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Power shift: Do advisers need to change ‘old school’ attitude to female clients?

The advice sector must be prepared to deal with a dramatic shift in economic power from men to women by changing its “old school” attitude towards female clients, experts argue.

Research by US firm the Boston Consulting Group predicts a “revolution” in female spending power which will drive a $6 trillion global increase in earned income by 2018, and flip the gender pay gap in favour of women by 2028 in the US.

It says the impact of the number of women undergraduates surpassing men around a decade ago will now play out economically over the next generation.

BCG senior partner Michael Silverstein says: “The correlation between education and income is almost perfect—the more education you have, the more money you make. Now 57 per cent of US undergraduates are female, and they are pursuing high-income careers and changing the demographics of how money is earned.

“In about 30 per cent of two-income households in the US, she already makes more money than he does. And if you go into New York and stop a hundred 20-somethings, you’ll find that she makes more money than he does.”

Higher earning power

In the UK, Ucas research reveals the gap in university application rates between men and women grew to the highest on record in 2015.

In England, 41 per cent of 18-year-old women applied to higher education, compared to 30 per cent of men, meaning women are 36 per cent more likely to apply.

And research published by Universities UK in 2013 shows that in 2011/12, 58 per cent of UK students in higher education were female.

Furthermore, Office for National Statistics data shows the gender pay gap (based on its preferred measure of median hourly earnings excluding overtime) narrowed for full-time employees from 10 per cent in 2013 to 9.4 in 2014. In 1997, the gap stood at 17.4 per cent.

And among younger age groups, women are earning more than men.

Among 22 to 29 year olds, women earned 1.1 per cent more than men per hour, and 0.2 per cent more among 30 to 39 year olds.

For those in their 40s, however, the gap widens to 13.6 per cent in favour of men, which the ONS says is likely to be connected to women taking time out of the labour market to have children.

Finance & Technology Research Centre director Ian McKenna says there is a causal link between further education and higher earnings power in the future.

He says: “There is evidence that suggests there are far more female multi-millionaires under the age of 35, and there is a definite trend and increasing evidence that women are actually better at starting their own businesses.

“There are enormous changes taking place in society and that begs the question of how is the advice industry, which is so male dominated, going to cope?”

In a report on future trends in the investment management sector last year, KPMG says the industry has focused on engaging male investors for too long.

The report says: “With wealth shifting to new demographic groups and women typically outliving men by five to six years, investment managers needs to re-evaluate how to engage the female investor and whether or not they will be looking for a different investment philosophy.

“The benefits of getting it right could be sizeable not least in terms of the potential to attract new assets. Numerous studies have demonstrated that as clients, women demonstrate greater loyalty, assign a higher value to the advice they receive and have a preference for a planning-based approach versus an investment performance-based approach.

“We are starting to see a shift in client marketing strategies, with a greater proportion seeking to engage a more female audience.”

Old school advisers

But many say the advice sector has a poor track record when it comes to attracting both female advisers and clients, and is likely to be unprepared for these demographic shifts.

Wise Monkey financial coach and former adviser Simonne Gnessen says: “There are still a lot of old school advisers out there who anticipate a traditional role for women in managing finances where the husband takes the lead.

“It is not unusual for a husband and wife to see an adviser and, even if the meeting concerns the wife’s money, for her to be ignored. That is appalling.

“While it is tempting to respond to whoever in the couple is more engaged with the conversation, it is the adviser’s responsibility to engage both clients.”

The industry remains male dominated, with women making up 21 per cent of the Personal Finance Society’s membership, and 25 per cent of the Institute of Financial Planning’s members.

Experts say many women prefer to deal with a female adviser, or want a different type of service.

Addidi Wealth founder Anna Sofat, who specialises in providing financial advice for women, says: “Women want different things from their money and that necessitates a different approach. They are put off by the hard sell – they want to be informed and to make considered decisions, and they don’t want to be patronised.”

Yellowtail Financial Planning managing director Dennis Hall says advisers need to adopt different approaches for male and female clients, but argues male advisers are equally well placed to offer this.

“I have found women prefer a consultative approach, whereas men on the whole are more interested in trading and finding the best funds to invest in,” he explains. “But there are enough male advisers out there who can adapt their style to suit both men and women – we have female clients who come to us because they like our approach.”

