Recent research shows there is no such thing as “the female brain” and that a brain cannot be identified as coming from a male or female human without other evidence.
But that does not preclude the evidence that female investors thinking differently toward investment decisions than men do. As such, females might require a different approach from advisors who want to work with them.
Former Wall Street executive Sally Krawcheck has started her own investment advisory service she has named Ellevest, and is outwardly marketing it to serve women investors.
“It is time to give women an investment experience built specifically for them,’’ Krawcheck said in making her announcement in mid-2015.
There is overwhelming evidence that women are treated differently when discussing finances and investing. Our study Advisor Relationships and Changing Advice Requirements shows that 21 percent of Millionaire investors with a net worth between $1 million and $5 million would change advisors because the financial professional spoke only to the investor’s spouse (and it is fair to assume the investor being ignored was the female spouse).
Women with funds to invest also approach the matter differently. Our e-zine High Income Women Investors repeatedly indicates the unique ways women approach investment decisions. Whether they are part of a two-income household or control all of their financial decisions alone, their approach to investments and their relationship with financial advisors are very different than for men.
“Women have a greater interest in a financial planning-based investment program, with an eye toward how their investments will affect other parts of their life,’’ said Spectrem President George H. Walper Jr. “Investment strategies should be developed and articulated in the context of how they impact matters such as financing college and retirement concerns.”
If you are interested in learning more about affluent women investors, explore the following resources:
Among women making $200,000 in annual income, 54 percent are willing to take a significant risk with a portion of their investments in order to earn a high return. That is well above the 32 percent of all other affluent investors who are willing to do so.
High Income Women are also far more likely to concern themselves with all of the factors involved in making an investment decision, including the level of risk involved, the reputation of the company to be invested in, the past track record of the investment, the tax implications, and the social responsibility of their investments.
High Income Women are far more likely to invest in money market funds and investment real estate than other investors. They are more likely to report dissatisfaction with their current advisor, and are more likely to use more than one advisor than other affluent investors.
This is information key to advisors who simply do not understand just how involved women are. A recent Harvard University study of advisor behavior found that women are often asked less detailed questions about their salaries, expected career paths and hopes for future economic prospect than men are. It also showed advisors are more likely to demand women turn over a greater portion of their investible funds to advisors.
It is in that environment that Krawcheck and others target women investors with the promise of understanding their financial attitudes and concerns better than other firms that do not go extra lengths to service women.
However, other than paying greater attention to what women want out of their investment and financial plans, it is not clear exactly what products or services better serve a female investor than a male investor.
“I see a number of technological startups that are only gearing toward women,’’ said advisor Kate Holmes, CEO of Belmore Financial, “But to me it is more of a marketing thing. That’s perfectly fine, creating your own niche, with a focus on who you want to attract. From a marketing standpoint, it does create a safer environment.”