A recent survey of high-net-worth (HNW) primary breadwinners finds that men and women defy traditional gender stereotypes when it comes to their perceived investing acumen, risk appetite and work-life balance.
Noting that high-earning professionals are a key target for financial advisors but there is little research on this targeted segment, FlexShares set out to understand their investment and financial goals, and what they expect from their advisors.
In “Rethink How to Win Executives,” FlexShares surveyed over 450 primary household earners and found that executive women have a similar – if not greater – risk appetite to men when it comes investing, despite the long-held stereotype that women are more conservative investors.
HNW men, meanwhile, were twice as likely to identify themselves as a “conservative investor” – at 31%, as opposed to 14% of women. Overall, 26% of women surveyed considered their risk profile to be “moderately aggressive” or “aggressive,” as opposed to 27% of men.
Executive women also expressed confidence in managing their finances and investments, challenging general assumptions that women are less interested in or capable of investing, the study notes. When asked to rank their general investment knowledge on a scale of 1-10, the mean response for HNW women was 7.3, while the combined average for all respondents was 8.1.
What’s more, women ranked their ability to perform a range of financial planning tasks – such as managing investments, planning for retirement and creating a budget – over 7.0 on nearly every activity. Even though men expressed having even greater confidence – rating themselves over 8.0 on every task – both groups demonstrated high levels of financial knowledge, the study observes.
“Many financial advisors continue to cling to outdated assumptions regarding female clients’ risk tolerance and overall interest in investing which may not be accurate for high-earning breadwinners,” says David Partain, marketing head at FlexShares Exchange Traded Funds.
When asked about their top two current financial goals, executive men and women reported significantly different priorities.
“Providing for future generations” and “taking care of my dependents financially” were identified as two of the top three financial goals among men at 70% and 62%, respectively, but women apparently did not place as much emphasis on these goals, registering at 30% and 38%.
Instead, the top goal for women was “to know that I’m prepared for the worst” at nearly 69%, as compared to 31% of men. Women were also most concerned with “planning for retirement” (56%) and “making philanthropic contributions” (54%).
Meanwhile, despite other studies suggesting that women tend to leave their financial advisor after divorce or death of a spouse, high-earning women expressed greater loyalty to their financial advisor than men.
According to FlexShares’ study, only one of five women had thought about leaving their advisor in the past year, though two out of five men considered changing advisors. This may be because HNW women take a more active role in selecting their family’s financial advisor than women in general, the authors note.
Women respondents were also significantly more likely than men (88% vs. 75%) to describe their relationship with their advisor as personal.
While interested in specialized services, women found them to be less important than their male counterparts. Across the board, men felt more strongly about advisors’ ability to offer services such as insurance, estate planning, sustainable investing solutions and legacy planning. Men were also more likely to expect business management advice from their advisor (77%), such as corporate tax solutions or executive compensation advice, while 63% of women expressed interest in this service.
There also was notable interest in socially responsible investing (SRI) among both genders, with a majority of respondents (62%) ranking their interest in SRI as an 8 or greater on a scale of 1-10. Even though SRI is often considered to be of greater interest to women and Millennials, the survey found that men expressed more interest in SRI offerings – at 7.5, as opposed to 6.8 for women.
“It’s critical for advisors to put gender assumptions aside as they engage with HNW primary breadwinners,” notes Laura Gregg, Director of Practice Management and Advisor Research at FlexShares. “What we see is that these professionals experience their roles as primary breadwinners differently. Taking the time to ask first, rather than to assume based on gender, may help advisors stand out from the crowd and deepen client relationships.”
The survey was conducted in March and April 2019 with a total of 461 men and women participants who were between the ages of 35-65 with household income over $200,000 and investable assets over $1 million or over $250,000 for those between 35-39 years of age.