An enormous intergenerational transfer of wealth will occur over the next three decades as the baby boomers and their parents pass down $2.4 trillion.
Women will be the main beneficiaries purely because women live longer than men. This bounty will further bolster the personal wealth many women have already earned and accumulated.
There’s no question that more women will need professional advice. Many are smart, humble and motivated enough to seek it. However, advisers have historically been poor at connecting with women, which could see many miss out on valuable opportunities.
Too many advisers are still guilty of assuming the male in a couple is the primary financial decision maker. That flawed assumption often means questions and conversations are directed at men and the broader advice proposition is tailored to accommodate male nuances.
Yet new research by ING DIRECT, conducted by Galaxy Research, found 66 per cent of women who are married or in a de facto relationship are joint financial decision makers while 27 per cent of women make the majority of financial decisions (see box).
Women are more capable and comfortable with household financial management and they’re increasingly active and engaged when it comes to their superannuation and investments, but many are still hungry for information and support, even if it’s an adviser or coach to guide them through the financial maze and go with them on the journey.
How and why do women invest differently to men?
Women and men both want to be able to fund a comfortable retirement but there are subtle differences in the way men and women go about saving and investing, which can be missed by traditional risk profiling.
For starters, women generally prefer more conservative investments such as at-call and term cash savings, cash and balanced superannuation options, and owner-occupied houses over investment properties.
Often the best solution won’t be the one which delivers the highest investment return. Women value strong performance, but they place equal value on intangible benefits such as consistency, security and peace of mind. They’re more compelled by the idea of ‘making it last’ than ‘watching it grow’.
Advisers must also understand that not everyone can, or will want to, make decisions quickly. Many women like to take their time and access their vast referral networks (often via social media) for assurances. They spend a lot of time thinking about what they want to do and then they think some more. Onboarding processes will need to accommodate this.
What you may not knowWomen are increasingly confident when it comes to making financial decisions but many still value support and assurance from a professional adviser. According to the 2015 ING DIRECT Women & Finance Report, 27 per cent of women who are married or in a de facto relationship make the majority of financial decisions in their household including 8 per cent who make all the decisions. The overwhelming majority of women are equal decision makers with only 1 per cent of women deferring entirely to their male partner. The report also found women, particularly older women, are actively engaged when it comes to their retirement savings and they want to learn more about investing and wealth management. Thirty five per cent of women surveyed said they would turn to a financial planner if they inherited a substantial amount of money. Interestingly, 34 per cent of respondents said they would turn to family and friends. The report’s key findings show the enormous opportunity for financial advisers, and other financial services providers, to develop – or adjust – their value proposition to meet the needs of increasingly educated, affluent and influential women. Currently, only 31 per cent of women receive professional advice, based on the ING DIRECT survey. This is despite evidence that women who receive professional advice are more likely to own their own home mortgage free and more likely to be high income earners. Given 11 per cent of women earn substantially more than their partner, 34 per cent earn roughly the same, 34 per cent of women own their own business and 33 per cent of single women own their own home, it has never been more imperative that the financial planning community reach more women to help them manage, protect and grow their wealth. |
Note 1: ING DIRECT Women & Finance Report / Australian Bureau of Statistics 6523.0 Household income and income distribution – Household net worth by age of reference person.
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