Gnessen adds: “Women want to be listened to and to understand things in plain English. A softer and more holistic approach which takes into account what they want from life is more accommodating for women.

“There are definitely women who would prefer a female adviser because they know how to listen and they won’t shy away from the emotional side of money. Money is a very emotive subject and if you are not prepared to deal with that side of things you may put off female clients.”

Next generation

But others argue there is no need for advisers to adopt a different approach for women, and that a bigger challenge for the industry in attracting the next generation of clients is one of age rather than gender.

IFP communications director Sue Whitbread says: “Whether the client is male or female, the important thing for advisers is to focus on encouraging their clients to plan an effective financial strategy for life.

“Helping clients to prioritise and set their goals is a strategy that typically resonates with everyone.”

Sofat says: “There are some big shifts that advisers will have to deal with: the closing pay gap is one, but another is that the younger generation does not think about money in the same way as older generations.

“Younger couples are more likely to keep some of their money separate, and to want a balance between living today and saving for tomorrow – they don’t necessarily want to be told that all they need to do is save for the future.”

Hall says: “It is an age issue more than a gender issue – we have got to bring the next generation up and you cannot just rely on your clients’ children becoming clients as they will have their own way of doing things.”

 

Adviser view

Georgina Partridge, Co-founder, Plutus Wealth Management

Generally, the formula is the same for both men and women in how we would advise them, and I am loathe to differentiate between male and female clients.

I always encourage partners to come in together as their financial planning situation has an impact on both of them. The number of female advisers is a different issue, but it will be interesting to see if the shift in earning power from men to women translates into more demand for female advisers.

Head to head: Should advisers target female clients?

Cardy Gill IFACentre MM blog

For – Gill Cardy

We have known for a very long time that women are actually quite powerful in the decision-making process, for example when it comes to choosing an adviser.

Clients end up migrating to people who are similar to them. This is why female advisers end up with a lot of female clients, even if they don’t necessarily ask for them.

At the moment the advice process is very male, typically dominated by advisers in their 50s. There will be people who treat women equally whether they are the primary breadwinner or not, but the simple fact is there would not be such a market for female advisers if that was universally true.

This may come down to something as basic as understanding husbands’ and wives’ differing attitudes to risk. With the balance of earning power shifting to women, I am absolutely convinced this will lead to a greater number of female advisers.

If the findings of Boston Consulting Group’s research are borne out, it will have implications for the whole of the investment process, from product development, to marketing, to the advice process, to the approach advisers take in framing and explaining their entire service proposition.

Women are sold to in a different way to men. That’s not to say advisers should follow the likes of Labour’s pink campaign bus, that kind of approach just gets you laughed at.

But there are serious discussions that can be had around the things that matter more to women from a financial planning perspective and their priorities.

Gill Cardy is wealth management insight consultant at Defaqto

justinking

Against – Justin King

I don’t think the pay gap will shift in a generation. Even if women are earning more than men in their 20s, they take time out to have children and that has a huge impact on their overall earnings capacity.

People will have made the same predictions about female spending power 20 years ago, but company boards are still full of men. There are still more men who succeed in business than women and that is down to their psychological make up – they are risk takers.

Women in my peer group have left good careers to have children and they do not want to go back to work at the same level. Children change everything because of the different roles men and women play in the family. Women have long breaks from work and are likely to go back part time, whereas men sail on with their careers.

I don’t think changes to paternity leave will change that – if you are trying to make partner in a law firm, or you’re running your own business, you are not going to take a long spell of paternity leave.

This means one half of the couple is the bigger earner, and consequently they will have a bigger pension and more savings and will take more of an interest in how that money is invested.

I do have 60 year old clients where the female is very engaged with the couple’s finances, but I am yet to come across a scenario where the wife is worried about the husband understanding the money if she passes away. I think it is still really old fashioned out there.

Justin King is managing director of MFP Wealth Management

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Comments

There are 20 comments at the moment, we would love to hear your opinion too.

  1. When I worked for a provider many years ago, I always remember an old adviser who would hang up if he phoned in and a female answered. He would call back until he got a male and then complain about how long it had taken to ‘get through’…

  2. I get so tired of reading all this crap about ‘hard sell’ condescending attitudes; women want to deal with women. Bolleaux. Good, professional adviser of whatever sex seeks good professional client of whatever sex. Loves pets and travel. GSH.

