Majority of Women Investors Would Stay with Financial Advisor upon Death of a Spouse or Partner, According to Russell Investments Study
Advisors can do more to engage women investors in long-term financial planning conversations; possible benefits include increased client satisfaction, consolidated assets and new referrals
SEATTLE--(BUSINESS WIRE)--Contrary to a commonly cited industry belief that women are likely to leave their financial advisor after a spouse or partner’s death1, a large majority of female investors – 93% in the “Silent Generation” age group and 78% in the “Generation X” age group – indicated that they would stay with their current advisor, even after the death of a spouse or partner, according to What Really Matters to Women Investors, a new study from global asset manager Russell Investments.
“Investing Wisely: What Women Need to Know”
The study, conducted by Mathew Greenwald & Associates on behalf of Russell Investments, explores the financial needs and concerns of women in two age groups working with professional financial advisors: Generation X (ages 32-47) and the Silent Generation (ages 67-80). To deliver a holistic perspective on the issue, Greenwald & Associates also queried financial advisors serving female investors.
In addition to being loyal to their advisors, the findings suggest that women investors are more likely than men to focus on longer-term planning issues, which can align well with an advisory relationship. More than half (56%) of advisors said that they believe that their female clients have a longer-term perspective when it comes to planning, versus only 5% who say male clients take a longer-term view.
“Undoubtedly, women are an attractive target client segment for financial advisors given their growing economic power. They can be predisposed to take a longer-term perspective, are assuming greater responsibility for investing decisions and value tailored guidance from an advisor,” said Jaylene Howard, consulting director for Russell’s U.S. advisor-sold business. “It’s clear that when they feel they are being heard and are on track to their investment goals, women are loyal clients who will often actively refer their advisors to family and friends.”
The study found that a significant portion or women (54% Generation X and 64% Silent Generation) said they have recommended their advisors to a friend or family member.
Women taking an active role in investing decisions but lack confidence
More than half of respondents (52% Generation X and 63% Silent Generation) share the responsibility for managing their households’ savings and investments and nearly one third (29%) of Generation X and one quarter (24%) of Silent Generation women have even more responsibility than their partners. The advisors surveyed also said that, on average, half the households they serve are led by female decision-makers.
Despite their increasingly active role in financial decision-making, women are not particularly confident about their investing knowledge. More than half (52%) of Generation X women and more than a third (35%) of Silent Generation women stated they are “a little” or “not at all” knowledgeable about investing.
“Nine in 10 women will manage their financial assets on their own at some point in their lifetimes.2 For many women, understanding this fact dramatically impacts how they approach financial decision-making and investing,” said Howard. “Financial advisors have an opportunity to engage female clients in building up the investment knowledge and confidence they need to effectively manage their progress toward financial security.”
The qualities and offerings women find most important in a financial advisor
Active listening skills were overwhelmingly cited (by 86% of Generation X and 87% of Silent Generation women) as the most important factor to a successful and lasting relationship with their advisors.
However, the two generations diverged somewhat when asked about specific drivers for satisfaction with their financial advisors. For Generation X women, the strongest drivers of overall satisfaction are an advisor’s ability to provide effective recommendations tied to their concerns, adapt explanations to their level of knowledge and explain how decisions may affect them differently in the future. For Silent Generation women, providing personal service and establishing a personal connection outside the business relationship rank as the strongest drivers of satisfaction.
“Most women want to understand their investment portfolios, but beyond that they want meaningful discussions with their advisors that tie the numbers to actual goals and help build a trusted relationship,” said Howard. “Advisors should use every meeting with a client as an opportunity to educate and engage them around their financial and personal objectives, and demonstrate that they are incorporating these goals into their financial plan.”
Where female investors need more from their financial advisors
Despite their focus on the long-term, many women in both age groups said they don’t have or don’t want a formal plan for how to accumulate money or generate income in retirement. Additionally, when advisors were asked to assess the importance to female clients of various services and solutions that they provide, advisors ranked preparing a formal financial plan relatively low, although planning-related conversations were rated high on the list.
In addition, only 27% of Generation X and 36% of Silent Generation women feel their advisors know everything about their financial goals and concerns, an attribute that correlated strongly with respondents’ overall satisfaction with their advisors.
“Expanding relationships with women investors may represent advisors’ most important business growth opportunity. Our study suggests that advisors can do more to fully involve female clients in a formal planning process, which we believe is a vital part of ensuring financial security,” said Howard. “Central to that effort is ensuring that advisors understand their clients’ goals and deliver a clear plan to help clients make effective financial decisions.”
Russell has worked with many distribution partners and financial advisors on the subject of creating better conversations and engagement with investors. In 2014, Russell plans to introduce the next evolution of its offering to help financial advisors deliver a superior client experience and better outcomes for investors through a process of effective decision-making.
For more information, download the What Really Matters to Women Investors study.
About the What Really Matters to Women Investors study
In March 2013, Russell Investments hired Mathew Greenwald & Associates to conduct two surveys on women and investing, which focused on financial advisors and women investors in two age groups: Generation X (ages 32 to 47) and the Silent Generation (ages 67 to 80). One survey queried advisors about their relationships with women investors in these groups and the other sought out the woman investor’s point of view for each generation.
The advisor survey includes the results of 343 respondents, while the women investor survey includes 901 individuals (501 Gen X and 400 Silent Generation). In order to qualify for the study, women investors were required to have at least $100,000 in investable assets (Gen X) or $500,000 in investable assets (Silent Generation); work with a professional financial advisor; and meet the age requirements mentioned above.
For advisors to participate, they were required to be employed as an independent financial advisor, planner, or RIA, or work for a wirehouse or national firm, regional broker dealer, or independent broker dealer for 3 years or longer. They also needed to generate at least 75% of their business from the sale of individual products and services and earn at least $100,000 in personal income from the sale of financial products and services.
About Russell Investments
Russell Investments (Russell) is a global asset manager and one of only a few firms that offers actively managed multi-asset portfolios and services that include advice, investments and implementation. Russell stands with institutional investors, financial advisors and individuals working with their advisors—using the firm’s core capabilities that extend across capital market insights, manager research, portfolio construction, portfolio implementation and indexes to help each achieve their desired investment outcomes.
Russell has more than $256 billion* in assets under management (as of 12/31/2013) and works with over 2,500 institutional clients, independent distribution partners and individual investors globally. As a consultant to some of the largest pools of capital in the world, Russell has $2.4 trillion in assets under advisement (as of 6/30/2013). It has four decades of experience researching and selecting investment managers and meets annually with more than 2,200 managers around the world. Russell traded more than $1.4 trillion in 2012 through its implementation services business. Russell also calculates approximately 700,000 benchmarks daily covering 98% of the investable market globally, including more than 80 countries and more than 10,000 securities. Approximately $4.1 trillion in assets are benchmarked to the Russell Indexes, which have provided investors with 30 years of smarter beta.
Headquartered in Seattle, Washington, Russell operates globally, including through its offices in Seattle, New York, London, Paris, Amsterdam, Sydney, Melbourne, Auckland, Singapore, Seoul, Tokyo, Beijing, Toronto, Chicago, San Diego, Milwaukee and Edinburgh. For more information about how Russell helps to improve financial security for people, visit www.russell.com or follow @Russell_News.
*includes more than $74 billion of derivative overlay assets under management not included prior to June 30, 2013
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1 “Women, Money and Power.” Allianz Life Insurance, 2008.
2 Source: National Center for Women and Retirement Research, referenced in “Investing Wisely: What Women Need to Know” by Kathleen Williams April 24, 2011. www.womensmedia.com