Why should you sell financial products differently to a women than you would to a man? The differences in the sexes around attitudes to and the meaning of money, which will affect the behavior of an adviser as well as the consumer.
Money is a very emotionally loaded discussion and it drives more couples apart than other issues. Psychotherapist, Olivia Mellon has done much research into this topic and has come up with some useful insights to think about. Have a look at her website for a quick quiz to find out your money personality type. Click here to find out more.
She mentions that money is inextricably linked with power, happiness, security, control, dependency, independence, freedom and love. So, if someone has an issue with money, to talk about it brings up an awful lot of other problems that are in their subconscious. This can bring up some really deep seated emotions and to talk about money in a relationship can bring about a lot of guilt and anxiety, which can stop the conversations happening and in turn the problems don’t go away and can often get worse.
Mellon says that men are brought up to see the world as competitive and hierarchical, there is always someone above you and someone below, however women see the world as co-operative and democratic, therefore sharing. Women are also encouraged to be seen as needy and vulnerable, which men are discouraged from such behaviour.
With this in mind, men think as islands whereas women see themselves as part of a team, so in a partnership situation, the men think that they are responsible for handling the family’s money and that they must be the one that makes the financial decisions, whereas the women believe that they should make the decision together.
In general men tend also to be internally validating, so if they make a good decision, then believe it is because of their own ability, however if the decision didn’t work out, they blame the advisor or bad luck. Whereas a women validates externally, therefore if they make a good decision, they credit their advisors and if it was a bad decision they blame themselves.
It seems that no matter how forward thinking we have become and how women have taken the reins on forging their own destiny, our very core existential behaviour patterns are still instrumental in influencing the decisions that we make.
In addition to the pure psychological aspect of finances, Savvywomen.co.uk also released a report from a survey they conducted last year which explained the differences between men and women when purchasing investments. They asked, what would you do with £100,000? It turned out that similar numbers of women and men would either save or spend their windfall, however only 12% of women would put some or all of it into shares investments, compared with 21% of men. The report shows that women tend hardly to invest at all and when they do it is without much risk.
Men still earn a fifth more than women, and so it more risky for women to invest. When asked, some people believe that we are still living in a male dominated society where women are socialised to take less risks and of course men are still encouraged to take more risks. Others polled, said that it’s simply down to biology and talk about research where female and male hormones operate differently when working in financial trading floors.
Savvy women talked to investing experts of both sexes about their experience and observations of how men and women handled financial matters.
Philippa Gee of Philippa Gee Wealth Management discovered that risk taking is higher in men than women. She says, “In my experience, I find women have a lower risk tolerance than men. That has an influence on how much they invest. When she deals with joint investments, she finds that the man is willing to take more risk as in general he looked after the family’s finances. She notices that, “As women become more familiar with the stock market, they become more likely to take more risks.” However, she only noticed one couple where the women took the lead.
Gina Miller from SCM Private Wealth Management says that women tend to take less risk, take a longer time to research the options and ask more questions, whereas men tend to claim they know more than they do. She also says that women often feel that they are not communicated well enough to by the financial industry. They don’t want to be patronised to, however they feel that the advertising is extremely masculine. She sees women investing purely for their children’s futures rather than their own.
Tim Cockerill from Rowan Dartington financial advisors notices that, “women tend to be more cautious and take a lot more convincing about doing something different with their money. They see they are going into a male dominated world. I think that can be a big barrier. It’s the same for anyone if you are male or female, you don’t want to put yourself in a place where you feel uncomfortable.” He also notes that, “’When women are making decisions, I sense they are more independent minded. I think men would be more inclined to go with the herd. If everyone is chasing after a sector, I suspect men would be more inclined to follow. I think women would be more cautious about that. I see that as more independent minded.’
With all this in mind and with women becoming more prolific in the work place it seems that the financial sector needs to make a substantial change if it wants to attract the biggest growing market for them. It may be a surprise to you that between 2008 and 2011 women accounted for an amazing 80% of the new self-employed. (Labour Force Survey, Office of National Statistics 2013.)
So how are investment companies going to market to this new previously untapped market? In the US, Jackie Renwick, account executive at Walter Karl List Co, handles the Institute for Econometric Research Masterfile and she agrees that this new market has been largely ignored. She says, “No mailers have selected the female segment in quite a few years.”
John Greenwood reported for the Telegraph in 2006 to say that more and more people are turning to female financial advisors to discuss their money decisions. It seems that it is easier to be open and honest with a women when talking about your financial mistakes. Click here to find out more.
In this report, Lin Ashurst, who is a top female financial advisor stated that, “People feel about female IFAs in the same way they feel about female GPs. Both men and women feel they can let down their guard when they talk to a female IFA, particularly when they talk to me about a stressful and emotional time such as following bereavement or divorce.”
According to the Centre for Economic and Business Research, it is predicted that by 2025 women will own 60% of the nation’s personal wealth.
Nicola Horlick fund manager and winner of UK’s top female financial advisor in 2006, launched her company Bramdean Asset Management specifically to look after the assets of according to her, “the rising number of independently wealthy women.” who have more than £1 million in the bank.
She also says that traditionally women have not been served well by the wealth management industry, which was created by men, for men even though research shows that women control a rapidly increasing proportion of the UK’s private wealth. She says that women have a different style of analysis and decision making and also a different attitude towards money and security. Women are starting to take steps to becoming involved in the financial decision making. This is crucial she notes, as the man most often dies first and it’s better to know what is going on before you are widowed and faced with a myriad of issues you may not understand.
Her biggest tip for women is not to rely on their husband’s pension when they retire. “Many women will not have made enough contributions to qualify for the full basic state pension, and you can never be sure your partner’s pension will be enough.” It’s never too early to start paying into your own pension.”
Fiona Price, Women’s Financial Advisor Group founder estimates that 8% of all IFA’s are women compared to 5% in 2002. She says that, “women have proved themselves to be outstanding advisors at the top of their profession and are amongst the most highly qualified.” Price also notes that women IFA’s focus on holistic and long-term advice which is essential for a women. Even though men and women’s financial needs are the same, women want to get the advice from another woman.
Maguire and Horlick agree that women are more conservative when looking after their wealth, “something to do with nurturing and protecting your funds.” says Horlick.
No matter whether someone just wants to put their basic finances in order or potentially invest a good deal of money, a financial advisor should think about the differences in beliefs, they get the most appropriate solution for them. The growth in female financial advisors has now given consumers choice as to whom they feel most comfortable when talking about their money. Hopefully all of this will encourage more women to discuss their finances in the future, which can only be a good thing.