The numbers are undeniable. The purchasing power and influence women have over household finances and commerce is not only substantive – but critical. Most compelling to financial professionals is the reminder that as they look at households from an account perspective, it is an essential step to look at a household holistically. Thus it is important to cultivate rapport and relationships not only with the primary client holding the accounts, but the spouse, regardless of gender.
Investing isn’t a man’s world. According to the book, Warren Buffett Invests Like a Girl by The Motley Fool and LouAnn Lofton: Warren Buffett and the women of the world have one thing in common – They are better investors than the average man. Why? “Psychologists and scientists have shown that women have the kind of temperaments that help them achieve long-term success in the market.”
Financial power of women
Today, many advisors still believe that women may not be their target audience. But the stats below might just change their stereotypical views of women:
- In 2012, women comprised 47% of the civilian labor force and the number keep going up
- Women control over 51% of US stocks
- In 2013, Women represent 39.9% of the high-net-worth segment
- 84% of married women are involved in financial and retirement planning
- Women contribute $7 Trillion to consumer & business spending in the US
- By 2020, American women will control over half ($22 trillion) of U.S. household asset. Why? Because women live longer! A woman’s life expectancy in 2013 stands at five years more than a man’s (Female 82/Male 77). The implication? These wives are likely to inherit these assets after their husbands’ passings with 70% of widows possibly choosing a different advisor.
Women: Challenges for the financial industry
The bad news for the financial advisor industry is that most women have not been working with financial advisors, according to a Prudential study in 2013. But there is opportunity: The study also shows that those women who do use advisors tend to have higher assets, more diversified portfolios, and greater confidence and preparedness in meeting their financial goals.
Still, there are some challenges the financial industry faces in communicating effectively with women investors:
- Don’t listen: Advisors often spend too much time talking and not enough time listening to women
- Talk down to women: When they should talk AT women
- Misunderstand their needs: 84% of women feel they are not understood by financial marketers.
- Wasting her time: Many high-net-worth women regard time as a precious and limited in making decisions. So, it’s important to strike the balance in meeting a client’s needs and not wasting her time.
How can you tap into women’s needs and connect with the female investor market? Just like trying to catch a woman’s eye in a lounge bar, this is not easy.
Let’s start from the science perspective. The image below illustrates the differences between a man and woman’s brain. Men think in a linear fashion while women are circuitous and programmed to collect information. Men prefer the immediate gain while women enjoy benefits over time. Men care about information while women appreciate connection. Men are goal-orientated while women are relationship-oriented.
In summary, women are social animals. They care about relationships and connection. They spend more time on social networks building relationships, communicating with friends, and making new friends. When they want to access product information, make decisions, or find new products, they seek advice and recommendations from their friends or others in their network This reminds me of a story from the book: Why Men Don’t Listen and Women Can’t Read Maps.
If a woman is out driving and gets lost, she’ll stop and ask for directions. To a man, this is a sign of weakness. He’ll drive around in circles for hours, muttering things like, “I’ve found a new way to get there” or “I’m in the general area” and “Hey, I recognize that gas station!
Savvy women now know how to search online and seek answers directly from their social media channels. According to Neilson’s Women of Tomorrow: “Women are expanding beyond their careers and homes to influence decisions in both business and politics to benefit others. And they are leveraging social media platforms to solve problems, ask questions and build communities.”
In 2012, 86% of US women had social media accounts, 72% of women were logging on social media at least once a day, and women were spending on average 12 hours per week using social media. Will female investors behave differently from women in general?
The answer is: no. According to Finect’s 2014 Investor Social Media Behavior Study, female investors use social media 12.6% more than male investors. In addition, for those investors who have advisors, female are 11.5% more likely than male investors to connect with their advisors on social media.
So what all this mean for you? Women continue to be online and in the social world more than men and ignoring this fact could lead to a missed opportunity – a powerful opportunity indeed.
Tips to build relationships with women investors on social media
Building relationship with female clients or prospects on social media is not a one-day job. Here are some tips and it all starts from “Listening.”
1. Find her, Follow her, then Listen to her. Women are very active on social media sites. For example, among individuals using Finect, 35% are women. You can also find them in different social media groups sharing personal and professional insights related to women topics such as this LinkedIn group powered by CitiBank: Connect: Professional Women’s Network. Consider joining women-oriented social media groups and follow key influencers in the women’s market; then you can start listening to them: What do they care about? What’s issues do they face in their lives? And what likes or dislikes do they have?
Fact: 70% of women see themselves as savers rather than investors, and are interested only in guaranteed or FDIC-insured products.
2. Speak in her language and make it relevant. You will turn women off by reverting to boring terms or numbers when communicating in social media. Make it relevant. Share financial tips related to their interests like weddings, travel, and fashion, to name a few – all great ways to drive women’s attention. Plus, women will be more willing to share smart help on these relevant topics with their BFF (best friend) through social media. Top topics (or key words) for women include: Kid, Pregnant, Family, Beauty, Parenting, Fashion, and Health.
3. Engage her:
- Start discussions: Create online communities for women. You can ask questions or start discussions in your group related to niche topics. The table below offers some examples of financial questions that every woman needs to answer. Posing these questions to women can be a good way to start a conversation.
- Education: Show your thought leadership by educating women. You can create FAQ videos to share your experts on these topics or invite them to join your webinar. One good thing about social media is that it’s now easier than ever to build your own video channel, and with a few clicks, invite followers or connections to attend or join.
To learn more about the behaviors that impact decisions made by investors – women included — when choosing an advisor through social media, download Finect’s full report for free here.