Wealthy women are more likely to drop advisors for bad service
Wealthy female investors who have negative experiences with their financial advisors are more likely than men to fire them.
That’s one of the conclusions from a gender-bias study by Bank of America’s wealth management business, which comes as female clients control an ever-increasing share of financial assets. For investors who had bad experiences with their financial advisors, 35% of women decided to switch, even though they were less likely to complain, compared with 30% of men, who were more likely to confront their advisor or complain.
“All of us unconsciously bring assumptions, and sometimes biases, to the table,” said Kirstin Hill, chief operating officer at Merrill Lynch Wealth Management. “Those are assumptions and experiences that we need to set aside.”
The firm tracked financial advisors’ eyes during meetings and found that both male and female advisors looked at men more than 60% of the time when speaking with heterosexual couples. Wealth managers made an average of 10 so-called miscues in every 30-minute meeting, such as defaulting to the men as financial decision-makers; inferring that the couple’s finances were merged; or assuming that women want direction, are more risk-averse and are less knowledgeable than men. Male financial advisors were twice as likely to commit miscues, the analysis showed.
The conclusions have implications for wealth management, where women represent just 15% of financial advisors. American women control more than $10 trillion in U.S. household financial assets, an amount likely to triple within a decade, according to a McKinsey report. The industry, which has long been dominated by men, will need to come up with systematic ways to serve female customers, just as the automotive and real estate industries have done, McKinsey found.
“There’s a series of seismic shifts on multiple dimensions that are causing wealth to transfer into the hands of women at an extraordinary pace and scale,” Hill said.
Younger women are also poised to transform wealth management, the Merrill study found. Those younger than 55 are 4.5 times more likely than older women to consider themselves knowledgeable about financial products and services, and are three times more comfortable making financial decisions on their own. As millennial and Gen-Z women take more control of their own finances and those of their families, they’re becoming less tolerant of biased advisors.
“The time for wealth management to catch up to and fully address the financial experiences of women is overdue,” Andy Sieg, head of Merrill Lynch Wealth Management, said in a statement. “By shining a new light on the stereotypes that still exist, we hope these insights will help the industry at large take a more informed approach to confronting them, and to best serving women throughout their financial lives.”