Female Investors Reluctant to Adopt Paid Financial Advice Relationships

February 18, 2021 — Boston

Advisors will need to creatively combat skepticism and prove their value  

Female investors express less interest in both managing their own accounts and paying advisors to act on their behalf, according to the latest Cerulli Edge—U.S. Retail Investor Edition. To better serve them, providers must seek opportunities to alter this dynamic.  

One of the most notable differences between investors on a gender basis is the desire to be actively involved in day-to-day management of their portfolios. Only 41% of female respondents voice an interest in this depth of engagement in their financial affairs, compared with 57% of males. This result is even more pronounced at each end of the spectrum, with 25% of males surveyed selecting “Strongly Agree” to wanting day-to-day involvement compared with just 15% of females. 

Females are also more reluctant to pay for advice to guide them through these topics. Barely half (51%) of female respondents agree that they are willing to pay for financial advice, compared with 58% among males. “This provides both a challenge and an opportunity to providers in the advice segment,” says Scott Smith, director of advice relationships. “As regulators are consistently elevating the role of transparency and disclosure in client relationships, investors are more likely to ask questions about advice fees and commission charges.” 

With such a relatively high percentage of advisor-reliant female investors already concerned with their fee relationships, it will be crucial for providers to clearly and concisely express the value of their services. As the industry edges toward a greater emphasis on planning-based fiduciary relationships, the benefits of employing trusted advisors are becoming more material. Instead of simply recommending the “best” stocks or funds, advisors are increasingly adopting process-based planning, which creates an implementation timeline. By dividing this timeline into tangible milestones, advisors are better poised to communicate the value of each step, rather than trying to assess an ambiguous “wealth management” fee. 

“When connecting their remuneration to specific responsibilities and outcomes, advisors could reduce the potential skepticism among female investors and create millions of mutually beneficial client relationships,” concludes Smith.    

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Note to editors

These findings and more are from The Cerulli Edge―U.S. Retail Investor Edition, 1Q 2021 Issue.

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