The wealth management industry knows the value of the personal touch. In recent years, the sector has also embraced digitalisation and looked at personalisation tools to offer the same gold standard of service online.
One of the factors driving the move towards greater digitalisation is the impending intergenerational wealth transfer and the younger age of heirs. While it’s clearly important to focus on the next generation of investors for long term, strategic growth, there is a more immediate concern – rising numbers of female investors.
Are female investors an important market segment?
Currently, male investors outnumber female investors by a factor of roughly three to one. However, this ratio is set to change during the next wealth transfer because of the many widows who will inherit an estate before it is passed on to the younger generation. In addition, the number of younger female investors of all ages is growing. A survey from N26 found that women currently invest 29% less than their male counterparts, but two thirds of them expressed an intention to invest more in the future. Some of this difference may be attributed to the gender pay gap, but there are other factors at play. Personalised digital wealth tools can be used to support this growing market segment.
Do women need different digital wealth tools?
The survey from N26 offers some actionable insights for the development of digital wealth tools that appeal to women. The team spoke to 16,000 men and women from five different European countries and found a trend for women to prioritise long-term security over short term gains. This sort of insight isn’t just a valuable guide for wealth management firms, it could lead to the creation of a digital interface that can offer greater insights, allow for longer term monitoring and more extensive curation of preferences over risk.
The longer-term perspective is certainly an important factor and may also be linked to the fact that there is growing evidence that women are proportionately investing more than men in climate action. The CDC Group, EBRD and EIB have joined together to promote women’s investment in environmental change and stated that:
“Women are agents of change and at the forefront of climate action globally.”
The area of ESG investment has implications beyond digital wealth tools, of course, but showing more information on these preferences could be a way to build loyalty with female investors.
Personalisation benefits all investors
People don’t fit neatly into trends or models. There will be men who take the long-term view or invest in green businesses just as there will be women who aim to make short term gains. This is why personalisation is so important. Integrating features that allow each client to curate their own digital wealth service will deliver benefits for all investors. If we look at another example from the N26 research, only 48% of female investors consider themselves knowledgeable about the subject, compared to 59% of men. This suggests a need for more information and client education, but it’s worth considering the gender bias at play – it may be that some women under-estimate their knowledge whereas there may be some men who are over-confident. In this case, the solution would be tiers of information that allows users to drill down for more details. This allows for greater client education and empowerment without being patronising or alienating to any clients.
Personalisation is the key to success in attracting female investors
The rise of female wealth will be a key driver for greater personalisation in digital wealth tools. In some cases, addressing the needs of this market segment – more information on environmental investments, greater financial education – will also attract other growing segments such as younger investors. It will also benefit more traditional wealth clients who may also be interested in such issues. Firms have the expertise to deliver services to a diverse client base with different perspectives and priorities and the digital wealth tools for greater personalisation are available. There is now an urgent need to unite these two elements to create a modern wealth management service that appeals to the growing number of female investors.
Our trends report on wealth management could be of interest to you as well: "To lead in wealth management, incorporate these key drivers in your strategy" - download the report here.
