Women’s increasing wealth has implications for advisors, says an Investment Planning Counsel (IPC) white paper.
Citing research from Investor Economics, the report says that by 2026, Canadian women will control nearly half of all accumulated financial wealth. That’s significant compared to a decade earlier, when the share was closer to one-third.
In particular, the paper focuses on the growing number of widows and divorced women, which reached about 2.5 million in 2015 (17% of adult females).
“There is every reason to expect that this number will continue to rise,” says the report, which cites women’s tendency to outlive men, as well as the large number of baby boomers. Also, after divorce, more men than women tend to remarry or establish common-law relationships.
And for Canadians over age 65, 43% are single — the majority being women.
“The challenge for financial advisors is to develop expertise in dealing not only with widows, but widows who are likely to be over the age of 65, with limited financial knowledge,” says the report. “Helping elder women to avoid a decline in their living standards is both a responsibility and an opportunity for financial advisors.”
Following divorce or the death of a spouse, women tend to change advisors, so understanding how to serve these investors is crucial. In fact, research finds that 70% of women change their advisors within a year of a partner’s death.
Research also shows fewer than a quarter of widows are inclined to work with an advisor to get the most out of their savings, and less than 20% expressed a concern about the tax consequences of making withdrawals from their portfolios. For those who are divorced, only a quarter see value in working with an advisor.
Among high-net-worth clients, women tend to feel less secure than men. Specifically, these women feel less prepared and less educated about finances.
Compared to men generally, women also tend to worry more about being a burden to family. “Clearly, there is a place for insurance in the financial plans of women,” says the report.
To serve women clients, financial advisors must “deal with the total balance sheet and cash-flow issues, and not assume that investment success is the priority,” says the report. That’s because women clients care about “assured outcomes,” not performance.
Though most advisors — both men and women — don’t think they should treat female clients differently from male clients, there are distinct differences, maintains the report.
At the same time, remember that clients are individuals. A senior IPC advisor is quoted in the report as saying, “Women are not just a singular group. They are hard to generalize.”
For more details on this client segment, including cited research, read the full report.