  3. When an article starts with the word Do, Does or Is It, then ends with a question mark. The answer is always No.
    Totally agree with Neil.

  4. @Neil Shillito

    Spot on, I have many Female Clients who are perfectly capable of planning their financial futures in the same way that my Male Clients do.

    Surely there can’t still be any sexist IFA dinosaurs out there? Unless you know different?

  5. Call a spade... 5th March 2015 at 10:00 am

    Justin King seems to justify his belief that nothing will change by assuming that nothing will change! If the woman is the higher earner of a couple, isn’t it likely that – at least in some cases – the man will take paternity leave while she goes back to work? To rewrite his comment: if you are trying to make partner in a law firm, or you’re running your own business, you are not going to take a long spell of maternity leave. A good adviser should adapt to the type and style of advice the client wants regardless of the gender of either of them – and not make assumptions based on their own prejudices.

  6. It’s nice to hear that Neil Shillito is perfectly happy to deal with “good, professional clients of whatever sex,” but I don’t share his confidence that all women clients will feel the same way. Some, for example, may be put off by the way his comment pitches to them in the language of online dating. Others, rightly or wrongly, may feel they prefer to deal with financial advisers who are women in the same way that many prefer to deal with women doctors, solicitors and other professionals.

    In short, it’s marginally interesting to hear the supply-side perspective on this issue – but actually, it’s the demand-side perspective that matters.

  7. There was some pretty persausive research published after the crash in 2008 that suggested that one of the underlying causes was the overly male dominated macho culture in Wall Street -almost every book I’ve read about the decline and fall of Lehmans refers to this – and funnily enough ,nearly all the names in the books are male….

    The trouble is, now everything has blown over and things are back to normal, nothing much seems to have changed.

    The second time as farce?

  8. I’m not pitching to the ladies though, am I? I’m using irony to make a point. The reason that my company is successful and respected is that we are a bunch of beer-swilling mysoginists who make a living by patronising the birds *good slap on the rear sweetie*

  9. The assumption that women want to be advised by women advisers is patronising. You might as well say that short people want to be advised by short advisers. People want advisers to be honest, intelligent and qualified. Some may have a preference for a particular gender but in reality that preference comes so far down the list of priorities that it makes no difference to the decision of which adviser to use. When you are looking for advice and you come across an adviser that you like and trust and that has good references, virtually no-one would reject them and keep looking just because they are the “wrong” gender.

    Although there may be benefits to having “empathy” that someone of the opposite gender might not, it’s extremely marginal. There is nothing more free of bias and prejudice than money. Women and men may have different plans for their future but the essential rules of finance does not change, and nor do the tax rules. A woman may want to take time off work to raise a family and a man may want to work continuously but when they ask the question “how do I save enough for retirement” it comes down to exactly the same things: how much they will need, how much they can save, their attitude to risk, and whether those goals are realistic. The variables may change but the equation does not. Whether their adviser is male or female makes not one jot of difference to the advice, only to how it is presented.

  10. The most sensible comment comes from Georgina Partridge. That, over almost 30 years, is exactly my experience. Money is money it doesn’t have a sexual orientation and at root all people want the same – to look after it and if at all possible make a profit.

    The rest is just detail. All this ‘precious’ agonising is in my view just nonsense – women are just people. We look after the money. Even old farts like me know better that to downplay the wife who more often that not is the boss anyway.

    As to the numbers of female advisers – if the remuneration is attractive and the job interesting there should in theory be no shortage, but it is the practices that have to change. It is just no longer appropriate to do ‘house calls’ – it isn’t expected of a solicitor or accountant – and it is particularly inappropriate for a lady to do this. Presumably you all have offices which cost money and to which clients should come. It also happens to be a lot more efficient.

  11. Jabba The Hutt 5th March 2015 at 4:42 pm

    Can somebody explain to me what the “old school attitude” is? It is the headline but not sure what it actually is!

  12. Funny how it’s the middle-aged men who seem to feel most strongly that women should be happy to deal with middle-aged men. Presumably, on this basis, they’d see no difficulty if all advisers were middle aged men. And all of everybody else? All MPs? All doctors? All police officers?

    I’m not sure if the message about diversity is getting across too well in the world of financial advice.

