A recent report entitled: When women control the wealth, society reaps the benefits, reveals the results of a survey carried by The Economist Intelligence Unit (EIU1) among high net worth women. The title is an excellent introduction to the way women tend to contrast from their high net worth male counterparts. When it comes to their finances, women have a way of their own. Attitudinally. Behaviourally. Ethically.
Women make a difference in society
We can’t possibly do justice in a single blog to this comprehensive piece of research discussed in a recent edition of MarketWatch2. But we want to highlight the conclusions we found to be most relevant and thought-provoking:
- High net worth women (especially those with $5million + in assets) not only support the economy through their direct participation in it, but they also tend to pay their good fortune forward.
- Many female high net worth individuals have a relationship to their wealth that is inextricably linked to their contributions to society at large.
- High net worth women often make their financial decisions with an eye toward making a difference.
A proof point
The MarketWatch story, based on the report’s findings, offers the following important proof point: “For example, while men with $5 million or more in assets cite tax benefits as the greatest deciding factor in their charitable giving, women at the same level of wealth most often cite the ability to make the greatest impact.”
For many years now, there has been a slow but steady tectonic shift in the financial industry toward an attempt to understand what is colloquially called “women and wealth”. That shift, apart from being truly gratifying for us, goes right to the heart of the client/portfolio manager relationship.
Understanding individual financial goals
When it comes to building a financial plan, it is critical to understand each person in their unique light. This is especially true when it comes to high net worth women, whose approach to investing may contrast from what financial professionals might be used to expect.
As The Globe and Mail3 further reports, high net worth women in general:
- Take a predominantly conservative approach to investing and their overall financial wellbeing.
- Prioritize financial security over prosperity.
- Prefer assured outcomes vs. speculative investment performance.
- Want a well-defined investment plan that reflects their personal values, with a solid level of exposure to responsible investments (RI).
This, of course, only reflects trends and should not be used to stereotype the female investor. In a personal relationship, like the one developed by Portfolio managers and their clients, the ultimate goal must be for the Portfolio manager to understand the person in her uniqueness, her lifestyle and objectives. The risk of misunderstanding these particularities is high and common in the financial sector.
StrategyMarketing4 expressed the issue in stark terms in a recent E-Book entitled Financial advisors are failing women – What female clients really want and how to change the dialogue:
“The numbers are hard to ignore – 73% of women report being unhappy with the financial services industry, 80% of widows leave their financial advisor upon the death of their husbands, and 87% of women looking for a financial advisor say they can’t find one they can connect with. Clearly there is an enormous disconnect between what the financial services industry and financial advisors are serving up and what women really want.”
Money as a means to reach higher values
One of the most important conclusions reached by the EIU study is that investing in the markets has played an enormous role in generating wealth among women. It seems that women tend to have a clear understanding of money, not as an end itself, but as a means to reach higher values in life, such as professional and personal development, health and peace of mind. This accentuates the need for adequate and inclusive financial services.
Our approach to this matter, at TWM Group, is to ensure that our team remains diverse and that each member has a strong voice. We do this through our values:
- Through self-knowledge, we encourage our team members to embrace their unique abilities and use them for the team’s advantage.
- Through independent thinking and thoughtful disagreement, we make sure to keep our diversity real. This means that each member must have an independent voice that is heard and challenged constructively.
- Through radical open-mindedness and building meaningful relationships, we strive to step away from stereotypes and understand our clients in the uniqueness of their own circumstances.
Very soon, we will share more about the values that guide us at TWM Group.
For now, we know many of you share our excitement for this shift the world is going through. The ongoing visualization of women as high net worth investors will hopefully contribute to a more welcoming society for all kinds of people.
We’d love to know what you think about this. Check our team’s page to find our emails.
1 To clarify, the EIU is the research and analysis division of The Economist Group who publish The Economist – the prestigious and authoritative weekly global financial newspaper.
2 https://www.marketwatch.com/story/when-women-control-the-wealth-society-reaps-the-benefits-2019-01-04
3 https://www.theglobeandmail.com/investing/globe-advisor/advisor-news/article-women-want-investment-plans-that-reflect-their-personal-values/
4 https://www.etfcm.com/womenmoney/include/wadvisors-failing-woman.pdf
