How to Attract and Retain Women Investors

An unprecedented shift in assets into the hands of U.S. women is expected to occur in the coming years, leading to a huge wealth transfer.

As women take charge of trillions of dollars in financial assets that baby boomers own, financial advisors may face a seismic shift in their client base, if they know how to engage and retain female investors.

Baby boomers control 70% of assets today, according to a July report from McKinsey & Company. What’s more: Among affluent households with a male and female partner, two-thirds of those households have men as the key financial decision-maker.

Laura McDowell, regional director at Schwab Asset Management Solutions, pointed out at Schwab IMPACT 2020 that women tend to live five years longer than men on average and also marry men who are two years older on average. As baby boomer men pass away, “more women than ever will be in sole control of arguably one of the largest wealth transfers in our lifetime,” McDowell says.

But research also shows that 70% of women switch their wealth relationship after their spouse’s death.

“If we do not continue to evolve in how we continue to reach and empower all individuals, especially those underserved by our industry, we are missing a massive opportunity,” McDowell says.

[Read: Liz Ann Sonders — Stock Market Outlook for Q4 and 2021.]

How to Engage Women Investors

One of the keys to building better relationships with female investors is to focus on her as an individual and not let her gender bias your perceptions of her or her needs. The same way behavioral biases can negatively impact investing decisions, social stereotypes about certain groups of people, called unconscious biases or implicit biases, can work against advisors in connecting with clients, McDowell says.

“What can differentiate an exceptional advisor from a competent advisor is not portfolio performance, but the ability to identify the unconscious biases they have,” she says. In doing so, “their interactions with all of their clients and prospects can lead to more meaningful connections and a better understanding between themselves and the person they’re trying to reach.”

According to McDowell and other experts, common unconscious biases about women and investing include the beliefs that:

— All women have the same needs.

— Women know less than men when it comes to finances and investing.

— Women need simplified financial information.

— Women know little or nothing about investing.

— Women need explaining more than listening.

This is all patently untrue. While women may lack confidence in investing compared to men, they are no less capable. In fact, “women are generally hardwired with tendencies that work in our favor when it comes to investing,” McDowell says. This leads them to outperform men on average over the long term.

“Imagine if every woman walking into an advisor’s office was told or said to herself, ‘Women tend to be better investors than men,'” McDowell says. The effect of such a simple knowledge shift could be profound. She encourages all advisors to try such cognitive reframing with female clients and prospects from the outset of their relationship and meetings.

[SUBSCRIBE: Get the weekly U.S. News newsletter for financial advisors. ]

And don’t make assumptions about her needs or knowledge level. Kathy Jones, senior vice president and chief fixed income strategist for the Schwab Center for Financial Research, said at IMPACT 2020 that great advisors take the time upfront to understand their clients in a respectful way.

Ask about her experience with money and goals for her investments. Find out her communication preference and what type of learner she is.

The misbelief that women need simplified financial information can often be chalked up to not understanding her learning style. Perhaps if you presented the information visually or orally instead of giving her a pamphlet to read, she’d be able to better grasp it.

During a joint meeting, be mindful of directing your words and eye contact equally among men and women when speaking to a joint household, McDowell adds.

“Our industry is built on trust in our relationships with our clients and each other,” McDowell says. “Can we really build a relationship based on trust if we don’t get to know each other on a personal level as individuals?”

How to Attract Women Investors

Outside of planning meetings, you can increase female engagement through the content you share. Consider creating content around topics that may be significant for women, Jones says. For instance, resources for caring for elderly parents, a task that more often falls to women than men. Or you could produce content on what you need to know if you’re planning a divorce or financial literacy for children and teens.

[Read: Divorce Planning — What You Need to Know as a Financial Advisor]

It’s also helpful to host women-centric events, not because women need to be educated differently than men, but because women investors tend to feel more comfortable asking questions when surrounded by other women. Even when the content is the same as what she would present to men, Jones tends to find higher engagement rates among women at all-women events as opposed to coed ones.

She also organizes workshops for widows where they can get the information they need about investing and how to navigate their finances on their own, along with a little bonding time, Jones says. She’s seen the group grow exponentially as the women identify with other women in their position, leading to many new referrals.

Referrals are another benefit to engaging your female clients. Not only are women 25% to 30% more likely to make referrals than men, but women are also more likely to make a purchase based on a referral, McDowell notes.

By improving your relationship with one woman investor, you may find yourself opening the door to new relationships with countless others.

More from U.S. News

Schwab Independent Advisor Outlook Study: The Future of the RIA Industry

What Advisors Should Look for When Hiring Staff

Behavioral Finance Techniques Advisors Are Using in 2020

How to Attract and Retain Women Investors originally appeared on

Related Categories:

Latest News

More from WTOP

Log in to your WTOP account for notifications and alerts customized for you.

Sign up