Karen Barrett is the CEO and founder of Unbiased and based on her wealth of knowledge and experience in the profession, she is pretty certain we’re on the cusp of a huge impending wealth transfer in the UK – and not just the transfer between old and young (you can read more about that here!). She thinks that, as early as 2025, 60% of the wealth in the UK will be in the hands of women.
To sum up a complex situation, a huge proportion of UK wealth is currently held by the older generation: couples and families where men are more likely to manage the finances. However, women generally tend to outlive men, and thus are now starting to manage a greater share of the wealth as this generation reaches older age.
This trend of wealth transfer to women may create some interesting knock-on effects for investment in the UK. For example, women have been shown to have more interest in philanthropy (63% compared to 56% of men), are more likely to make value-driven investments that align closely with environmental, social and governance (ESG) factors, and to back women-led businesses. A study found that 75% of women believe investing responsibly is more important than the returns they generate.
With this transition of the ‘typical’ profile of a client, and the investments they might seek to make, we must recognise that a degree of change is needed in the financial advice industry.
It continues to be male-orientated, which creates a looming threat of losing female clients who need guidance with their finances.
The advice industry lacks female representation
From working across the financial advice industry every day with Unbiased, we know anecdotally that women desire like-minded advisers who can relate to their experiences. Yet a Freedom of Information request submitted by FTAdviser in 2022 found that just one in six financial advisers are women.
And on top of that, it’s important to keep in mind here that bereavements will be driving a lot of this wealth transfer. The emotional and difficult experience of being a widow may exacerbate this preference for a female adviser, who the client may feel has a better understanding of what they’re going through. Studies show that around 80% of widows fire their late-husband’s adviser within a year. Perhaps this is why?
We all know that compassion and trust are the foundation of any adviser relationship, and thus alarm bells should be ringing for advice firms. As a survey by Schroders found, only 5% of advisers have a specific plan to retain and attract female clients.
Not only can falling short here lead to potentially losing clients, it also leaves these women feeling overlooked and disconnected – ultimately contributing to financial insecurity and unpreparedness.
As an industry, we need to get this right and be prepared for this movement. I know we can, and ultimately it comes down to two key streams.
Encouraging more female advisers over the long term
It’s unavoidable. The industry needs to hire and train more female financial advisers, who can better relate to the experiences and needs of other women.
Of course, this is far easier said than done, and lots of firms are indeed making the steps to do this, but it will not (and should not) happen overnight. It takes well over a decade to become a fully qualified adviser, and so a push for more gender balance in the adviser pipeline may take up to 15 years.
Of course, that doesn’t mean you should lose motivation to start work on the pipeline now. Gender balance within your firm should be a core focus for many reasons; but adapting to the changing demographics of wealth ownership is surely a compelling one.
However, to make a more immediate impact, you might start by focusing on how you can retain the brilliant women you already have. How can you, for example, ensure that your firm is one that supports women through maternity leave, should they take it, and ensures they can eventually return to their work or training and pick right up from where they left off?
Too many times talented professionals go underutilised due to being mismanaged or misunderstood during their transition into motherhood. After all, in a financial advisory context, this is a demographic that might relate best to taking responsibility for family matters – wealth or otherwise.
Think about how you can create a more inclusive and welcoming environment for women. To be the end-goal of that long-term talent pipeline, but also to start hiring and retaining top female talent. Over time, an advisory firm where women feel trusted and heard won’t just bring in the best women for the job, it will also become an attractive proposition for female clients, and allow for strong and trusting bonds to be built with them.
And on those client relationships, directly upskilling your male advisers on their changing primary audience should also be a priority.
Understanding the needs of female clients as a priority
This may be accomplished by offering educational resources and sessions about understanding the general financial needs and preferences for women in the older generation.
Part of that needs to include how to advertise and deliver specific support during life-changing events such as divorce or the death of a spouse. Learn the complexities of assisting women through these experiences, and build that directly into your services.
Thinking more specifically, it might now be time to double down on ESG-focused funds that you can offer to female clients. Make sure you know how to give them guidance on philanthropic activities, and how to integrate them into one’s financial planning. This should translate to seeing more goal-based investing, rather than simply stock picking and trading. And of course, as always, provide clear and understandable explanations of the risks involved in different investment options.
Ultimately, your goal in this stream should be helping women feel more confident and prepared to manage their finances, and for your staff to feel more confident doing so, too.
The wealth shift to women will be a huge moment for the advice industry. By preparing now, advisers can be well positioned to do exactly what they do best – build relationships with clients and lead them to exceptional outcomes. Not just today, but in the years to come, too.
Karen also recently joined the IFA Magazine team for a podcast recording on the advice gap – to listen in to what she had to say you can find the recording here!
