Building a wealth proposition around women

Women create, control and influence a massive amount of wealth, as their economic power and financial independence rapidly increases. Women’s wealth represents 30 per cent of global wealth, and is expected to grow seven per cent faster than men over the next five years, reaching $18tn by 2021. 

Yet women remain an underserved and undervalued segment of the wealth management market. Various studies show female investors tend to view the financial industry as male oriented and unwelcoming, which leads them to rely on an informal network of advice, such as friends and family. Only 10 per cent of female wealth management clients use their relationship manager as their primary source of investment advice, according to BCG.

They are also more likely to switch advisers, perceived as unable to understand their long-term objectives and empathise with their lifestyle. 

“What really distinguishes a good versus a bad client experience for women is a deep understanding of their investment goals,” says Alex Birkin, Global Wealth and Asset Management advisory leader at consultancy firm EY. “A private banker or wealth manager needs to not only understand clients but also be able to communicate that understanding.” More training in this area is needed, and it is even more important when it comes to female clients, he adds.

While everybody is unique, there are certainly key common traits and characteristics which distinguish women investors as a different cohort. Yet, wealth managers regard gender as the least important factor when considering client segmentation (see Fig 1). 

“The financial services industry is still predominantly male driven, and has historically approached clients more from the product perspective,” states Olga Miler, managing director at UBS Wealth Management, the world’s largest private bank. “But women want to be served with a different approach, which should be centred around goals, lifetime aspirations, family and legacy rather than financial products,” she says. 

As a result, client advisers have not developed the right level of connection or trust with female clients, and women do not engage with the industry as much as they could. More than 50 per cent (53 per cent) of HNW women globally do not have a financial adviser, according to the Centre for Talent Innovation.

To address this gap, following major client research, early this year UBS launched a five-year global programme, called Unique, of which Ms Miler is co-founder and architect – which aims at refocusing its advisory services to serve women better.

“We thought that pink products or creating a different department for advising women were not going to fix this issue. We decided instead to embark on a journey of change, by reviewing our current practice top to bottom,” she says.

Far from being a cosmetic exercise, the change plan ranges from training advisers to reviewing the gender policy of its suppliers. An advisory board – comprising business leaders, entrepreneurs and philanthropists, including Maria Sharapova, the controversial tennis player who is also an entrepreneur and investor – works closely with UBS’ senior wealth management executives on the programme. 

And some results have already been achieved. The bank has replaced stock photos of women it used in marketing material with images that better portray modern women, banned male-only panels, reached better gender balance in the bank’s investment committee and introduced a rule that any UBS event should have a woman as a co-host, if not a host. 

The institution, which has also launched a “giant IT project” to improve data mining to better understand female preferences, aims to generate “significant revenue growth” over the next few years by increasing the number of female clients it advises.

“Women experience wealth differently, their focus isn’t purely on the investment portfolio, they are looking for a more empathetic approach, for a trusted partner,” says Jennifer Lemieux, co-chair of RBC Wealth Management Canada’s Women Advisory Board. “Empathy matters, trust matters and education matters.” That the majority of women are dissatisfied with advisers is an “incredible growth opportunity” for the business, she says. 

“Also, women are phenomenal clients to have, as we are three times more likely to refer than our male clients. We are story tellers, we do have that sisterhood feeling and we are always looking to support and champion people that we feel have done well by us.” 

The Canadian bank is currently rolling out an education programme for its advisers on a national scale, aimed at creating a client relationship that is “holistic, and makes clients feel understood, valued and respected”. 

Historically, wealth managers and private banks have not done a very good job at engaging effectively with their female clients and getting to know them, states Annamaria Koerling, partner at Owl Private Office. “I have seen it so often that when a husband and wife come in for a meeting and if for instance the conversation is dominated by the man, the adviser engages with the man but not with the woman,” says Ms Koerling. 

But smart private bankers need to understand that 50 per cent of marriages end in divorce and women tend to live longer than men, so wives are likely to outlive their husbands. Most women at some point in their lives will end up being in control of the assets. 

Yet, research indicates that 70 per cent of women change advisers within one year of their partner passing away. “It is very important to make sure that wealth managers engage with all their clients and get to know them individually, to then design the strategy that work for them,” says Ms Koerling.

Thus, addressing unconscious biases is crucial when training advisers. 

“I think the most important part of serving women, or really any client well, is putting our own assumptions or biases in check, acknowledging we have them and trying to be much more intentional about our language and communication style, as we relate to the client in front of us,” says Adrienne M. Penta, senior vice president private banking, Centre for Women & Wealth at Brown Brothers Harriman in the US. The centre, run by a dedicated team of four, was set up in 2015 to increase the engagement of female clients and attract new ones. 

Although there is no evidence emerging from research suggesting that women prefer to liaise with female advisers, “hiring more women as advisers is part of the solution, because having more diversity of background and experience allows us to serve a wider range of clients better,” says Ms Penta. That is a stumbling block for the financial services industry which has been historically dominated by men, and still is. In the US, the large majority of financial advisers (80 per cent) are men.

Thus, many banks across geographies, including Citi, RBC, BBH and UBS are making huge efforts to hire women both as advisers and at senior management level, to create an environment supportive of women, while committing to fostering a diverse and inclusive culture. And such values must be instilled from the top management. 

