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Opinion: Women in Wealth Management and How the Industry Can Drive Change

Malik S. Sarwar of K2 Leaders

Mar 26, 2020

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In a world in which women control more and more private wealth, both directly and indirectly, is the wealth management industry globally lagging behind, both in its approach to female clients and also the prominence of women in key roles in private banks and asset management or advisory firms? The short answer is most certainly ‘yes’. This opinion piece is a call to action for our wealth management industry, which, I believe, can and should become a true leader for change.

By Malik S. Sarwar, CEO and Founder, K2 Leaders, New York; Senior Advisor, Singapore Consultancy

In the US, women have been establishing new businesses at more than twice the rate of men, yielding more than USD1.4 trillion in annual revenues, according to research cited by Oppenheimer Funds. In 2017, UBS Wealth Management said women’s global wealth was expected to rise sharply to USD18 trillion by 2021, outpacing the pace of men’s wealth generation.

As far back as 2015, the Bank of Montreal's Wealth Institute reported that already women controlled about 51%, or USD14 trillion, of American personal wealth and that this figure would rise to USD22 trillion by 2020. The bank also reported that by then, women-owned businesses accounted for 30% of all privately-owned enterprises in the US and that this figure continued to rise.

Women and financial power

In the US, Western Europe, and in the Asia-Pacific region, women are fast acquiring financial power both at home and at work. According to a report by the Boston Consulting Group focusing on what women want from financial services providers, roughly two-thirds of American women will possess half of the country’s wealth by 2030, and women in Europe and East/Southeast Asia display similar trends.

We all know that women of all ages and income levels have been entering the workforce in larger numbers, that women increasingly take a financial leadership role in the household, and that more female senior executives and business owners are growing their wealth. Meanwhile, more and more women are benefiting from inheritance as a result of increased lifespans and demographic shifts.


Yet one only needs to look around any wealth management industry event to see that women are under-represented. Anecdotally, events I have attended in the past year around the globe would show a maximum of perhaps 30% of the delegates are women, and often far fewer, while the number of female speakers on the stages would generally be somewhere around 15% or less.

My informal poll at Wealth Management conferences around the world asks just one question - If Lehman Brothers had been Lehman Sisters, would it have failed? Typically, between 20% and 40% of the people raise their hands in response, which is a clear recognition of their importance. Thus, the industry can do far more to promote women as leaders in the marketplace, especially in recognition that the winds of change are such that more and more wealth is controlled by women around the globe.

I am of the school of thought that by embracing the unique character-based contributions of women, the hubris that is all too often evident in our industry will diminish and the evolution will encourage a generally longer-term perspective to gradually inculcate the firms and the asset management industry. This is especially the case, as women are known to be highly receptive to concepts such as wealth strategising, family governance and legacy planning, which are all key areas for the wealth industry worldwide these days.  

In a 2017 report, UBS Wealth Management described its plan to better serve female clients, identifying areas that required attention, such as the absence of a ‘gender view’ in its business practices, a more diversified advisory board, and a general ability to recognise the differences in approaches between male and female clients with regard to their communication, their investment strategies, and their overall expectations of their private banks and relationship managers.  

In a 2017 report titled ‘Women and Wealth: The Case for a Customized Approach’ by EY, the firm noted how women’s wealth and income were growing faster than ever, driven by what it described as powerful demographic, economic and technological changes are increasing women’s financial strength and independence. EY referred to recent research at the time that indicated that women might soon control the majority of US household wealth.

But EY also highlighted how despite all this, most wealth managers continued to view gender segmentation as being of minor importance. “It is hardly surprising that many female investors feel unwelcomed and even alienated by the investment industry”, the authors remarked.

Three key factors

And EY focused on three key factors to consider. Firstly, unlike men, women view achieving their personal goals as more important than investment performance, and women were more likely than men to switch between wealth management providers and do so for different reasons. Secondly, women have distinctive preferences in many areas of client experience. These include more emphasis on security, accuracy and privacy, and they have a greater appreciation of high-quality human interactions, as well as more openness toward digital technology and a greater willingness to share their experiences online. And as to trust, EY observed that women see transparency and clarity as particularly important drivers of trust, also placing more value than men on advocacy or referrals from family and friends.

According to EY, wealth management firms should be focused on developing better relationships with women investors, underlining the importance of personal goals, security, accuracy, transparency, privacy, regular contact with advisors, on the need to advise on rather than ‘sell’ products, and shorter response times. In addition, EY recommended a variety of other approaches that would help the investment industry better and more empathetically serve women wealth management clients.

