High earning executives and professionals are a key target for many financial advisors, but how well do advisors really know what this group is looking for? As traditional gender roles are changing, both at work and at home, advisors may be serving the high-net-worth (HNW) based on outdated assumptions about the way they invest and the roles they play outside of the office.
While there are many existing studies related to investors as a whole, there is little available research specific to HNW family breadwinners. As such, FlexShares conducted a national survey of HNW primary household earners and investors to find out exactly what this group values, what they’re looking for in an advisor, and the extent to which their expectations are shaped by gender differences.
KEY TAKEAWAYS: WHY HNW PRIMARY BREADWINNERS ARE DIFFERENT
Executive women challenged some long-held gender stereotypes
Executive Women are not afraid of risk. Women in the survey broke some common stereotypes often found in the wealth management industry. Executive women were only half as likely (14% vs. 31%) as men to identify as being conservative investors. They were on par (26% vs. 27%) with their male counterparts as identifying as either moderately aggressive or aggressive investors. Furthermore, 86% of women versus only 69% of men expressed comfort with taking on a higher than minimal degree of risk in exchange for higher returns.
Executive Women are loyal to their advisor. A common theme in the industry is that women are not loyal to their advisors, especially after a divorce or a death of their spouse. While we didn’t frame our survey question in that manner, there were significantly fewer female respondents (20%) than men (39%) that considered leaving their advisor in the previous 12 months. Executive women were also more likely to describe the experience with their advisor as being personal (88%) compared to executive males (75%).
Executive Women are confident in investing. FlexShares asked the HNW primary breadwinners in our study to rate their abilities on a 10-point scale (10 highest) to gauge their interest in financial management tasks. Women rated themselves between 7-8 out of 10 on almost all categories, including:
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Create and manage a household budget (8.9)
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Plan for retirement (8.3)
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Appropriately balance contributions (8.2)
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Effectively manage debt for optimal tax benefit (7.9)
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Effectively manage own investment portfolio (7.7)
Despite historically facing social stigmas that discourage or demean their interest in key investment and wealth management concepts, these women have shown they have interest in wealth management and confidence in their financial and investment acumen.
Financial and investment goals vary between men and women
We often hear that women invest primarily to take care of their families. However, our survey revealed that women aren’t the only ones that prioritize providing for dependents and future generations. In fact, providing for the next generation was the top current financial goal for men, while it ranked lower on the current list of priorities for women.
Roles and stresses at home also vary by gender
Both HNW men and women juggle caregiving responsibilities with their professional and household management obligations, too. Men and women reported equally (23% by both) that child caregiving responsibilities are shared equally in their homes. However, more executive men (49%) than executive women (45%) reported that they take on more than 50% of childcare responsibilities. This group of men also reported more often than women (50% vs. 41%) that more than half of the care required for elderly parents and adult dependents (managed care, transportation, financial duties) fell on their shoulders.
CONCLUSION
We encourage advisors to consider whether they carry any gender stereotypes with them into their marketing, prospecting and client engagement. Here are some takeaways to consider.
Segment beyond asset levels. To state that you serve high-net-worth individuals is not enough. Most advisors say that they serve wealthy investors. Thinking beyond asset levels will enable you to connect in a more personal and hopefully relevant manner. As the research points out, executive primary breadwinners may be quite unique from other investors. Don’t make the mistake of casting traditional gender roles on this cohort. Instead, assume they all have a keen interest in their wealth management but don’t assume you know what their primary financial goals and investment objectives are until you’ve discussed their unique circumstances.
Understand executive women by investing time to get to know them. Assuming women executives share the same expectations of their financial advisors as other women may not be a winning approach. These HNW primary breadwinners are confident in their investment and financial acumen and understand the potential value of taking risk to generate excess returns. Understand that while executive women seek efficiency, they also desire a highly personal relationship with their advisor. Be sure to ask questions that will enable you to understand what they expect from you – not what you think they expect from you.
Don’t forget about the men. Be sure that you are letting go of historic gender norms when engaging with your executive male clients. The survey revealed that many assumptions typically associated with working women are also true for men. Make sure you ask about their roles at home as well as those at the office and understand how they are juggling both. Consider pulling a group of men together who share similar challenges for an evening of fun and networking. Knowing that other professional breadwinner men are taking on more at home may be cathartic for all involved and position you as more than an investment manager.
Before investing, carefully consider the FlexShares investment objectives, risks, charges and expenses. This and other information is in the prospectus and a summary prospectus, copies of which may be obtained by visiting www.flexshares.com. Read the prospectus carefully before you invest.
Foreside Fund Services, LLC, distributor.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
