Research is a vital component of the vision of The American College State Farm® Center for Women in Financial Services. We are developing original research on topics of importance in the field. Our experts also examine and evaluate research from other sources. Consumers and advisors alike can benefit from exploring the latest research highlighted on the Center's website. You will also find a compilation of resources from a variety of providers.
Today, women are working more, earning more, owning more, learning more and making more financial decisions than men. By all measures, they are an attractive market. Yet they are under-represented as advisors, and the mostly male profession has largely focused its attention on male clients; even among married clients.
To date, wealth managers and advisory firms have been slow to respond to the demographic and social changes that are transforming the market for financial advice and many are missing the significant market opportunity that women represent.
While women essentially need the same services as men, they do have some specific preferences and needs that firms have, so far gone unmet. Some leading firms have realized the opportunity, and are changing how they approach women as clients. Firms can learn about the changing trends in this important market segment, and how best to realize the opportunity.
Women are increasingly taking ownership of their household’s financial management. Research conducted by The American College for Financial Services in 2020 reveals that more than 9 in 10 women with partners or spouses equally share or lead financial and investment decision-making for their households. This survey, which includes an analysis of over 800 women, describes how likely women are to work with a financial advisor, express concerns about their retirement security, and managing their finances.
The survey found that women tend to be more modest and humble about their financial and investment knowledge and literacy, and that their retirement planning and income literacy trails that of men. Men outscored women on our 38-question quiz, which tested knowledge on retirement planning, medical and long-term care, life insurance, investing, and retirement income planning and strategies.
Women represent a critical audience for financial advisors and financial services providers. Understanding how their approach to financial and retirement planning differs from men and by age, asset level, and racial or ethnic background is critical to building lasting relationships and developing products, services, and approaches that meet women’s needs.
We know that financial services is not as diverse as the country as a whole. We also know that there is tremendous business opportunity associated the changing demographic. There is a saying that the first step to solving a problem is acknowledging there is a problem. If that is the case, then nearly half of those we surveyed in our research report, Diversity and Inclusion in Financial Advice in 2020, do not think the lack of diversity is a problem in the financial advice business. Only about a third of respondents said their firm attempts to foster a racially diverse staff.
The report highlights the obstacles to greater diversity in our industry. The ways that firms recruit advisors needs to change in order to yield different results. How firms require new advisors to develop, their book of business does not work for some minorities. The report reinforces the changing US demographics and the opportunities that the shift in the population will present. There are compelling reasons to rethink how firms recruit and develop new advisors. Women and minorities will be controlling more wealth, so it is imperative that financial services firms’ staff reflect their potential client base.
The report then presents actionable steps that firms can take to become more diverse and inclusive. It outlines the policies and programs that drive the greatest impact in terms of diversity and inclusion and those that do not work. What survey respondents said was most effective may be surprising.