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The rise of female wealth

Women are not only becoming more financially independent and savvy. They’re controlling more wealth than ever. But before wealth managers can win a share of this growing and lucrative market, they’ll need to win the hearts and minds of female customers. 

By 2025, women are expected to control over 60% of the UK’s wealth, according to the Centre for Economics and Business Research. In the younger generations, the distribution of wealth is more evenly split between men and women than ever before. Women are increasingly likely to earn top salaries or to be entrepreneurs.

But the real shift in wealth is happening in the older, richer generations. Since women have a tendency to outlive their partners, much of the wealth held by over 65s is either currently controlled by women or will be transferred to women in the next decade. 

What does this mean for wealth managers?

Currently, wealth management companies can still thrive while serving only men from the baby boomer generation. But over the next ten years, this will change. That client pool will grow smaller, with the pipeline of potential new clients looking very different. To adapt, there are two key issues that wealth managers need to address.

The first is the women who are soon to take sole control of the wealth they currently share with their husbands. According to research firm Spectrem Group, 20% of these women will switch financial adviser when they become widowed. Wealth managers need to understand the reasons that lead these clients to leave. 

The second is learning how to appeal to the next generation of female savers and investors. With younger women earning higher salaries, they are, by choice or necessity, making decisions about their finances that were denied previous generations.

Why do women leave their advisers?

Among the 1 in 5 women who change their adviser after the death of their husband, common complaints include being patronised or ignored by their previous adviser. Other reasons for switching include desiring a more personal relationship or looking for someone with a better understanding of their needs. And about those needs. Affluent women tend to be more risk-averse than men and focused on life goals over market-beating performance. From this, it’s clear that female clients are looking for a wealth manager that communicates relevance and understanding, as much as it shows financial expertise.

New money needs fresh thinking

The landscape of wealth creation and management is changing. As we’ve seen, the next generation of potential clients is shifting towards women. As with the older, newly-empowered generation of female investors, Millennial women want personalisation and ownership of their financial decisions. And, in common with Millennial men, they’re taking a greater interest in sustainability, ESG investing and financial inclusion. They’re also increasingly adopting DIY investment options such as fintech apps and cryptocurrencies, which are seen as more egalitarian than traditional investment choices.

Many banks and wealth managers are hiring more women to provide a more identifiable connection to the changing demographic of their client base. But change must run deeper. Solutions must evolve to meet different circumstances and life goals. And brands must transform too.

To bring in the new generation of clients, wealth managers need to move away from brands built purely on product and performance. Younger clients, women and men, expect good results. But they also expect more. Wealth managers must lead with emotion and connection. Savers and investors will be drawn to the brand that appeals to their hearts and minds as much as their pockets.

Facing up to the new reality

In 2017, UBS Wealth Management launched a project to be more relevant to women. They started by banning outdated and cliched pictures of women (invariably at the side of a successful man) from marketing materials, replacing them with images of modern females.

That was just the start and the way UBS engages their female audience is impressive. Because a commitment to better serving and communicating with women has to be more than skin deep. Firms need to rethink how they create value for their female clients, and realign their brands accordingly. 

They must develop powerful, relevant propositions and creative campaigns that engage women on emotional and rational levels. Backed by tailored educational content and tools that empower women to make the best decisions. It’s what we do at Arthur London. We’d be glad to help.

The face of wealth is changing. It’s time for wealth managers to change too.