We make a living by what we get, We make a life by what we give.

Winston Churchill

Articles and opinion

No "one size fits all" in wealth management for women

Have you seen the television advertisements for Dove Men+Care shower gel?  Two campaigns which were launched last year, both set to the William Tell Overture: the first and more humourous of the two aims appeals to the family man who copes with all life throws at him.  The second campaign takes a more scientific approach, comparing skin to leather which may dry out if not properly cared for.

What has all this got to do with wealth management for women? 

In common with the wealth management sector, the international cosmetics industry has recognised that there is a potentially huge untapped and unsatisfied new market for their products amongst the opposite sex. 

The cosmetics manufacturers have invested heavily in researching and understanding their target market before tailoring a number of approaches to different elements of the male market. The first Dove advert has emotional appeal for the family man.  The second provides evidence for the man who needs some proof.

At the time of the campaign launch, according to the Toronto Star, 80% of Canadian men did not feel that they were accurately portrayed in the media or in advertising, rejecting advertising that portrays the ideal man as �rich, implausibly handsome and aggressively ambitious � irresistible ladies' men driving luxurious sports cars.� Apparently real Canadian men are more inclined to value their personality and sense of humour over money and possessions!

According to Rosalyn Breedy, managing partner of Breedy Henderson Solicitors, in contrast, there is very little research available regarding the specific requirements of ultra-high-net-worth women and therefore an inadequate understanding amongst traditional wealth managers.

Last year one fascinating report was published by The Boston Consulting group entitled �Leveling the Playing field � Upgrading the Wealth Management Experience for Women�. This survey of 500 women revealed that �many wealth managers either overlook women as a discreet and important group or else use superficial strategies to reach them�.  Financial products and promotions labeled as �for women� were seen as �patronizing or contrived� and often alienate the clients that they are meant to attract.

Rosalyn Breedy has advised very wealthy women (and men) for 8 years and draws on her experience to highlight some of the ways in which the wealth management industry needs to adapt in order to really meet the needs of a client group which can no longer be ignored.

Background trends

It is worth considering why the number of wealthy women has grown to represent such a sizeable proportion of the market in such a short period of time.  There are a number of trends which account for this.

Historically, there were always heiresses, usually inheriting only because of the absence of a male heir.  More recently, a more equal approach has been taken to passing on family wealth and daughters are now as likely to inherit a share as their male siblings, and may be just as likely to want to take an active role in any family business.

The post-war generation of predominantly male entrepreneurs is currently entering old age and with women typically outliving their husbands, the industrial wealth generated after the second world war is falling into the hands of elderly widows.

The incidence of divorce amongst couples in their fifties and sixties continues to grow as they anticipate a longer, healthier and more attractive retirement.  It is no longer just a case of the cliched succesful older man trading in his wife for a younger model.  Women of a certain age are reportedly less inclined to settle for second best and leave whilst they believe they still have time to start another life with someone new.  After a long and wealthy marriage, women can usually be assured of a generous divorce settlement that will keep them in the style to which they have long been accustomed.

The final reason is the growth in the number of female entrepreneurs.  According to �A Global Perspective on Entrepreneurship in 2010�, published by Global Entrepreneurship Monitor  which researches 56 countries, many countries now have similar levels of entrepreneurship between men and women.  The highest ratios of female participation in Western Europe are in Belgium and Switzerland, with ratios around 80 to 100. The United States and Russia also have many women entrepreneurs, with a ratios of about 85 to 100 in the USA and 80 to 100 in Russia.  Latin American countries tend toward higher levels of participation, with Costa Rica and Mexico reporting almost equal participation by gender.

Understanding your clients

The point of entry to wealth is key to understanding the client and their needs.  

A woman who has accumulated her wealth through her own successful business skills will have different needs to the lady who acquires independent wealth suddenly due to a death or divorce.   It is likely that she will already have a team of professional advisers that she can turn to for advice or a referral to another trusted advisor.

In the case of death and divorce, these are likely to be �high impact� potentially distressing situations and emotional support may also be required.  It is important not to make assumptions regarding the financial astuteness of the widow or divorcee.  Whilst it is not uncommon to hear of wives who have never had to bother with the finances, it is now just as likely that she was an active shareholder in the business.

What investment characteristics does your client portray?  In the same way that Canadian men do not wish to be portrayed as �rich, implausibly handsome and aggressively ambitious � irresistible ladies' men�, women do not want to be stereotyped as conservative investors without an appetite for risk.

Is she an Accumulator � interested in growing assets?  Or is she a Steward - more interested in protecting her wealth. She could be a Mogul and likes to keep costs low and maintain control over the assets and family.  If she is an Innovator she may be less worried about costs and tend not to focus on the next generation.

What sort of philanthropic goals does your client have and how do these need to be structured?   

Are there cultural factors that you need to consider and cater for, such as the women-only banks opened by Kuwait Finance House.

The demographic is for women to live longer and so they may need to generate an income for a longer time frame.

Restructure the service offering

There is a real mismatch between the way the wealth management industry is structured and the way that women (and probably men too) would prefer to receive advice.

No-one who purchases an iPhone has to worry about whether it will be compatible with their current telephony or internet provider, they have no need to understand how the telephony business model works.  The technology sector has worked together to provide its consumers with a relatively seamless experience.

Compare this to the professional advisory business, where each professional operates in his or her unique specialist silo and is reluctant to stray outside their core area of expertise.  Take for example a business woman who is getting divorced from a fellow director and shareholder, she will need advice from:

  • Lawyers for the divorce, sale of shares, employment issues
  • Accountant for the company valuation
  • Property surveyor
  • Tax adviser
  • Pensions actuary
  • Independent financial adviser.
  • Investment manager
  • Bank

Each adviser will have a different regulatory framework and is likely to charge on a different basis: hours billed, fixed fee, percentage of funds managed. Some pay or receive commissions. Some advisers are tied, some are independent.

Following a death or divorce, at a time in her life when she really needs clear guidance and support, the wealthy female client is likely to encounter a highly fragmented uncoordinated response from the wealth management industry. 

Despite the fact that all these professions are regulated (albeit differently) who can she really trust as her adviser? 

Frankly, these problems are just the same for wealthy men, and any improvement prompted by female clients would improve the service for the whole marketplace.

As one lady remarked recently, �Good advice is appreciated by all your clients, male and female. The only real difference for women is that they probably don�t have a wife that they can use for tax planning purposes!�

What can be done?

According to Rosalyn Breedy, there are four areas with scope for improvement:

Better and more frequent research into the number and profile of ultra-high-net-worth women and their needs, including analysis of international trends.

An holistic approach to providing integrated advice.  Advisers need to be more like doctors who take responsibility for the whole patient and use their professional skill, knowledge and contacts to ensure that the needs of their patient are met.

Alignment of interests, transparency of information, educating the client enough so as to enable them to have real understanding and control,  clarity of costs and common charging structures.

The industry needs to properly recognize and value the role of the �trusted adviser� . The first stage is to identify the competencies and attributes required and the second is to provide proper multi-disciplinary training and mentoring for those professionals who aspire to the role. These are the professionals who will lead in the delivery of an integrated service calling upon functional experts and other service providers as and when required ensuring that all stakeholders work effectively together.

It is important to note that there is no �one-size fits all� solution to providing advice to ultra-high-net-worth women, but there is certainly scope for eliminating some of the current areas of dissatisfaction.