women have conversation in the office

Independent broker-dealers and their financial advisors can only benefit by gaining a deeper understanding of the priorities and goals of the various types of clients they serve. While the financial services industry is becoming increasingly harmonious and dedicated to empowering those with diverse backgrounds, advisors must still be aware of the differences that should be considered when formulating wealth plans for investors. Below is a guide to help advisors better realize some common wealth management goals and considerations shared amongst female investors.

Your clients and their needs are defined by more than just their gender. Yet there are certain differences that financial advisors need to consider when connecting with, and creating wealth management plans for women.

While women have made tremendous progress in evening the social, political and economic playing fields, there are still key considerations for you to keep in mind when helping women plan for and achieve their financial goals.

What are the top wealth management priorities for women?

Results of the most recent RBC Wealth Management survey show that women clients assigned higher levels of importance to retirement planning, estate planning, tax planning, insurance and philanthropy, compared to men who responded to the survey. Your female clients may have wealth management questions about topics relevant to their unique needs. You can take the opportunity as their financial advisor to help find the answers that are right for them and their situation.

Consider the following when addressing priorities:

  • Many mothers prioritize their children’s college education ahead of their own retirement savings. They may wish to consider maximizing retirement savings first and develop a college savings strategy with other funds.
  • Women are more likely to interrupt careers to bear and care for children, and/or elderly parents which may further reduce contributable assets to retirement plans.
  • Women are increasingly becoming the sole or primary breadwinners in the U.S., which can make childcare decisions and determinations more complex.
  • Many women view their wealth as a means to make a positive change. Sixty-two percent of high net worth women cite social impact as being very or extremely important compared to 50 percent of men.1 For this reason, women may wish to consider sharing their wealth during their lifetime. Help them explore the possible income and estate tax benefits of making gifts to qualifying charities.
  • Women tend to be more risk aware and may choose lower-risk investments resulting in lower returns. Use this as an opportunity to help them understand their own risk tolerance.
  • Women-owned businesses comprise 31 percent of all privately held businesses – and 20 percent of businesses with revenues of $1 million or more.2 Financial considerations include sourcing start-up funding, managing substantial risk and coping with unpredictable income.
  • Women prefer a collaborative and consultative approach when building their knowledge on financial and wealth matters and therefore place value on learning from a broad range of sources, such as family, friends and financial advisors.
  • Women take a proactive approach to educating the next generation, and this trend is increasing with each generation. Female Millennials are more likely to find effectiveness in their financial learning experiences, benefitting from their mothers’ efforts, demonstrating that women’s long-term investment in educating their children is making a difference for the next generation.3
  • Women can expect to live longer than men, which may require additional assets to cover lifetime needs. In fact, seven of 10 retirees will need some form of long-term care4 with seven of 10 nursing home residents being women.5 And since they will likely outlive male spouses, they are in line to inherit and control family wealth. Help clients better prepare for potential long-term care expenses as well as developing estate and inheritance plans.

Women are no longer just controlling household finances – they are attaining higher levels of education, achieving success as business owners and professionals, and are earning more. Women are also increasingly single, living longer and are first in line to inherit large sums of wealth. These factors present the perfect opportunity for you to create lasting connections with female clients and earn the right to be their primary advisor by making a difference in their financial future.

Notes:

  1. “U.S. Wealth Report 2014,” produced by Capgemini and RBC Wealth Management.
  2. National Association of Women Business Owners, women business owner statistics from Womenable report commissioned by American Express, “OPEN State of Women-Owned Businesses 2015.”
  3. RBC Wealth Management Women & wealth transfer: The influence of women on building the family legacy, Royal Bank of Canada and Scorpio Partnership 2017.
  4. S. Department of Health and Human Services, National Clearinghouse for Long-term Care Information, www.longtermcare.gov, February 2017.
  5. American Association for Long-Term Care Insurance, 2014.