Mary Quist-Newins, MBA, MSFS, CFP®, CLU®, ChFC®
Women, Money and Financial Services – The Big Disconnect
The role of the highly competent and ethical financial planner has never been more important, nor as complex. Trustworthy financial education and planning are life-changing differentiators on the path to economic security for women, and those who count on them.
Financial advisors can be the critical, and often missing link in delivering trustworthy education that enhances financial well-being and client confidence. Yet women are often disconnected from financial services -- the very industry that is best positioned to help.
Since women experience longevity, lower lifetime earnings, caregiving, disabilities, singlehood, and poverty at higher rates than do men, comprehensive financial planning is especially important for their economic security.
At the same time, female affluence is growing rapidly. It is estimated that women control roughly $11 TRILLION – or one-third of the nation’s privately-held wealth. Growing affluence is fueled not only by the “traditional means” of asset accumulation by women (i.e., marriage and inheritance), but also through strides being made in education, entrepreneurship, and executive roles.
These dual aspects of female wealth and poverty are often under-acknowledged, overlooked, and unaddressed by the financial services industry. More than ever before, women present new financial planning, asset management, preservation, tax, and legal opportunities for those that advise them.
…"An unprecedented amount of assets will shift into the hands of US women over the next three to five years, representing a $30 trillion opportunity by the end of the decade"…
¹
As such, thought leaders in financial services, advisory practices, and academics consider the “women’s market” to be one of the most significant revenue prospects for the years to come. That’s the good news, HOWEVER, the industry hasn’t reconciled the persistent and yawning chasm between the “women’s market opportunity” and its current state. The challenges discussed below have been around for decades with minimal progress, at best.
This needs to change.
Women and the Financial Services Industry
Research reveals that majorities of women (both as consumers and as advisors) feel put off by so-called “financial planning,” and the financial services industry. The all-too-common opacity, sales pitch masquerading as “education,” and gender-biased “advice” are frequently at odds with their best interests. As a result, most cite dissatisfaction with both service and products associated with investments and insurance.
Satisfaction with Financial Products and Services Is Low
²
Women also cite feeling disregarded by financial advisors. According to a vast study by the Boston Consulting Group, the financial services industry was the worst-rated out of 33 consumer product and services categories (including car dealers) in terms of how women feel they are treated. Recent research by NY Life Investments Group sheds additional light on the perceptions of women regarding financial advisors, as reflected below.
Women Often Feel Disconnected from Financial Advisors
³
Then, there are the legions of financial agents, brokers, representatives, and journalists who despite even the best intentions, fall short. Many do not know what they need to know about differing financial needs, preferences, and risk exposures that women often present. They also fail to recognize the inherent strengths that females possess and how to leverage them to improve outcomes. As a result, financial advisors run the risk of breaching their fiduciary duties with female clients. If interests aren't fully understood, how can they best be served?
It is essential that industry leaders recognize and address the significant challenges, risks, and market opportunities, that their female consumers present. Failing to do so will further erode customer satisfaction, retention, profitability, and market share. When 90% of C-Suites in financial services are occupied by men ⁴, company culture and strategy cannot help but be biased, no matter how well-intentioned. We all have biases as part of our basic human nature. The problem is when they are unconscious biases that are potentially damaging to others. For example, according to research by the Boston Consulting Group:
…"One of the study’s key findings is that most decision-makers in financial services institutions (overwhelmingly white heterosexual men aged 45 or older) underestimate the obstacles that women face."…
⁵
Compounding these challenges is the overwhelming “noise” generated by financial services advertising, marketing, and sales campaigns passed along as “financial education.” Much is nothing more than an elaborate sales pitch. Consumers are frequently overwhelmed and confused by an onslaught of often-contradictory, over-simplified and product-oriented information. According to the Consumer Financial Protection Bureau (CFPB), financial marketing dollars outstrip those for financial education by about 95%. Think about that for a moment.
Financial Marketing
OUTSPENDS
0 : 1
⁶
Financial Education
This lack of financial education is widespread and dangerous. Studies reveal that majorities of American men and women fail even basic financial literacy quizzes. Sadly, women often fare far worse than do men, and their gaps in financial education and confidence run across ALL income, asset, and generational levels. Since females are more vulnerable to certain life perils (e.g., longevity, lifetime underearning, time poverty, singlehood, caregiving, etc.), low financial literacy is itself a pernicious peril.
It doesn’t have to be this way.
Closing the Gaps through Financial Literacy and Community
Women and men who care about them, need to work together to effect necessary change for this generation and those that follow. Access to unbiased trustworthy financial education for women needs to be increased. Financial, tax, and legal advisors can grow in awareness and skill to educate and better address the economic needs of women. Senior and C-Suite leadership in the financial services industry can be stirred by not only a large and growing market opportunity, but also be compelled to help women at risk of impoverishment. Together, we can be the critical links to female financial security through financial education that inspires sound decisions, purposeful action, and philanthropy.
Moneyweave® Academy is committed to helping change the landscape of financial education for women and a brighter future. As a nonprofit 501(c)(3) organization, we are driven by purpose:
- Our vision is to enhance the financial literacy and thus, the economic security of American women and girls.
- Our mission is to deliver trustworthy, competent, and holistic financial planning education that inspires sound decisions, purposeful action, and philanthropy.
We’re on the move and growing fast! Please consider helping us build our beneficial impact by joining the ranks of our Qualified and Board Certified Experts, serving on the Board or in a committee, attending classes, donations, sponsorship, and/or strategic partnerships. Your support makes a meaningful difference. Join us
For more information about us and how you can get involved, visit Moneyweave® Academy.
Also check out our newest online class for Qualified Experts on February 17th: Financial Literacy for Women: A Toolbox for Financial Practitioners with the author, professor, industry leader, behavioral finance expert, and Moneyweave® Academy Director, Dr. Daralee Barbera, EdD, MS, CFP®, ChFC®.
About the author, Mary Quist-Newins, MBA, MSFS, CFP®, CLU®, ChFC®, Founder, Executive Director and Chair, Moneyweave® Academy
Copyright© Mary Quist-Newins
Sources:
- Women As the Next Wave of Growth in Financial Services, July 29, 2020, https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management
- Women Want More in Financial Services, Boston Consulting Group, 2009, Silverstein, https://affq.org/pdf/bcg_report_women_want_more_in_financial_services.pdf
- Women Feel Ignored by Advisors, Forbes, R. J. Shook, August 7,2020 https://www.forbes.com/sites/rjshook/2020/08/07/woman-feel-ignored-by-advisors-study-says/?sh=2da9e11b7817 (Study from NY Life, Janice Tarsney, NY Life Investments, qualitative (focus groups) and quantitative study (800 respondents aged 25 – 65 nationally.)
- Women in Financial Services, C-Suite Grew by 10%, Norton, March 11, 2021, Barrons, https://www.barrons.com/articles/women-in-financial-services-c-suite-rose-10-in-past-five-years-51615480290
- Managing the Next Decade of Women's Wealth, Apr, 2020, Boston Consulting Group. https://image-src.bcg.com/Images/BCG-Managing-the-Next-Decade-of-Womens-Wealth-Apr-2020_tcm9-243208.pdf
- “The CFPB Finds Financial Education Programs are Significantly Outspent by Financial Marketing,” Consumer Financial Protection Bureau, Nov. 18, 2013
