Alienating women could cost financial industry $700bn a year

Traditional gender stereotypes are being smashed by a generation of women who control more assets than ever before – and yet feel let down by the industry. Charlie Corbett spoke to Lindsey Larrabee, Templar Advisors’ lead for Financial Psychology and Behavioral Finance, about why the industry struggles to engage female clients, and what more can be done to win respect – and investment – from women.

The evidence is clear. Women control more of the world’s financial assets than ever before. And their influence is only going to grow. Not just as private investors, but on the institutional side too.

By 2030, according to McKinsey & Co, women in the United States are expected to control much of the $30 trillion in financial assets owned by baby boomers. This is a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States, the consultancy says. It’s the same story in the UK. According to the Centre for Economics and

Business Research, by 2025, 60% of Britain’s wealth will be in the hands of women. Similarly, on the institutional side, more and more women have control over investment decisions. Almost 10% of chief investment officers are women, according to a survey of 29 global markets by Alpha Architect, but that number – and the amount of women serving on investment committees – is only going to grow.


Communication breakdown

And yet despite the scale of the opportunity, the financial industry is still failing to get to grips with how to engage female clients. A recent survey from WealthiHer and Tilney, a group that supports female investors, showed that a staggering


72% of women feel that they are not understood by the financial services industry, and the same percentage believes that biases against women remain.


But just why is it that the industry consistently struggles to win over such a hugely important and influential section of the population? According to Lindsey Larrabee, Templar Advisors’ lead for Financial Psychology and Behavioral Finance, outdated stereotypes remain embedded in the industry psyche.

“Throughout my career I’ve built and managed relationships across every channel. I’ve worked at and with the largest global financial organizations. I’ve been the seller, the buyer, and now the coach, and I’ve have had a seat at every angle of the table,” she says.


“And yet despite my experience, I’ve lost count of how many times I’ve been presumptively mistaken for and treated as ‘the junior’ or ‘assistant’ or ‘non-decision-maker’ in the room, just because a male colleague is in the room with me.”


Expensive bias

Many women who work in financial services say they have had similar experiences. And while 20 or 30 years ago this attitude might not have carried much consequence, today, alienating women with conscious and unconscious bias could be a very expensive mistake. According to consultant Oliver Wyman, a failure to engage women could lose the financial industry up to $700bn in revenue a year.

Financial professionals who want to win over female investors, says Larrabee, need to reframe their approach to engaging women and equip themselves with new skillsets to avoid the most common pitfalls. And this advice is not just confined to men. “Recent research finds that despite the best of intentions, both men and women make many mild, but frequent, stereotypical miscues in investor meetings,” she says.


Listening to understand

The most important change people can make when trying to engage women is to listen, and ensure they feel understood. “It sounds like such an obvious thing to say, but it’s amazing how many advisers walk into the room pushing their own agenda, and either start selling products straight away, or flexing their credentials,” says Larrabee.

Research from Merrill Lynch has highlighted some of the many ‘social miscues’ financial advisors make when meeting with women. These include assuming the man is the decision maker, assuming that a couple’s finances are jointly invested, and assuming that women are less knowledgeable about investing than men.

Quite apart from the direct offence such miscues can cause, all the evidence shows that women react far more positively to people who seek to understand their aims and take a thoughtful and collaborative approach to reaching them.

In addition, for men, attitudes to investing have been found to be more competitive, whereas women see investment more as a life skill. People also pander to outdated myths such as ‘women are more risk averse’. “Women want to be more aware of the risks than men, but that doesn’t make them more risk averse,” Larrabee says.


EQ is sales IQ

“At Templar we coach people to be emotionally intelligent, using practices drawn from the field of financial psychology. Techniques like active listening, visibly demonstrating understanding, and ‘listening between the lines’ can make a big difference to outcomes.”

Larrabee says that she helps people build awareness of verbal and non-verbal cues. “Words only make up 7 percent of the message, the rest is in our body language and various sensory cues than many increasingly ignore,” she says.

“We teach people to notice these ‘micro-expressions’ and teach them how to respond.”

But these lessons don’t just apply to women. Many of them are universal principles of persuasive communication.

“Let’s be clear, the call to action here is not about treating or communicating differently, just because it’s a woman you are talking to. Rather, it’s about building our abilities in overall emotional intelligence and subconscious communication, so that we can be more present and engaging across all audiences,” Larrabee says.

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