women say their financial advisors come up short

advisors need to understand the differences between men and women clients.

in what could be a wake-up call for accounting firms, a majority of women think that their wealth managers could do a better job of serving them, and nearly a quarter of them say that there is a “significant need for improvement,” according to a new global study by the boston consulting group.

the findings—released in a white paper titled “leveling the playing field: upgrading the wealth management experience for women” —are based on a survey of 500 women and more than 70 interviews with private-banking specialists and wealthy women around the world.

get the instant download: “upgrading the wealth management experience for women” (pdf, 12 pages)

the fact that women, as a group, are overlooked or undervalued belies their significance as wealth management clients. according to the study:

• women controlled an estimated 27 percent, or about $20 trillion, of the world’s wealth in 2009.
• the percentages were highest in north america (33 percent), australia and new zealand (31 percent), and asia (29 percent, ex japan), and much lower in latin america (18 percent), japan (14 percent), and africa (11 percent)
• in europe, the percentage was higher in western europe (26 percent) than in russia (21 percent) and eastern europe (19 percent, ex russia)

figures are based on wealth owned by clients with at least $250,000 in investable assets, which include cash deposits, money market funds, listed securities held directly or indirectly through management investments, and onshore and offshore assets.

while the share of wealth controlled by women has changed only gradually over time, the amount of women-controlled wealth has been on a rollercoaster ride since the start of the financial crisis, mirroring the overall movement in global assets under management (aum). after falling sharply in 2008, it soared by 16 percent in 2009, to $20.2 trillion. it grew by nearly 30 percent in asia (ex japan) and by 24 percent in australia and new zealand. in other regions, it increased by anywhere from 13 to 18 percent, except in japan, where it grew by only 2 percent.

bcg projects that the amount of wealth controlled by women will grow at an average annual rate of 8 percent from year-end 2009 through 2014, slightly above the 7 percent rate from year-end 2004 through 2009. emerging markets are expected to lead the growth over the next several years.

an uneven playing field

according to the survey, conducted in early 2010, 55 percent of respondents said that wealth managers could do a better job of meeting the advisory needs of women; 24 percent said that private banks could significantly improve how they serve women.

“the dissatisfaction stems from the unshakable perception that men get more attention, better advice, and sometimes even better terms and deals,” said peter damisch, a bcg partner and a coauthor of the study. “we heard this sense of subordination time and again in our interviews.”

the problems that cause women to feel like second-class clients are deep-seated. they stem from experiences in the advisory process as well as the communication style of private banks and relationship managers (rms).

• many women said that their rms assume that they have a low risk tolerance and thus provide only a narrow range of investment solutions
• some said that they were given “dumbed down” versions of the standard offering
• several said that their advisors do not take them seriously, which made for off-putting and sometimes humiliating interactions

the problems are compounded by the superficial strategies that some wealth managers use to target women. “some of the most common approaches revolve around products, pitches, or promotions that can easily come across as patronizing or contrived,” said monish kumar, a bcg senior partner and a coauthor of the study. “they can alienate the very people they’re meant to attract.”

wealth managers need to understand that there are material differences between men and women clients. women, for example, often seek holistic advice to fulfill long-term goals. most want their banking relationships grounded in empathy and personalized advice, while men tend to view their banking relationships through a business-oriented lens.

“these generalizations should not be taken as holy writ,” cautioned anna zakrzewski, a bcg principal and a coauthor of the study, “but they do shed some light on why so many private banks—despite targeting other groups of clients, such as doctors or lawyers—still have a service gap between male and female clients.

“for example, many women feel that their advisors focus too much on short-term results and disregard their long-term goals, which often revolve around major milestones in a woman’s life, such as the birth of a child. this is in part a function of incentive systems and company cultures that are focused on near-term performance, but it is also a shortcut and a symptom of superficial advisor-client relationships.”

upgrading the client experience for women

wealth managers can attract new clients and reinforce relationships by fine-tuning, rather than reinventing, their approach. “most banks will find that the problems are less about what they provide for women, in terms of products, and more about how they deliver their service,” kumar said.

wealth managers can put their rms in a better position to initiate or strengthen relationships simply by calling attention to areas where women generally feel undervalued or overlooked. more ambitious wealth managers can develop robust training programs and incentive systems to ensure that they are serving women effectively.

most important, wealth managers should recognize that the necessary changes are likely to be subtle rather than sweeping. “as critical as it is for wealth managers to improve how they serve women, it is equally important that they understand the cost of artless overtures,” damisch noted. “overreacting to the problem with graceless ‘solutions’ will do more harm than good.”

posted on september 27, 2010