(Hingham, MA) – Women investors demand significantly more from financial services providers than men, according to a new study by retirement and savings trends research firm Hearts & Wallets. The study of more than 4,500 U.S. households nationwide reveals that women investors are much pickier than men about their financial suitors, both in terms of firms and advisors, and the reasons for these preferences.
These expectations carry financial clout because women control or influence at least $16.2 trillion of U.S. household assets and are now sole head of 32 percent of U.S households, an increase of 18 percent in the past five years. The Hearts & Wallets study found women want more from financial services firms than men for every attribute measured, in many cases by 10 percentage points or more.
Why are women so demanding? What is their ideal match in a financial provider or advisor? Women weren’t hesitant in providing the answers. Their responses and the resulting Hearts & Wallets analysis reveal the steps financial services firms can take to woo this critical market segment.
Financial Frustrations Fuel Expectations?
“Many women are in a difficult position in terms of getting the financial advice and support they need. As a result, they may feel frustrated and be even more discerning than men in their selection of financial providers and advisors,” said Chris Brown, Hearts & Wallets principal. “Our study identified that women find several key financial tasks more difficult than men, notably retirement planning, and are getting less help with this task. More women than men also describe themselves as very inexperienced about investing and anxious about their financial future.”
Women are 50 percent more likely (45% of women versus 31% of men) to be concerned about “making assets last throughout retirement/outliving my money.” This heightened level of concern extends to all retirement issues. Selected other key findings in Hearts & Wallets Quantitative Panel 2011 Insight Module “Understanding Women Investors” include –
- 56 percent of women find retirement planning difficult as compared to 51 percent of men.
- Only 12 percent of women seek help for retirement planning, resulting in an advice gap of 44 percent.
- More than one-third of women (35 percent of women versus 26 percent of men) feel moderate to high anxiety about their financial future.
- A much larger number of women, 41 percent, say they are very inexperienced with investing as compared to 27 percent of men.
- Only 15 percent of women have a good understanding of how their primary financial provider earns money, a key trust driver, as compared to 25 percent of men. Understanding among women customers of leading firms is also lower across the board, and notably lower for certain firms.
What Women Want
The top three attributes women seek in a financial services provider is “has low fees” and “fees are clear and understandable,” and “explains things in understandable terms.” Women ranked these attributes at least 10 percentage points higher than men.
“More women rate firm attributes as more important than men on every single dimension. It may be challenging for providers to deliver upon this, while still keeping fees low, which is very important to 51 percent of women,” Laura Varas, Hearts & Wallets principal, said. “We saw in our previous Explore focus groups the importance of firms articulating service dimensions. Women want to know what they’re paying for, and how to evaluate providers. Our study points to the importance of educating women on fees.”
For advisors, women again rank all attributes higher by at least nine percentage points. The top three attributes women expect in a financial advisor are “does not pressure me to buy products,” “is open/honest about fees and compensation,” and “is responsive.”
The firms that meet women’s needs could be positioned for growth. The study found women tend to own fewer types of investment products than men, and have higher allocations to bank products, because of lower risk tolerance and lack of financial experience.
“Asset managers, broker-dealers, employer-sponsored plans and others can help women become more comfortable with asset categories that can lead to long-term wealth creation, a positive for both women and providers,” said Brown.
The study provides channel and company-specific benchmarks and offers detailed insights into women investors.
“As with all our studies, the findings interrelate,” Varas said. “For example, many women are seeking more financial help. This correlates with an attitudinal group of investors we are tracking. We label them as Upshifters, investors who are looking for more help and willing to pay for it. This group is studied in depth in several other reports we have just issued.”
The insight module is one of four modules recently released by Hearts & Wallets. The others include –
- Upshifting & Downshifting: Successful Positioning in the Changing Advice Landscape (Insight Module 10)
- Best Practices in Defining and Pricing Advice (Insight Module 11)
- Acquisition Demystified (Insight Module 13)