  13. Georgina partridge has written pretty much what I would.
    When I started work in a bank in 1984 -0 the machine room was dominated by (sexist) women. In the Army is was dominated by men and in the 1980’s most were antio women in the services AND homophobes. I have clients who are male, female, straight and gay.
    I have clients where the husband leaves the room once we’ve said hello and just leaves his wife to get on with the financial discussions and vice versa (although I try to involve both of them and get them both to understand what we are planning in case it ends up with one dying or divorce etc, when they become HEAVILY reliant on us at least for a time)
    My wife earned more than I did until we had children and after maternity leave I was VERY pleased when she chose to go back to work part-time in a reduced role as it took the financial pressure off me as the sole bread winner (it is a lot of pressure, just as main parenter can be). My wife used to give our children “lifetime bans” which I then had to rationalize with her to clarify that lifetime bans torture us as parents more than resolve the issue with the child. She is/was a better parent than I was/am, but we both cared and both had something to offer.and my son is even better with his daughter than we were.
    Now our children have left home, we share more responsibilities, but tend to let one take the lead with certain issues simply as it is more efficient to do so.
    My wife is better at a lot of things than I am, but that doesn’t mean the better one is the main focus of that issue sometimes. Does it really matter so long as everyone is happy with their lot?

    People buy people. Sex has very little to do with advice.

  14. Lucian

    If Middle aged people (and older!) seem to be the norm it a logical choice. In general they have the experience, have ‘skin in the game’ and have done what the advise their clients to do. They are solvent with a few bob tucked away. Younger advisers have yet to build this up.

    People like to feel that their adviser is as well of (or better off) than they are. It is somewhat akin to comparing a doctor glowing with health or a pasty faced alternative with a hacking cough.

  15. Trevor Harrington 5th March 2015 at 8:52 pm

    Georgina and Sascha, particularly Sascha are of course absolutely correct.

    There are of course, sexist males …. and sexist females …. both of whom will have strange views and attitudes about what they see as the “opposing” sex … which is a bit of a narrow and to tiresome argument …

    You can pick whichever one suits you to get into bed with (if you will forgive the entirely inappropriate analogy), or to take advice from … entirely your choice …

    There are of course exceptions, thankfully few, but generally speaking when one stumbles across a claimant about sex discrimination or sex stereo-typing, more often than not, one usually finds an inadequate person who is not entirely comfortable with their gender …. in one way shape or form.

    It is very much the same with homosexuals – criticise them (at you peril) about any matter whatsoever, and you will immediately be labelled Homophobic …. stupid or what !!

    Beyond the life truism of “vive la difference” may I suggest that you treat all people …. well … as people really …. they are all lovely … and different … and strange … and fascinating … and normal … and abnormal … and unique … and lovable … and I guess that is why most of us are financial advisers and relish that task … despite the negative and destructive endeavours of a group of highly prejudiced and jaundiced people called the FCA …

    Personally , I can even love them a bit … if only because they are such consistent failures ..

    x

  16. I advise many couples where the dominant partner in terms of the financial arrangements is female, and I tend to spend more time with them, the male is often only called in to sign things and receive a brief summary. In other relationships the reverse is true or the input is joint, I just have to work out the dynamics and tailor my approach accordingly.

    Many of my female clients cook me dinner or meet me for lunch, which suggest that they like me, enjoy working with me and can trust me. I did lose one client to a female adviser, I could tell the relationship was becoming uncomfortable and wished her well.

    If you are professional and personable most clients of either sex will accept you. However, there may be women who have every reason to distrust men as a result of a bad personal experience, whether it be relationship or work based, and they would feel more secure dealing with their own sex. Hopefully they are a minority, but having a choice is important to them. For the same reason there may be men out there who have similar emotions and can only deal with a male adviser, the difference being is that they have a wider selection of advisers to choose from.

  17. Jabba: I think the old school attitude involves keeping women chained up in golden bikinis.

  18. I must have gone to a different type of school!

  19. How would we react if someone said “There are definitely men who would prefer a male adviser because they get straight to the point and don’t let emotions get in the way of giving the correct advice”?

    Would we consider that outrageous sexism and neanderthal “old school” thinking? Because all I did was take Simonne Gnessen’s statement “There are definitely women who would prefer a female adviser because they know how to listen and they won’t shy away from the emotional side of money” and reverse the genders, and their associated stereotypes.

  20. @Sascha – I get your point. I was an office junior in a female dominated environment in the 80’s and there were as many sexist women there as there were sexist men in the Army in the 1980’s.

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