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EXCLUSIVE REPORT: Women Gain Economic Ground, Wealth Managers Must Avoid Risk Assumptions

Tom Burroughes

2 January 2014

Women have gained ground on men in breaking into boardrooms, launching businesses and flexing investment muscles although the gap remains wide in parts of the world, according to a report by Wealthmonitor published exclusively by this news service.

Wealth managers must also avoid clichéd assumptions about how women are supposed to be more risk-averse than men, and ensure they do not fall into the trap of treating women as the same and overlook individual behaviours and needs, said the report, entitled Women and Wealth: Female Entrepreneurs, HNWI and How To Approach Them. The report draws on interviews from Anna Sofat, chief executive and founder of financial services boutique Addidi, and Afi Ofori, managing director of Zars Media, an event organiser and promoter of women in business.

The report notes that a “significant” rise in the number of women on company boards indicates that a big change in companies could be “imminent” even if gender-based quotas – a controversial issue – are not introduced.

A number of reports and studies in recent years have flagged the issue of whether there are more opportunities for women in the higher business echelons and whether their needs as investors and clients of wealth managers are fully appreciated. For example, Duncan Lawrie Private Bank, the UK boutique, has reported that there are considerably fewer female retail investors, compared to their male counterparts in the UK. With 8.4 million adult men in the UK investing, women come in far below with only 5.8 million women in the United Kingdom having an investment portfolio. In another study by Pershing, part of BNY Mellon, it was found that the number of female advisors is actually falling from its level of 30 per cent.

A mixed picture

The Wealthmonitor report, written by Christian Meyer, Wealthmonitor’s head of research, and Sabina Andersson, research analyst, noted a mixed bag of data. In some countries, such as Norway and Sweden, women account for more than a quarter of boardroom directors, but in other countries, such as Portugal and Austria, the representation is in single digits. (Since 2006, Norway has stipulated that at least 40 per cent of boardroom members at publicly-listed companies must be female.) CitingForbes data for 2013, fewer than 10 per cent of the world’s billionaires are women, although there were a record number of such billionaires in 2013, at 138, up from 104 in the previous year. There are more male than female entrepreneurs on average, although in jurisdictions such as Singapore, Thailand, women have the numbers edge.

While such progress – with some sharp regional variations – is taking place, Wealthmonitor says, it would be a grave mistake for wealth managers to jump to conclusions about the kind of services they must offer based on the issue of gender alone.

“Unlike previous research has reported, the interviews conducted by Wealthmonitor show that women do not necessarily see risk differently or want to be approached in a very different manner than their male counterparts,” the report said.

“Whether a person is more or less prone to take risks in their career and with their investments is often down to other factors than gender, such as age, professional and cultural background and previous experience,” it said. “It is, however, important to keep in mind that some women can be put off by financial jargon, especially in cases when the person is not used to having someone taking care of their finances for them,” it continued.

“As obvious as it might sound, meeting a client on their own terms is important yet not always happening. Afi Ofori believes that the investment process needs to be simplified and explained in a manner that the client understands. She has herself bad experiences of banks discussing topics that she felt she could not relate to or understand, and therefore turned the offers away. Investment managers also need to take the time to understand the women and how they look at investments. Ofori also believes that business women who built their fortunes and women who inherited their fortunes work in different ways when it comes to risk, confidence and types of investments,” the report said.

It added: “To build trusting relations and taking wealth management to the next level is exactly what Anna Sofat does at financial services boutique Addidi, aimed primarily but not exclusively towards women. To put the emphasis on lifestyle wealth and not just crunching numbers has been proven a popular take on wealth management, she says, with investments her clients can relate to and social investments that still bring good returns for the clients.”