Women as a growing key client group in wealth management: 8 strategic recommendations

Introduction

Wealth managers and private bankers are aware that women will soon become one of the most important, if not the most crucial, key private client groups. The question is whether incumbents are prepared for this transition from both a business and organisational perspective.

A paradigm shift

• There is a diverse female client segment composed of career women, businesswomen, entrepreneurs, widows, retirees, and divorcees.
• Women often outlive their partners.
• The population of wealthy widows is rapidly increasing.
• Most investable assets and wealth are expected to fall under the control of women in the mid-term.
• Younger generations of women show different types of needs and preferences, related notably to digital solutions and interactions.

These trends indicate a significant paradigm shift in the financial industry. Financial advisors must recognise the unique needs of this growing segment to cater to its financial goals effectively.

Challenges for wealth managers and private bankers

• A holistic strategy targeting wealthy female clients is often missing or underdeveloped.
• There are limited business approaches for attracting, servicing, and retaining female clients.
• The industry is largely represented by male advisors, with female relationship managers being underrepresented.
• There are increasing risks of lost revenues and opportunity costs in the ongoing context of the paradigm shift.

These challenges pose significant obstacles for wealth managers and private bankers in catering to the needs of their female clients. Addressing these challenges is crucial to ensure the retention of existing clients and the acquisition of new ones in this growing segment.

Influential factors to consider with the female client group

• Women and men have different investment styles, with confidence being a key differentiating factor.
• Studies have shown that women are typically more risk-averse than men.
• Women tend to prioritise capital preservation over appreciation objectives and lifestyle motivations.
• Specific needs of female clients can be related to wealth protection, goal-based planning, inheritance tax optimisation, or support when facing divorce and widowhood situations.
• Female advisors with an intrinsic and natural understanding of specific women’s needs and behavioural characteristics can have a stronger resonance with female clients.

These influential factors highlight the importance of identifying the unique characteristics of female clients to provide tailored financial advice and solutions.

Recommendations for wealth management and private banking firms

1. Design a holistic strategy focused on acquiring and developing the female wealthy segment.

2. Recognise and address gender-based differences in investing and confidence.

3. Design a dedicated value proposition that is perfectly aligned with the specific needs and preferences of female clients.

4. Actively recruit, train and promote female advisors, leveraging their intrinsic resonance with the behavioural characteristics of target female clients.

5. Provide tailored financial advice to build brand loyalty and trust-based relationships with female clients.

6. Develop education and empowerment programs for both female employees and wealthy female clients.

7. Create an inclusive culture to retain female talent and, more broadly, prioritise female representation for diversity and inclusion.

8. And last but not least, implement digital solutions to better serve the more digitally-savvy younger female generations.

Conclusions

In this changing landscape, it is crucial for wealth management and private banking Executives to recognise the specific needs, concerns, and behavioural characteristics of female clients and adapt their activities accordingly.

To stay competitive in the long term, financial players must address in particular the digital needs of younger female generations, who have different expectations for wealth management services. Failing to do so can result in a loss of relevance, as younger generations become the primary wealth holders. Personalised digital experiences can help attract and retain younger women, and maintain a sustainable competitive advantage.

Wealth players will need to deeply rework their business model, value proposition, front office, service processes, and organisational set-up to succeed in this paradigm shift. Those who lag risk losing market share and experiencing declining profits with women.