Retirement Director Marquette Payton explains why engaging female clients and prospects provides an opportunity to demonstrate that your value goes beyond dollars and cents – and why it’s especially important during turbulent times.

We’ve all heard the saying, “Every cloud has a silver lining.” In today’s market and economic environment, there is no shortage of clouds as we contend with soaring inflation, ongoing volatility, recession fears and rising interest rates.

As these clouds build on the horizon, financial professionals are focused on providing investment solutions to help clients weather the storm. But in turbulent times like these, there is a need – and an opportunity – for advisors to demonstrate their value beyond investments. That opportunity is the silver lining, and it’s especially relevant to female investors.

There are several reasons why female clients warrant extra attention right now. The challenges all investors are grappling with have a heightened impact on women, who already face several gender-based barriers to growing their wealth. In addition to the well-known wage gap, the so-called “Pink Tax” results in women paying an average of 7% more for certain products and services marketed to women compared to those sold to men.¹

Despite these obstacles, female investors are quickly gaining a greater share of wealth. Women control more than $10 trillion of total U.S. household financial assets, and that figure is expected to rise to $30 trillion by 2030.²

Considering their growing assets and unique challenges, women are clearly in need of financial services and advice. But female investors also tend to have certain traits that can make them excellent long-term clients. For example, women:

• Are slightly better investors than men, outperforming their male counterparts by 40 basis points, or 0.4%, on average.³
• Typically choose less risky investments and trade less frequently compared to men.⁴
• Tend to be better savers than men and more focused on long-term goals.⁵
• Are generally less emotionally motivated in their investment decisions than men.⁶

The Importance of Outreach in Times of Crisis

Challenging markets also present an opportunity for increased engagement with female clients – one that Janus Henderson’s own research has highlighted.

In March 2020, we conducted a survey to gain an understanding of financial professionals’ interactions with clients at the outset of the pandemic. 42% of respondents who use a financial professional said they had not been contacted during the COVID market correction. While that’s a surprisingly large number, the disparity between genders was even more striking: 60% of female respondents had not heard from their financial professional compared to 29% of male respondents. These findings demonstrate the importance of proactive outreach during times of crisis and underscore the opportunity advisors may be missing by disregarding their female clients.

Going Beyond Dollars and Cents

Now that we’ve painted a picture of why female investors represent an opportunity for financial professionals, let’s delve a bit deeper into the qualitative benefits of financial advice and, in particular, how they apply to women. To illustrate, I’ll share findings from another survey Janus Henderson conducted in 2018.

The motivation for the survey was Vanguard’s “Advisor’s Alpha” study, which determined that the value of working with a financial professional is 300 basis points of incremental return, half of which is associated with behavioral coaching. We wanted to investigate this further to help educate investors on the advantages of working with a financial professional outside of investments.

Our study sought to determine whether investors have higher levels of confidence and lower levels of financial anxiety when working with a financial professional. While we didn’t find a relationship between working with a financial professional and lower financial anxiety, we did find a statistically significant relationship between working with a financial professional and investment confidence.

Now, what is the connection to women? Although our survey didn’t analyze confidence levels in men versus women, many other studies have shown that women lack confidence when it comes to long-term financial planning. If you can help build that confidence by providing guidance and emotional support -such as the behavioral coaching Vanguard cites as a key component of an advisor’s value – clients will be more likely to follow your recommendations and stay the course, which of course is particularly important in challenging markets.

Another way to help female investors build confidence is to educate them on how to make informed decisions regarding their portfolios. My colleague Matt Sommer recently shared some timely tips that can assist your female clients as they navigate these choppy waters. You can also refer back to the traits I shared about women’s investing tendencies. After all, what better way to instill confidence than citing research showing that women are better savers and investors compared to men?

As the future continues to remain uncertain, there is one thing you can count on: Engaging female clients and prospects provides an opportunity to demonstrate that your value goes beyond dollars and cents. By helping them build confidence now, you can build long-term relationships that are productive and rewarding – in good times and in bad.

 

¹ “There’s A Pink Tax On Women.” Forbes, February 12, 2022.
² “Women are gaining power when it comes to money – here’s why that’s a big deal.” CNBC, May 3, 2022.
³ 2021 Women and Investing Study, Fidelity Investments.
⁴ “Boys Will Be Boys: Gender, Overconfidence and Common Stock Investment.” The Quarterly Journal of Economics, February 2001.
⁵ “If female investors have any weakness, it’s their mistaken belief that they’re not good investors.” CNBC, April 11, 2022.
⁶ “Women Make Better Investors Than Men, but Why?” ABC News, November 28, 2011.