Why Women Don’t Trust Financial Advisors

Women have money. The investment industry wants it. Too bad they don’t talk the same language.

You’d think the investment industry would have figured out by now how to market to women. It goes like this:

  • Listen
  • Reflect
  • Confirm
  • Repeat

Why is it so hard for financial advisors do this? From independent financial planners to stockbrokers, insurance agents and other commission-driven salespeople rechristening themselves as financial advisors, the entire investment industry continues to circle the huge women’s market. But like the AV club at the prom, they can’t quite figure out how to get a girl to dance.

A MetLife study found at the nonprofit  Women’s Institute for A Secure Retirement found that financial advisors can’t even hit the halfway mark with women executives — women whose earnings of at least $75,000 annually, and whose professional standing make them the most likely to hire a money manager to help them achieve their financial goals.  Yet:

  • 43% of the executive women currently work with a financial advisor
  • 61% cite trust and respect as the most important factor in choosing and keeping and advisor
  • 54% cite fees as a key factor
  • 50% cite focusing on their goals
  • 77% insist on meeting an advisor in person before committing to the relationship

 Once women get in bed, so to speak, with an investment advisor, they expect a long and mutually satisfying relationship. Mintel just released a survey that found that 39% of women rely on their investment advisors for primary advice about investments, compared to 27% of men. Mintel’s conclusion is that for women, personal interaction catalyzes investment decisions.

Just like men, women want to maximize returns. But they also want to understand how those returns will be maximized. Women tend to put a priority on investments that balance returns with the social good. Women care about factors like those analyzed by Calvert Investments, such as its analysis that found that 37% of the S&P 100 companies don’t disclose any demographic information about their employee population.

Women want advice. Investment advisors want clients. So why are these two groups having so many problems finding each other?

Because there aren’t enough women advisors to make the entire industry more welcoming to women clients. The most recent — 2007, unfortunately — diversity report from the Securities Industry and Financial Markets Association found that women comprised:

  • 42% of securities industry employees
  • 31% of managers
  • 16% of brokers
  • 14.5% of managing directors
  • 54% of regional/branch managers (the lowest management rung)

Where women in securities have presence, they have no power. And in the power positions, they have no presence. Things aren’t much different in  insurance and for independent financial advisors. Until there are enough women to make a difference, women consumers will be skeptical of an industry that kisses up but never commits.

Image courtesy of Morguefile contributor gracey.

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  1. […] is the original post: Why Women Don't Trust Financial Advisors « Women Drivers Posted by admin at 3:19 pm Tagged with: commission, entire, insurance-agents, […]



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