Traditionally, financial advisory firms have catered to only one half of the population: men, as they were once predominantly the main financial planners in their own homes. Today, however, women are increasingly involved in the investing and savings aspects of their families. On top of that, women outlive men on average and therefore have longer financial lives for which to plan. When these factors are combined with the fact that women, on average, make less than their male counterparts do, it becomes clear that women have unmet needs in the areas of financial planning and investing.
Are Women Happy with Their Financial Advisors?
Several reports show that women are not happy in general with their financial advisors. Some find the process intimidating and the advice that they receive from their advisors difficult to understand. Because of this, women still make up only a small portion of clients in most advisory practices.
That status quo is beginning to change. Financial advisors are starting to realize that they have been missing out on a significant client base. Some firms are serving only women and their specific financial planning needs. According to investment trends company, The Spectrem Group, the average wealth of women is growing faster than men's, and this segment of the market will drive demand for financial planning firms in the future.
Do women really have different financial needs than their male counterparts? In some ways, women have the same needs as men: to build a financial plan that will pay all the bills and grow wealth enough to meet life's goals and retire in comfort. On the other hand, women's needs are not being met as often as men's are. A recent survey suggested that 70% of women are unhappy with their advisors and the way they are being treated. The fact that the vast majority of financial advisors are men makes it difficult for women to relate, though some firms are courting female advisors to serve this market segment.
For-Women Firms on the Rise
For-women financial advisory firms, such as Parker Financial, LLC in Maryland, are increasing in number, focusing solely on helping women navigate life changes, such as marriage, children, retirement and widowhood. According to Parker's website, the firm caters to female entrepreneurs and executives. The company has recognized that, just because women may have significant wealth or be successful executives, it doesn't necessarily mean that they know how to manage their own personal finances. Women are more likely to be nervous about admitting their lack of financial knowledge than men. Successful advisors focus on helping to educate female clients in investing and saving issues, and make them partners in the process.
According to the Bureau of Labor Statistics, it is estimated that the number of women employed in the financial advisory sector, which sits at 207,000, will grow by 32% by the year 2020. Baby boomers continue their march toward retirement, creating an increasing market for financial services. More women than men will reach retirement age and beyond. Financial advisors who take the needs of female clients into consideration will thrive.
The Bottom Line
The rise in for-women financial advisory practices stems, in part, from an increasing awareness on the part of advisors that women are an underserved market and that their wealth is increasing. As baby boomers approach retirement age, women will control more wealth in the United States than ever before.