Research out of the UK has revealed significant differences in the way men and women view financial advice, with the contrasting concerns indicating that more gender-specific service design and marketing approaches would help attract more people to advice.
In a paper released recently by the International Longevity Centre, Peace of mind: Understanding the non-financial value of financial advice, researchers state that while men felt that advice would increase their financial control, women were more sceptical and felt concerned about losing autonomy to an adviser.
“Men who had taken advice more clearly reported that it added to their feelings of being in control of their finances,” the report stated. “Women (who both had and hadn’t taken advice) expressed concern about a potential loss of control in taking advice and worried about decisions being made for them.”
In a webinar discussing the findings, ILC Research Fellow Arum Himawan explained that men expressed the feelings of control advice gave them in a number of ways; from having an expert consultant with them to learning about different product options, benefits and risks. Women, on the other hand, were “particularly worried” about potential drawbacks.
“This included concern about a loss of control,” Himawan said. “They felt that because they were no longer the sole person in charge of their financial decision-making, because they had someone else involved, they felt that advisers might be able to make changes to their financial situation without their knowledge.”
While women who hadn’t taken advice said this perceived lack of control was a barrier to seeking advice, it was noted that those who did seek advice had this concern allayed by their adviser. “They say they were able to build a positive relationship with their adviser and they were able to overcome that control issue quite quickly,” Himawan added.
The implication for UK advisers, according to the study, is that action by the industry and policymakers to address “misconceptions over the loss of control” may well increase the uptake of advice among women.
“This perception is actually a misperception and more needs to be done to help women understand that when they do take financial advice they will be able to retain the level of control they feel comfortable with,” Himawan said.
Of all the differences among sub-groups in the study – which incorporated interviews, roundtables and a survey – the “most marked difference in views” were between men and women.
Of those in the study who reported being under advice, women spoke of increased financial literacy and subsequent empowerment as the main non-financial benefit while men said it made them more confident to try new ways of investing.
And while most participants who had not taken advice expected it to reduce their worry, women – particularly in the lower wealth group – were concerned that it might have the opposite effect.
“These participants only felt that their worries would be less if their adviser provided solutions that they could easily implement; they felt if their problems were too complex, their adviser would not be able to suggest actions that would be within their capacity to implement,” the report states.
Similar challenges
While the UK financial advice industry has undergone changes similar to the Australian industry in an effort to engender trust among consumers, the study found that people have not responded as positively to the uplift as hoped.
In 2012 the UK’s Financial Services Authority (FSA) implemented the Retail Distribution Review, which raised the level of qualifications for advisers and replaced commission-based advice remuneration structures with fee-based structures.
The RDR had a similar effect to the FASEA mandate implemented in Australia and, to a lesser extent, the FoFA regulation implemented in 2013.
“Since the implementation of these changes, many firms and advisers, particularly those working for banks, have withdrawn from the sector,” the report states.” Many remaining businesses have tailored their services towards clients with a higher net worth, to offset higher regulatory and other costs.”
The anticipated increase in consumer trust and confidence, however, is yet to arrive. “Our research suggests that the intended increases in consumer confidence have not arisen.”
The Financial Conduct Authority (which replaced the FSA) and UK’s Treasury launched a Financial Advice Market Review in 2015 to address the country’s burgeoning advice gap – another theme Australian advisers would recognise.
The results, again, have been less than encouraging so far.
“These recommendations resulted in a number of initiatives, but the reforms so far haven’t had the desired impact,” the report states.
Some interesting observations on how some female clients respond to working with a male adviser, compared to male clients. Some men also fear losing control as well – it depends on how the adviser explains their service offer to some extent.
More interesting is that results of the UK RDR had a similar effect to the FASEA mandate implemented in Australia and, to a lesser extent, the FoFA regulation implemented in 2013. Both have been a complete train wreck in opening up advice & service support for low income families and individuals. Advice is expensive for low income families in both countries, because over-regulation has made it expensive. An utter disaster.