Female investors feel misunderstood by advisers
The financial advice industry is yet to move beyond misperceptions and gender stereotypes when it comes to female investors, with 39 per cent of women still feeling misunderstood by the investment industry, a US study showed.
State Street Global Advisors' research paper, ‘Tracking the Alpha Female', revealed women who wanted more information and took more time to make investment decisions were perceived as indecisive and less confident.
Moreover, advisers assumed female investors preferred working with female advisers, with the paper stating that they were "missing the point of what female investors really want — an investment partner who demonstrates understanding and integrity, and can help guide her decision-making process".
Advisers must build trust and confidence by becoming their female investors' collaborative partner, rather than her commander.
The paper listed six techniques advisers could use to attract and retain female investors, and pointed out that the female investor was the ‘informed investor', and focused on achieving long-term goals, which meant that she took time to gather information, and consider opinions of those in her trusted network.
Almost half (45 per cent) of all female investors focused beyond a five-year time frame.
"However, this comprehensive process can become unproductive if it stalls with indecision. Help her gain the information she needs while being mindful of excessive rumination," the paper said.
Advisers should be aware of the different mindset to risk between men and women, and should help the female investor look at the downside risk of an investment option separately from overall volatility, which can hide outperformance.
"If she's holding an unsuitable amount of risk-free assets relative to her return expectations, help align her actual risk tolerance with her asset allocation. Illustrate the opportunity cost and inflation impact of holding too much cash," the paper said.
AUTHOR
Malavika Santhebennur
Recommended for you
Results are out for the latest sitting of the ASIC financial advice exam, with the pass rate falling for the second consecutive sitting.
Adviser losses for the end of June have come in 143 per cent higher than the same period last year, and bring the total June loss to over 350.
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