“My responsibility is to facilitate access of skilled women to key leadership roles within the bank,” says Paolo Molesini, CEO of Fideuram-Intesa Sanpaolo Private Banking, the largest private bank in Italy, pointing out that crucial positions within the firm are already covered by women. 

“But I don’t believe in the extreme clustering of the female segment, which risks falling into the ‘politically correct’, or so-called ‘pink’ quotas,” he adds.

Having a numerous and growing network of female private bankers represents a key success factor to target this client segment, states Mr Molesini. “Often women are more inclined to listen, and therefore are very successful in these roles.” 

Also, women private bankers generally have a higher number of female investors in their client portfolio, perhaps because of “symbiosis and language communion”, he notes. And they often manage “larger than average client portfolios which generate excellent commercial performance”. This is testament to their competence but also competitive spirit, often wrongly associated with men only.

“Women will be central to the development and growth of our business,” believes Mr Molesini.

Events and training

Engaging female clients through dedicated events and training courses has proved successful for many institutions. 

Although women entrepreneurs outperform their male peers in terms of personal net worth, according to the latest report from BNP Paribas Wealth Management, there is a clear need to better train women entrepreneurs and improve their networking opportunities, explains Sophia Merlo, co-CEO at the French institution. 

“Women entrepreneurs tend to develop their business on their own, and are more sceptical about borrowing money, leveraging their assets or launching IPOs, unlike their male counterparts,” says Ms Merlo. To address this gap, three years ago the bank launched a training programme on ‘leadership and accelerating business’ at Stanford Graduate Business School. This is offered each year to 40 women entrepreneurs, selected across the bank’s networks of 12 countries, with the requisites of being leaders of growing companies with international appeal. 

“We want to support women entrepreneurs to grow their businesses faster,” she says. If their business grows, it benefits both the entrepreneur and the bank. 

This initiative also aims at fostering networking opportunities among women, and has led participants to go into business together. 

Standard Bank Wealth and Investment runs a Wealth Academy for women across all the jurisdictions in which it operates, with training focused on topics including money mastering, investing and raising a financial effective family, as well as philanthropy. 

“We want to empower women to make financial decisions, to create enough wealth for themselves and make sure their specific needs are addressed,” says Sanah Gumede, head of Wealth Management at the South African institution. “We have fascinating conversations with them about how to raise financially responsible children, as most women are concerned about the financial independence and wellbeing of their children,” she says. 

The institution also runs academies for their clients’ children and ‘future leaders’. 

Private banks are also realising that corporate events have traditionally addressed male preferences and are now making amends. 

“In my experience, women enjoy networking, and they do it well. In the private banking world, however, hospitality events are primarily focused on traditionally male pursuits, such as shooting, racing, fishing or golf,” says Camilla Stowell, head of Wealth & Investment Management, Coutts International and Private Office Coutts. While there are women who enjoy those sports, they often have other passions and enjoy having the opportunity to bring a friend or family member along to events, she explains. 

“The popularity and great success of the luxury, fashion and jewellery events that we have hosted this year at Coutts has been overwhelming in terms of engaging female clients with whom we may not have met with previously.”

Also, banks generally hold client events either at lunch time or in the evenings, notes Owl’s Ms Koerling, times least favoured by women. Research carried out at Hoare & Co, her previous employer, shows that most prefer a late breakfast session, which better fits their schedule when running a business and/or a family. 

And women-only clients feel special. “There is something really unique about having only women in a room, as they think they can be more frank and open, and there is a level of trust and kinship that is established more quickly,” says BBH’s Ms Penta, whose team hosted 20 events this year, many of them focused on women business owners and entrepreneurs, but also targeting a cross section and diversity of them. 

The team also publishes a quarterly magazine called Women & Wealth, focused on the “intersections of family wealth and values”.

Significant prize 

In this race to capture the growing wealth of this underserved client segment, there are already some players claiming to benefit from the first mover advantage. 

In France, Pictet Wealth Management launched a specific programme for women called “Pictet & Les Femmes” 10 years ago, ahead of any other competitors in the country, claims Dominique Benoit, head of the firm’s French private banking operation.

“At the time, many of my friends were getting divorced and I saw wealth changing hands.” He organised in-depth qualitative interviews and focus groups with women across all ages, set up dedicated meetings with women and private bankers and arranged for tailored information to be delivered to female clients. This contributed to rise the share of wealth held by women at the bank to 20 per cent today, which is higher than any other competitors in the country, claims Mr Benoit. 

“French banks have copied us, but we have the advantage of being the first,” he says, and is looking to further increase the share of female wealth.

“Gender should not be taken in isolation but private banks should be much more sophisticated in the segmentation of the client base and use data mining to truly understand customer preferences and experiences, and which cohort they exist in, and therefore trying to extrapolate and anticipate their needs,” says EY’s Mr Birkin. 

There is an untapped opportunity for private banks to tailor their message, services and products to women, and there are two components to growing the business, he says. One is the growing asset pool, as the wealth created and controlled by women is increasing, the second is taking market share, as women are more likely to switch, and can consolidate more assets with their wealth manager. “If private banks get this right, the prize is significant.”