Should Female Investors Seek Out Female Wealth Advisors?

By Teresa Conley | July 24, 2016

The other day, I was having coffee with a friend when the conversation turned to female investors. Should women seek out female wealth advisors? Does it make a difference?

Teresa Conley is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyWhile on initial contemplation, the question may seem silly or even archaic; after all, if someone suggested that male investors should work with male financial advisors, they'd likely encounter a derisive response or even be accused of sexism. Historically speaking, however, the fact remains that women have faced a distinct disadvantage -- and, in more recent years, a distinctly gendered experience -- when it comes to accessing and managing financial assets.

Your Estate Planning Strategies Have Come a Long Way, Baby

Consider that until the mid 19th century, women couldn't legally own property, write a will, enter into a contract, or earn a salary. More than a century later, though things have progressed, women make an average of $.77 to a man's dollar, hold only 14.6 percent of executive officer positions at Fortune 500 companies and only 1 in 3 wealth advisors are female. 

In other words, as Karen Finerman of Fast Money puts it, if you don't let men tell you what to wear, where to live or how to vote, why do 80 percent of female investors have male financial advisors? Finerman advocates that, when possible, women seek out female wealth advisors to provide wealth management services. 

Teresa Conley is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt County

While no one is suggesting that you dump your current financial advisor -- if you're satisfied with the investment guidance he provides, that is -- female investors may want to critically and carefully rethink their relationship with their investment professional. If you feel as though your financial advisor takes a, "don't worry about a thing, I'll take care of you" attitude, think twice. 

All investors, regardless of gender, deserve to be empowered with as much information as possible. Then, and only then, can they make a truly informed choice about their financial options and play an active role in the wealth planning process. 

Female Wealth Advisors May Offer a Different -- More Relevant -- Perspective

Female investors tend to assess risk differently, a trait that a female advisor may be more responsive to. In general, women tend to be more risk-averse than men when it comes to investing, says The Washington Posta characteristic that may lead to more rational decision-making.

In fact, studies from Vanguard, Barclays and Ledbury Research indicate that women investors tend to take a long-term, buy-and-hold approach, rather than throwing money away on a "stock picking" or "market timing" approach. The upshot? Women statistically make more money on investments than men because they don't tend to take as many risks. 

Others, such as Dr. Laura Lindsey of the W.P. Carey School of Business, suggest that female advisors may have an advantage when it comes to building relationships based on trust, as well as encouraging communication with clients. However, the fact remains that women are a minority in the personal wealth management industry -- so it's not realistic to expect every female investor to work with a female wealth advisor.

Instead, look for wealth advisors that share a commitment to communication, building trust-based relationships, and taking a long-term approach to investing... regardless of gender. 

Posted in Financial Planning