Impacting the investment world

Interestingly, women are helping re-calibrate the world of investments, especially with regard to impact investment and ESG. In a 2016 report by The Philanthropic Initiative titled ‘Women Leading the Way in Impact Investing’ women look more broadly at companies than men generally do, preferring to invest in businesses that demonstrate transparency and they can relate to.

The work being done with respect to ESG, sustainable, and impact investing could go a long way toward attracting female talent and clients alike. Visit any ESG finance conference, and one can see the difference. Although we still talk about ESG, sustainable, and impact investing as a separate category of investing, as companies are subjected to ever stricter rules and regulations and greater client pressure, they will likely take on more sustainable ways of conducting business, eventually making sustainable investing far more mainstream than today, in fact potentially the key driver behind investment decisions.

Values and value

In its report, The Philanthropic Initiative stated: “We believe the time is right for an initiative focused on affluent and high net worth women who are naturally drawn to investing with their values, poised to control an increasing share of societal wealth, and facing a range of highly surmountable obstacles to deploying that wealth for social good.”

And as our industry focuses increasingly on women as clients, so too we must drive ahead to encourage more women into our fascinating business and to further open the doors to leadership roles, not of course based on positive discrimination, but on meritocracy and achievement. As more and more women become mainstream private bank clients and as more women assume leadership roles in our industry, the shift will become self-fulfilling, and a more virtuous circle achieved that more closely relates to women as a core client segment.

Mind the gap

And our industry can also help this positive evolution by assuming a role that champions these aims and causes. In the UK, the Financial Times has highlighted the average gender pay gap among asset managers in an article headlined ‘Fund managers forced to confront endemic gender pay gap’. The report noted that this gap was 28.5%, while the national average pay gap was 9.7% and the national financial services pay gap was 22.2%.

Interestingly, the FT pointed out that the asset managers often ascribed the large imbalance to a dearth of women in senior positions, rather than explaining their plans for rectifying the situation.

Avoiding bias

A fascinating June 2017 study by the Harvard Business Review highlighted a similar type of bias in the meritocratic and competitive venture capital funding in the US. Female entrepreneurs own 38% of businesses in the US, yet at the time obtained only about 2% of all venture funding. Observing Q&A interactions between VCs and entrepreneurs at the TechCrunch Disrupt New York, the report found that male-led start-ups raised five times more funding than female-led ones.

But there are powerful reasons for all this to change.  State Street Global Advisors published research that highlighted a positive correlation between the presence of women on corporate boards (or in senior management) and corporate performance. And a study by Credit Suisse Research Institute back in 2016 underlined how across 3,400 companies in North America, Europe, EMEA, Developed Asia, and Emerging Asia, the presence of at least one woman board director raised excess compound returns by 3.5% between 2010 and 2016.

Women drivers

Traditional corporations are not the only ones to benefit from women as leaders. According to a Forbes article in 2017, an internal review of 300 early-stage investments made by venture capital firm First Round Capital showed that, between 2005 and 2015, companies with at least one female founder exceeded companies with exclusively male leadership in performance by 63%. In 2017, the Conference Board published a report showing that company boards more inclusive of women experienced less fraud, corruption and governance issues than all-male boards.

The rise in women’s economic empowerment has enabled investment platforms like Ellevest (led by Sallie Krawcheck) and women-led start-ups to assist women in realising their life goals and dreams. Hanna Raftell, Co-Founder of Hong Kong-based coaching service firm Altitude22, spoke at a Hubbis event in early 2019 to offer her main thesis that the wealth management industry falls significantly short in paying attention to the values of women and how they make their investment and wealth planning decisions.

She also highlighted how the industry could encourage women with more events, more communication, more dedicated information flows and education, and at the same time recognise that regarding investment objectives, women are somewhat different from men, as they are more particularly focused on the protection of wealth and wealth transition.

A collective call to arms

I am sufficiently aware of the way the world turns to know that my opinions here are not revolutionary. I am simply drawing on certain themes and resources, as well as on our collective experience to highlight the need for our wealth management industry to address the needs of women in wealth management. And this is not all about lofty ideas regarding the role of women in society, even though this is a cause I am passionate about personally.

For the wealth management industry at large, there is a vast, and rapidly growing multi-trillion-dollar pool of wealth controlled by women that requires greater attention and more dedicated sensitivity and segmentation. And at the same time, we need to see greater participation from more women as key players; this will help achieve an increasingly virtuous circle that encourages more women as clients, and also more women in our industry serving the needs of both men and women with empathy and, I hope and expect, in a manner that is positive for the long-term health of our business.  

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