Women’s wealth is growing. Here’s how advisors can serve them better

Natalie Jamison, a senior wealth advisor at Scotia Wealth Management in Oakville, Ont., decided to specialize in serving women clients early in her career, after her mother came to her in a panic.

“My mom came to me, and she said, ‘I don’t know what your father’s doing with all my money. He’s invested it all in Italy,'” Jamison recalled. “I said, ‘No, he would never do that, mom.’ She said, ‘Yes he did, look at my statement right here — it says LIRA.’”

That incident — her mom not knowing that LIRA stood for locked-in retirement account, and the fact that she didn’t take the concern directly to her husband, who was a stockbroker — was the reason Jamison decided to become an advocate for women in the wealth industry.

“I have a unique position being a female in this industry and being able to talk to other females about their money,” she said.

The financial industry serves women much better today than it did when Jamison started out more than 25 years ago. She founded Women & Wealth, a specialty service offering financial education, events and access to a team of planning, investment, insurance, and trust and estate professionals through ScotiaMcLeod. The bank-wide Scotiabank Women’s Initiative also provides educational resources and events, with other banks having similar programs.

But the great wealth transfer, which is now underway, could create even more opportunity for advisors — a new wave of clients as some women seek to engage a financial advisor for the first time.

According to a McKinsey & Co. study released in May, the growth of female-controlled assets is outpacing the market. Between 2018 and 2023, global financial wealth increased by 43%, while the amount of wealth controlled by women rose 51%. It now represents around US$60 trillion in assets under management (AUM), or 34% of global AUM.

In Canada, women are expected to control $3.8 trillion in assets by 2028, nearly double the $2.2 trillion they held in 2019, according to a CIBC World Markets study.

At the same time, women are less likely to engage with financial advisors, with McKinsey estimating that 53% of assets controlled by women are currently unmanaged, compared with 45% of assets controlled by men.

Here’s how advisors who want to grow their practices through the historic wealth transfer — and ensure they retain clients — can prepare now.

Build relationships with both partners

Boomer women are at the forefront of the great wealth transfer, as many outlive their spouses. But advisors can’t take their loyalty for granted.

Canadian figures are hard to come by, but U.S. studies show that 80% of widows switch advisors within a year of their husband’s death. Advisors who make the effort to build relationships with both partners in a household are more likely to retain clients.

“Anyone who moves is because they don’t have a good relationship with their advisor,” Jamison said.

“Even though one of the spouses usually takes the lead, it’s important that both spouses be involved in every conversation, that they have a say, that they feel valued and heard, and that their goals are included in the financial plan.”

Micha Choi, a client portfolio manager with Guardian Capital Advisors, says advisors need to make a special effort to reach out to women, especially if they seem less interested and engaged.

“Most advisors will say, ‘Well, I always try to include wives, but they don’t come out. What do I do?’” Choi said it could be as simple as asking to speak to the wife separately.

If one partner in a couple isn’t interested or engaged, the advisor should try to find out why, Jamison said.

“It’s up to the advisor to find out, well, where does her interest lie? Because if her interest is all about the children, then let’s start by including her in the conversation about educational planning, perhaps that’s how you open the door to including her,” Jamison said. “If we do our job well and we have in-depth conversations, we’ll figure out what matters to her and find a way to include her in that conversation.”

Done right, both partners will appreciate the attention.

“Many of my male clients tell me often, ‘Natalie, I love that you include my wife in these conversations, because I know if I die first, you’ve got her back,’” Jamison said.

Choi, who cofounded Guardian Capital’s Guardian Women initiative four years ago, says her male clients are grateful for the program, which provides financial education and social events.

“We’re taking care of their family members. This is their estate planning,” Choi said. “So actually, a lot of my male clients love this and will say ‘Oh, thank you for including my wife. She’s interested. She’s learning. I can sleep better at night, knowing that she’ll be taken care of because now she has a relationship with you.’ So it’s actually strengthening the relationship.”

Use plain language

Industry jargon can be intimidating. Jamison said her clients sometimes say they think of her as a financial translator, because “finance can be like a completely different language.”

Using plain language helps everyone, she added.

Choi also focuses on using plain language and making complex concepts easier to understand.

Instead of using the term “investment objective,” she’ll ask questions that get to the core of a client’s goals, values and motivation, like: Do you want to leave money for your children? Do you care about certain charities? How do you want to live your life?

Then she makes it clear that the portfolio is there to support the client in achieving those goals.

Choi also avoids sports analogies including language about batting averages, and comparisons like relative performance, which in her experience women are generally less concerned with.

Take the time to explain

While women investors are sometimes perceived as lacking confidence, Choi says women expect more information and want help understanding what the advisor is proposing and why.

Women value advisors who provide financial education and who take time to explain concepts, strategies and investments.

“Women won’t invest in it if they don’t understand it, whereas a lot of my male clients will be like, ‘Yeah, let’s go ahead,’” Choi said, acknowledging that’s a generalization.

Jamison said advisors who are patient and take the time to explain concepts in depth will win client loyalty.

“Let them ask as many questions as they want. Women want to comprehend and understand, and that sometimes requires asking a lot of questions,” she said. “Just be patient and answer them — that also leads to building trust.”

Don’t make assumptions

Women are perceived as — and sometimes perceives themselves as — more conservative investors, Choi said. But that’s not always true.

Women are more “risk aware” and advisors may need to build trust with them more slowly.

“A male client who has a million dollars in his bank account will give me a million dollars and say, ‘Here, [invest] it,’” Choi said. “A woman with a million dollars in her bank account will say, ‘Can I start you out with $50,000 or $200,000?’ Then, once they get comfortable it’s, ‘Here is everything.’”

Often, Choi said, greater risk tolerance will come with more education and financial knowledge.

One client of Choi’s left another advisor because she was “devastated” by the 40% market fall that happened at the start of the pandemic. She cashed in her investments at a market low.

When Choi onboarded the new client, she explained what had happened in the market and why it was detrimental for her to sit on the sidelines with cash. Choi brought her back into the market over time, tranche by tranche. “When there was another market tumble after ‘Liberation Day,’ she felt fine.” Choi said.

“I don’t think we can generalize that women don’t have risk tolerance,” she said, explaining advisors need to properly explain risk to clients and educate them where necessary.

Be a BFF

The wealth transfer opens an opportunity for advisors to become a BFF — not a best friend forever, but a “best financial friend,” as many of Jamison’s widowed clients refer to her.

For them, they’ve lost a partner in life that was also their partner in managing their finances.

“I cannot replace the spouse, but I can become their financial partner,” Jamison said. “I become their sounding board for all financial decisions going forward, and that’s really what they need.”

Often, clients are “frozen” when they receive a significant inheritance and aren’t sure how to use the money in a meaningful way.

“Our job is to help them prioritize. Should they pay down debt. Should they retire early? Can they help adult children purchase a house? There are all these competing priorities, and they’re kind of unclear,” Jamison said.

“That can only be done with prudent financial planning and lots of discussions.”

Advisors also need to be sensitive to the emotion involved with any inheritance, which necessarily is accompanied by loss.

“Don’t rush someone to make financial decisions when they’re grieving their loved one that was just deceased.”