CORRECTING WEALTH’S GENDER GAP

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Last week, Forbes’ list of The World’s Highest-Paid Actors and Actresses 2016 highlighted the extent of the acting industry’s gender pay gap. Over a 12-month period, the 10 best paid actors made 2.2 times more than the highest paid actresses. If you have ever seen any films starring Dwayne “The Rock” Johnson, you will surely agree that it is astonishing that he earned USD64.5 million last year, while Oscar-winner Jennifer Lawrence earned just USD46 million.

Like Hollywood, the wealth management industry has work to do when it comes to gender equality. Professionally, women are underrepresented in the advisor community, with just 14% of the total advisor and broker headcount reportedly female. From a client relationship standpoint, efforts to understand the differences between male and female clients have also been relatively limited; the incorrect assumptions being that men are primary financial decision-makers and women’s principal wealth accumulation opportunity is as inheritors.

Several leading firms have been making efforts to correct the imbalance by creating opportunities to engage with the female audience. For example, HSBC Private Bank held a Women’s Forum and Business Breakfast for female entrepreneurs. Similarly, BNP Paribas Wealth Management launched a ‘Women Entrepreneur Program’ at Stanford Graduate School of Business, aimed at cultivating leadership and providing mentoring to women in business.

The lack of focus on women as a client segment is surprising, not only because wealth accumulation among females is increasing at rapid pace, but also, as our research shows, because women tend to be more engaged as wealth management clients.

Our insight work with FactSet on wealth management culture reveals that focusing on women can pay off.

Female clients are more likely to opt for discretionary relationships, with one in four women choosing to delegate compared to one in five men. Women also tend to place a higher proportion of their assets with their primary wealth management firm (58% compared to 54% among women) and are more satisfied across the various aspects of their wealth management relationships [Figure 1].

Figure 1: On a scale of 0-10, how well is your primary wealth manager performing in each of these areas?

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But it is certainly not time to get complacent. As my colleague Ruohan explored a few weeks ago, women have very different priorities to men when it comes to their family wealth and philanthropy which require more focus from their financial advisors.

Our latest FactSet research also indicates that responsibility is at the core of their assessment of a wealth manager’s culture. Female clients, for example, look for broader markers such as transparency in investment process, customer feedback and sustainable investing while men tend to believe that transparency in business performance is the overriding indicator of credibility.

Figure 2: Do you look for any of these evidence points to determine whether your wealth management firm is a responsible organisation?

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While it appears women make for happier, more engaged clients, wealth managers will need to be more mindful of the nuances between female wealth creators and their male counterparts if they are to achieve success with this segment. Women certainly have high expectations for their future financial relationships and firms will need to up the ante around responsibility to gain traction.

News from the world of wealth:

US$200B in global wealth management revenue at stake as client expectations shift – [Yahoo! Finance]

How much do you really pay your money manager? – [FT]

How the super-rich are making their homes ‘invisible’ – [FT]

Fitch Takes Rating Actions on Costa Rican Private Banks Following Peer Review – [Reuters]

Octopus launches ‘lab’ for fintech start-ups – [Citywire.co.uk]

 Thought of the week:

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” – Ayn Rand

 Coming events in the world of wealth:

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Valeriya Semenova Scorpio PartnershipAuthor: Valeriya Semenova, Senior Analyst at Scorpio Partnership.

Expertise: Val’s primary focus is data analytics and client insight. Engaged in client experience programs – globally and on a regional UK PCIMs market. In addition to project work Val oversees a Client Engagement Score database, as well as Global Private Banking Benchmark report.

Background: Val holds a MSc Global Banking and Finance degree from Regent’s University London as well as BSc Economics and Finance from London School of Economics and BSc Economics from Higher School of Economics (Moscow).

 

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