Wealth management’s underserved segment

I just read an interesting McKinsey research paper. It concluded that as more assets shift into the hands of women, wealth managers need to understand the investment needs and behaviors of this large – but as yet underserved – group of investors.

In Western Europe, women investors now control about a third of total AUM, valued at around €4.6 trillion. McKinsey expect this share to grow rapidly over the next few years, partly because of the rising number of married women taking responsibility for household financial decisions. They surveyed almost 3,000 women and 2,000 men in the affluent, private banking, and high-net-worth investment markets and identified how women’s investment needs differ from men’s, and explored how firms could improve their propositions for female financial decision makers.

The research findings provide a rich perspective on women as investors, as well as insights for firms who might want to cater for their needs. For example, 61% of women and 64% of men share the same primary financial adviser as their partner. But when asked whether they would change their bank or adviser if they were separated from their partner, 40%of women said yes; compared with just 29% percent of men. The message is clear: A sizeable portion of women’s assets under management could be at risk in the event of relationship breakdown or bereavement, unless advisers take steps to improve their offerings across this segment.

A substantial proportion of the women investors in the survey expressed a willingness to receive more advice from their financial advisers, especially through digital channels such as web-based advisory and analytical software and mobile apps. In addition, 28% of women said they would be happy to receive more advice over the phone from experts, compared with 22% for men.Unfortunately, dissatisfaction was common for both men and women. 43% of women said they were not fully satisfied with the quality of financial advice they received, as did an even higher proportion of men (49%).Few investors reported being uncomfortable when making financial decisions in their portfolio, but women were twice as likely as men to say so (18% versus 9%).

It seems to me that this is an opportunity for wealth managers: Develop and market your advisory services to support the different stages in women’s lives, such as managing wealth before marriage and after divorce, planning retirement and bereavement. Build your advisers’ expertise in understanding women’s needs for products, services, and solutions and how these needs change as women’s careers progress, their household or family circumstances alter, and they grow older.