A Growing Opportunity for Female Financial Advisors and Wealth Managers
Gender inequality has long been an issue in the workplace and beyond. For example, in the field of financial advice, women constitute the minority with about one advisor in five. But in the midst of every crisis lies a great opportunity. These are exciting times for female financial advisors and wealth managers.
The growing trend of women in power, along with the transfer of wealth from baby boomers, is benefiting female advisors. Widowed and divorced women tend to transfer their wealth relationships to new financial institutions. Although there is no conclusive evidence that women prefer to work with other women, studies show that they base their decisions on well-built relationships – a fact that women can take advantage of.
All of this comes against the backdrop of a significant shift in the control of wealth that we anticipate over the next decade. The future of counselors is really bright.
Trends relevant to the growth of female consultantsThe growing trend of more women with more power and wealth is attributed to many components, including the transfer of baby boomer wealth and a style of leadership found predominantly among women. These, in turn, are augmented by the growing number of female financial advisors we see today.
Baby boomer wealth transfer
According to the McKinsey & Company Federal Consumer Finance Survey, approximately 70% investable assets of affluent American households are controlled by baby boomers. Of these investable assets, about two-thirds are held by joint households where wives take on a more passive role – they let the husband dictate where to invest their funds.
In the United States, this implies greater control of wealth in the future by women because of two things. One is the expected longer lifespan of women compared to men. And second, women tend to marry older partners. In the same study, it was also found that divorced women account for even higher rates of switching financial advisors. More than changing financial advisors due to death, divorce is an indomitable part of the decision to change.
But whatever the cause, there is opportunity in the impending large transfers of wealth and the impending influx of new female clients seeking new advisors.
But do clients prefer to work with counsellors? Although unproven, there is evidence that women choose their advisors based on their relationships and trust more than men, as the McKinsey study also points out. Now, that’s something counselors can take advantage of.
When it comes to leadership style, women tend to be more inclusive in decision-making activities, involving every member of the team where everyone’s strengths shine. In contrast, men tend to be more solitary. Of course, that’s a generalization that men try to bust. Nevertheless, the team-oriented approach and inclusiveness are more effective for business success.
In a Deloitte 2021 Global Human Capital Trends report, they found that focusing on teams rather than leaders is key to great business performance. Similar results have been found elsewhere. Another example is Ray Dalio’s meritocracy policy. Due to the leadership style primarily seen in women, this can be an advantage for female advisors.