Unconscious biases come at a cost to women advisors and clients

When I’d attend professional events early in my career, men who didn’t know me would often assume I was from head office, someone’s assistant or someone’s wife. It often took three or four guesses for unfamiliar industry peers to realize I was one of them. It wasn’t malicious. In fact, those who’d mistaken me for anything other than an advisor were generally embarrassed. Nonetheless, their biases were easy to spot.

People make mistakes — snap judgments based on our lived experience, perception of the world and a tendency to fill in knowledge gaps.

Women in financial services are more likely to experience gender-biased interactions because they are still the exception, not the rule. A Sun Life Global Investments report estimates that we make up only 15% to 20% of the industry.

But inherent gender bias and stereotypes can show up with any mixture of advisors and clients. Here’s what you need to know.

Assumptions are dangerous

The tendency to apply quick filters to various scenarios and people can help us navigate our lives with greater ease, but it can be dangerous to make assumptions that we don’t verify. That’s especially true when it comes to gender and finances.

If your assumptions create a negative experience for your client, you could lose them. A 2020 study by Merrill found that women are more loyal and give more referrals to an advisor they are happy with. But they are also more apt to leave than a man if they’ve had a bad experience. So, it makes sense for all advisors to avoid getting on a female client’s bad side.

There are many scenarios where a person may say they have one opinion or belief, but their behaviour shows the opposite. For instance, take those advisors who took too long to guess my role all those years ago. If you sat each one of them down and asked if they had any bias when it comes to women in the industry, they likely would have answered with an emphatic “no.”

Miscues are common

One type of miscue is when one person is not accurately interpreting subtle information from another. For instance, the woman client is holding the investment statements, making it obvious she’s got the financial details, but the advisor still assumes she doesn’t understand the numbers. 

No one is off the hook when it comes to miscues and stereotyping. Both men and women are likely to lean into gender-based assumptions. Though many advisors argue they don’t change their behaviour based on the gender of their clients, women advisors are just as likely to pay more attention towards male clients when working with heterosexual couples.

The same Merrill study used eye tracking to observe which client the advisor focused on. The company found that 60% of the time, both men and women advisors looked at the man in the couple.

Among the common miscues were behaviours that indicated the advisor thought the man was the decision-maker, that the woman was more risk-averse or that the woman needed direction. Women clients pick up on these assumptions, which can damage the relationship with the advisor and erode trust.

Merrill’s report found that despite the best of intentions, clients experienced an average 10 miscues in a 30-minute meeting. Male advisors were responsible for twice as many miscues when compared to their female counterparts. And women clients meeting one-on-one with their advisor are much less likely to experience any miscues at all.

Age is a factor

Three-quarters of female clients under the age of 45 manage their own finances, but only 50% of women over 55 said the same thing, according to the Merrill study.

Why? Putting off marriage until further into adulthood, as well as more partners choosing to remain financially independent are both factors. Older women may also be more used to being left out of important financial discussions, or having their questions dismissed by their advisor. But a tolerance for poor treatment shouldn’t be mistaken for contentment.

Words matter

Women investors favour positive goal-oriented language when discussing their personal finances. Any advisors hoping to engage women clients more deeply can benefit from reviewing their standard talking points and ensuring that their discussions include forward-looking, goals-based, positive language about financial opportunities.

For example, rather than saying, “You’re not saving enough for retirement,” say, “Let’s figure out your retirement income goals based on how you want to spend and go from there.” Male clients don’t seem to be impacted by language in the same way women clients are.

Evening the playing field

I think most would agree that women’s needs are underserved by the financial services industry. Because of this, women are less likely to rely on their own judgment when they have men advisors, which could magnify financial literacy and confidence gaps.

Stereotypes may be self-fulfilling, vicious circles, too. Women are aware they’re assumed to be less educated, competent and comfortable with financial matters. As a result, they could be far more guarded and less open when engaging in financial planning meetings for fear of being judged — especially when you consider that women are 2.5 times more comfortable taking investment risks when their advisor is a woman, according to Sun Life Global Investments.

This would indicate that financial comfort and confidence are situational for women investors, rather than fixed.

It’s difficult to recognize gender-based bias in yourself. So be careful not to dismiss these influences in your own behaviours. Read evidence-based studies. Watch your behaviour, as well as the industry for bias.

Meet with women clients one-on-one. Come right out and ask them if they feel heard. Ask them to tell you more about their financial goals, and wait a beat to give them time to think. When you ask a question, especially if the client hasn’t felt heard before, prepare to sit in the awkward silence for a moment. Let them answer. Then ask follow-up questions.

When something is this out of balance, we can’t simply wait for it to eventually even up. This didn’t happen naturally — it was our social constructs, behaviour and biases.

To undo it, we need to both understand and make meaningful conscious changes. We need to continue to study the issues surrounding how gender impacts finances to spot more ways to improve. In the meantime, financial advisors and institutions need to ensure it’s obvious to both women advisors and clients that they belong here too.