partners. The advisors surveyed also said that, on average, half the households they serve are led by female decision-makers.

Despite their increasingly active role in financial decision-making, women are not particularly confident about their investing knowledge. More than half (52%) of Generation X women and more than a third (35%) of Silent Generation women stated they are "a little" or "not at all" knowledgeable about investing.

Howard added: "Nine in 10 women will manage their financial assets on their own at some point in their lifetimes.² For many women, understanding this fact dramatically impacts how they approach financial decision-making and investing. Financial advisors have an opportunity to engage female clients in building up the investment knowledge and confidence they need to effectively manage their progress toward financial security."

The qualities and offerings women find most important in a financial advisor

Active listening skills were overwhelmingly cited (by 86% of Generation X and 87% of Silent Generation women) as the most important factor to a successful and lasting relationship with their advisors.

However, the two generations diverged somewhat when asked about specific drivers for satisfaction with their financial advisors. For Generation X women, the strongest drivers of overall satisfaction are an advisor’s ability to provide effective recommendations tied to their concerns, adapt explanations to their level of knowledge and explain how decisions may affect them differently in the future. For Silent Generation women, providing personal service and establishing a personal connection outside the business relationship rank as the strongest drivers of satisfaction.

Howard added: "Most women want to understand their investment portfolios, but beyond that they want meaningful discussions with their advisors that tie the numbers to actual goals and help build a trusted relationship. Advisors should use every meeting with a client as an opportunity to educate and engage them around their financial and personal objectives, and demonstrate that they are incorporating these goals into their financial plan."

Where female investors need more from their financial advisors

Despite their focus on the long-term, many women in both age groups said they don’t have or don’t want a formal plan for how to accumulate money or generate income in retirement. Additionally, when advisors were asked to assess the importance to female clients of various services and solutions that they provide, advisors ranked preparing a formal financial plan relatively low, although planning-related conversations were rated high on the list.

In addition, only 27% of Generation X and 36% of Silent Generation women feel their advisors know everything about their financial goals and concerns, an attribute that correlated strongly with respondents’ overall satisfaction with their advisors.

Howard added: "Expanding relationships with women investors may represent advisors’ most important business growth opportunity. Our study suggests that advisors can do more to fully involve female clients in a formal planning process, which we believe is a vital part of ensuring financial security. Central to that effort is ensuring that advisors understand their clients’ goals and deliver a clear plan to help clients make effective financial decisions."

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