Blue Chip Journal, Issue 77

FINANCIAL PLANNING
Women as financial
PLANNING CLIENTS
Creating value for the female market
McKinsey & Company has in a recent article [1] made a
compelling case for why, as financial planners and
wealth management firms, it is “a critical growth
imperative” that we are deliberate in creating a value
proposition that speaks to the needs of the female market, if
we are to make any meaningful strides in attracting and retaining
this market segment.
THE CHANGING FACE OF WEALTH
In what is commonly referred to as the great wealth
transfer, it is expected that in the next three to five
years, American female baby-boomers will, in essence,
control financial assets estimated at $30-trillion. This as
they inherit, and thus gain, more control on a further
$10-trillion, which currently is jointly owned but has
the husband as the primary financial decision-maker.
Women tend to be less involved in the management of
these assets while their husbands are alive.
Another factor expected to spur an
increase in the size of the female market are
the younger affluent women who are likely
to be more educated, have higher personal
earning potential and thus tend to be more
involved in household financial decisionmaking.
The indicators are no different
in South Africa. Recent research released
by the Department of Higher Education
indicates that there has been a marked
increase in female doctoral graduates over
the years, where it is reported that females
make up 53% of all doctoral graduates. [2]
A more intriguing number comes from the results of
a survey conducted by 1Life on 7 000 females aged
between 24 and 44 years where it found that 69%
of the respondents are the main breadwinners in
their households. [3]
McKinsey’s research also shows that seven in 10
affluent women, particularly widows, seek an alternative
wealth management relationship within a year of taking
reign on financial assets. Other crises such as a recession,
a divorce or the more recent Covid-19 pandemic also
cause clients to re-evaluate their service providers and assess if
their needs are adequately being met.
WOMEN MANAGE THEIR WEALTH DIFFERENTLY TO MEN
These factors should cause us to pause and reflect on whether our
offering and businesses are well-poised to participate meaningfully
in this new playing field. While our industry has taken notable steps
in preparing for this market, such as targeted marketing campaigns
and products, increased emphasis on financial literacy as well as
policies and efforts to change the demographic of staff members
across both the gender and racial lines, more is required from the
industry. McKinsey advises that “firms will need
to commit to a much more systematic approach
– transforming their business and client-service
models in ways that will acquire, retain and serve
women as long-term investors”. This starts with
a recognition of the growth and the potential of
the female market, coupled with a willingness to
truly understand the factors that drive women.
Equipped with this knowledge, an appropriate
strategy becomes easier to formulate.
The research highlights the
following six key differentiators [1] :
1. Greater demand for advice
Affluent female decision-makers
are more likely to seek an advisor.
Furthermore, they place more value or
preference on face-to-face interaction,
rather than a digital service offering.
2. Lower financial self-confidence
Many of the women included in the
survey “self-report lower confidence
in their financial decision-making
and investment acumen”. This speaks
to historic and socially ingrained norms
rather than intellectual acumen. It
further emphasises the need for broader
financial literacy interventions aimed at
women and conducted in a manner that
is empowering and offers the space for
them to pose questions without the fear
of being patronised.
3. Less risk tolerant
The women surveyed tend to prioritise capital preservation rather
than assume more risk in return for potential growth.
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