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As has been widely documented, men and women approach investing differently and that extends well beyond simple asset allocation and risk tolerance.
An obvious result of those differences is that advisors cannot employee one-size-fits-all approaches when it comes to portfolio construction for female and male clients. Likewise, an increasing amount of data and research suggest that when it comes to wealth and estate planning and related issues, women have different objectives than men.
Numerous reasons explains why the mainstream financial media and the financial services industry itself are placing added emphasis on advisors better engaging female clients. There's the obvious of women overlooked for far too long in the advisory business, but there's more to the story. Some of the “more” includes women’s differing views on subjects such as legacy goals, succession planning, how they want wealth to be passed on and values-based estate planning.
A new study from UBS details some of the estate and wealth planning concepts advisors need to be aware when working with women.
Examining What Wealth, Legacy Mean to Women
As UBS notes, women view money and wealth as sources of security. That’s not surprising and a case can be made plenty of men feel the same, but the departures between the two sexes are more pronounced when examining legacy and estate planning. Put simply, women view building a legacy as much more than simply bequeathing assets to their heirs.
“There is a tendency for women to invest with purpose, where purpose represents both their goals as well as their values and impact on society,” according to UBS. “For example, they may want to help finance the next generation’s business ventures, or provide for a first family home. They may also have a passion for a certain cause and would like to use their wealth to make a difference but may not know whether such goals conflict with their objective of passing on wealth to the next generation. A personalized plan would help better understand and meet these objectives.”
That highlights substantial opportunity to better engage female clients and the data highlight that point. For example, 56% of women polled by UBS don’t know how much wealth they can leave to the next generation and 59% believe having a professional helping them make such decisions would be beneficial.
Further highlighting the opportunity set for advisors looking to bolster relationships with female clients, 55% of those surveyed intended to leave inheritances to heirs, but haven’t established solid plans to that effect. On a directly related note, 37% of women queried by UBS do not understand how the “death tax” works and it affects their beneficiaries.
With Female Clients, Values Matter
Another area where advisors can better connect with women is acknowledging values-based legacy planning. No, that doesn’t imply substantial allocations to environmental, social and governance (ESG) strategies, though that can be part of the conversation.
“Sustainability-focused advice and offerings can drive positive impact not only by encouraging more women to invest, but also through certain underlying investments’ ability to contribute to positive social or environmental progress. The UBS Investor Sentiment survey highlights that more women (71%) take into account sustainable considerations when investing compared to men (58%),” adds the bank.
Arguably, the more important takeaways are that seven in 10 women boosted charitable giving over the past two years while nine in 10 want to do more to create positive social change.
The point: Advisors need to acknowledge women’s unique wealth and estate planning objectives. Doing so can pave the way to improved, longer-lasting relationships with female clients and their children.