Men and women invest differently, I know you are shocked by that statement right? Probably not! The following is from an article in the Chicago Tribune.
In the financial services industry, the default language is male-speak. Women do not feel served. You look at the advertisements, lingo, acronyms. Even the client-engagement and retention process (sales) is a male model.
According to LearnVest.com, 87 percent of women would like to work with a financial adviser, but only 17 percent do. A big part of the reason is women don’t meet the asset threshold to work with the advisers, so they get disenfranchised.
Several of the big companies have raised their thresholds recently, alienating even more women while they are spending their marketing dollars on the male market.
So, I went to my friend, TJ Couzens, of BrandX, a market research firm who researches the female market, to ask his opinion. TJ wrote the following post in which he discusses the importance of financial companies going after the female market more effectively.
Women control ALL of the purse strings. Women make over 68% of investment decisions. In the next decade, they will control over 2/3 of the total wealth in the U.S.
Consider this fact of high-end investing. All male investment clubs get an annual rate of return of 8% while all female investment clubs get an annual rate of return of 22%. (Source: Brand X Research, Investment Survey Analysis). Men are in it for the game while women are in it for the long haul. For men, its all about me. For women, its all about we. They invest not for their own wealth, but for the sole purpose of taking care of loved ones and friends.
In the area of retention, men change brokers about every 3 years, while women, if treated well, stay with their brokers for 10+ years (Source: Brand X Research). One of the reasons for this is men like bragging rights for great stock performance, so they will jump around if their portfolio is lagging behind their buddies. This leads to high client turnover for brokers. Women, on the other hand, invest based on her relationship with her broker. If they earn her trust and confidence, she will seek their advice and stay loyal because the relationship is valued more than bragging rights.
Another reason why all financial institutions should woo women is in the area of referrals. Men will refer their financial institution to 2.6 people on average. Women, if treated well, will refer you to 21 of her friends. This is huge and is worth billions of dollars over the long term. Right now the investment industry is doing a poor job of retaining women. According to a recent research study by Brand X Research, women only stay with their current broker 5-6 years. The cause of this is too many brokers cater to the husband and pay almost no attention to the wife.
What does this all mean? In essence, it means most financial institutions and brokers are spending marketing dollars on the wrong audience. They are sending out the wrong message. They still believe men make up most of the investment community and their marketing approach confirms this. It is male, ego driven themes based on competition and winning. Instead, they need to try to win over the women market through communicating, relationship building and mutual respect.
Companies need to realize they are losing by spending marketing dollars trying to win over male investors because its cheaper to do so. Men are easily persuaded, but are not loyal. You will always have a hole in your sales bucket. By marketing to women, you will spend more marketing dollars because she is harder to convince, but, once convinced, she is extremely loyal and will invest more money with you over the long-term. Remember 2.6 vs. 21 and 3 years vs. 10+ years. Who would you rather have?
If Financial Planners want more referrals they need to have a better understanding of the female market. Changing your marketing message is not enough.