Marketing Financial Products to Women

Part
01
of three
Part
01

Best Practices - How US Banking Organizations Market Financial Products to High Net Worth Female Clients

Our research findings have uncovered six best practices that can be used by financial organizations and personnel, including banking organizations, to market financial products to high net worth female clients:
- Connect and communicate with HNW women on social media.
- Provide them with in-depth details regarding financial products and investment pitches.
- Locate and connect with HNW women via networking events and opportunities.
- Provide up-front product information and services that are designed to solve the complex financial problems of this demographic.
- Locate and connect with HNW women through a referral pipeline by networking with CPA's and financial attorneys who already have this demographic as clients.
- Give special attention and cater to the life changes and stages that HNW women experience.

Below, you will find a deep dive of our findings.

METHODOLOGY

In order to fulfill this request, we searched extensively through industry reports, analyst reports, and insights from trusted media sites to locate any existing insights that directly outline how U.S. banking organizations market financial products to high net worth female clients. However, this research did not yield any specific enough results.

Therefore, we next conducted research on investment trends pertaining to high net worth females. This research included gaining an understanding of how this demographic discovers financial products, marketing methods utilized by investment managers, and factors that serve as motivators for women to seek out financial products. Using these insights, we triangulated a list of best practices that we assume banking organizations/personnel likely utilize and focus on when marketing financial products to high net worth female clients.

Below, you will find a list of the best practices we have identified. Information on how this demographic learns about financial products and how financial officers can intersect with them has been woven throughout these best practices. For this research, we have provided general best practices which we could logically assume are applicable to the U.S. demographic specifically.

Please note that according to the Global Banking Alliance for Women, high net worth women "want the same from the bank as all women -- inputs that increase their confidence," including "more and better information, education, and networking." Based on this insight, some of the best practices we have presented may be more geared towards women clients in general. However, we have selected those that we assume would be particularly applicable to the high-net-worth demographic, based on the aforementioned insight from the GBA for Women.

SOCIAL MEDIA MARKETING

Social media is a useful marketing tool to use in order to reach high net worth women. According to Spectrem Group, "high net worth women are more likely than high net worth men to use social media for financial purposes," and are also "twice as likely as men to rely on social media to communicate with others than the telephone."

EY recommends using digital communications to complement human interactions.

DETAILED INVESTMENT PITCHES

EY states that financial professionals looking to impress female clientele should provide "clear, substantive information and advice." Insights from Spectrem Group state that women in this demographic are expecting in-depth insights regarding the benefits of their financial investments.

According to Spectrem Group, millionaire women and ultra-high net worth women are focused on the following details when considering a financial investment/service:
- 76% of UHNW women and 83% female millionaires say that they consider a company's reputation before making an investment.
- 82% of female millionaires, 81% of mass affluent women, and 78% of UHNW women "consider the past track record of their investment choices."
- 46% of women say they are interested in socially responsible investments, with 34% of UHNW women and 45% of female millionaires say the same.
- Overall, women are very likely to consider how their financial choices/investments will impact their taxes.

PEER NETWORKING

According to the Global Banking Alliance for Women, high net worth women enjoy being presented with opportunities to network with other high net worth women. This gives them the ability to exchange information and expand their social circles further into the high net worth arena.

Investopedia also recommends relying on networking as a way to connect with the high net worth demographic, but to also do so in a way that targets a specific niche demographic; this could be specific high-income professions, or a specific geographic region. To accomplish this most successfully, Investopedia further suggests connecting with professional associations within these niches. Financial personnel can also network via hobbies typically enjoyed by the high net worth demographic (e.g. boating, golfing, etc).

SOLVE THEIR PROBLEMS

Investopedia says that marketing successfully to the high net worth demographic requires the financial institution to offer products and services that solve their problems and cater to their needs.

The high net worth demographic typically has "more complex financial situations than average income earners." Typically, they require asset management services and want to reduce their tax liabilities. According to the Global Banking Alliance for Women, a some key financial concerns of high net worth women are estate and family succession planning. Investopedia says financial organizations looking to market to the affluent demographic should "add specific services to [their] financial planing menu that speak directly to solving these complex issues."

GENERATE A REFERRAL PIPELINE

In addition to networking at the client level, Investopedia says that successful financial product marketing to the high net worth demographic can be achieved by networking with "local estate planning attorneys and CPAs who cater their practices to wealthy individuals," as these individuals often serve as a link between their clients and available services.

PAY ATTENTION TO LIFE CHANGES

According to EY, financial professionals looking to build strong relationships/business connections with female clients should develop a solid understanding of their priorities and goals, take time to understand their lifestyle (including culture and religion), and maintain a sufficient "human-machine balance in core advice models."

In accordance with this, EY also recommends that financial organizations encourage advisers to serve as financial coaches, both for the clients and their families. The Global Banking Alliance for Women states that a woman being close with her financial adviser is a sign that she values them.

A woman's financial needs will change as her life changes. According to Wilmington Trust, marriage, divorce, new babies, death of a family member, reaching retirement, and changes in business ownership/career "can all have an impact on a women's needs for growth and income." Therefore, we assume these different life stages and the financial needs at arise from them are areas where a banking organization should focus their marketing efforts.

CONCLUSION

In closing, we have provided an overview of the best practices that financial institutions and personnel, such as banking organizations, use to market financial products to high net worth female clients. We have provided a total of six best practices, which collectively provide information on how high net worth women learn about financial products and where financial officers can intersect with them.
Part
02
of three
Part
02

Women Making Financial Decisions - Comfort Level: Generational Breakdown

While 82 percent of women in the United States are confident in making short-term financial decisions, such as daily budgeting, they are less confident than men in making long-term investment decisions. In general, women are less likely than men to answer financial questions correctly, less confident in their financial knowledge (even when it is correct), and less confident when accurately rating their financial decision-making abilities. It is estimated that 80 percent of women have made a decision not to discuss financial matters with friends or loved ones, primarily due to their lack of confidence in their financial knowledge. The most commonly cited reason for failing to discuss financial matters, which was cited by 37 percent of women in one survey, was a failure to adequately research financial topics. Among generational groups, 53 percent of female Baby Boomers make all financial decisions in their households, although they enjoy this task much less than younger women. The impact of financially difficult major life challenges is believed to have negatively affected the confidence of Generation X women in making financial decisions. However, Millennial women are more likely than older women to be confident in their abilities to make financial decisions, and also to enjoy doing so. Below you will find a detailed discussion of our findings.

OVERView of FINDINGS

My colleagues and I first attempted to test the general hypothesis that women are less comfortable than men in making financial decisions, focusing our research on the population of the United States. Having identified a preliminary finding that women are, in fact, less comfortable than men in making key financial decisions, we then determined some of the most frequently reported reasons women verbalize for explaining their hesitance or discomfort when making financial decisions. Finally, we explored generational differences among women in the United States as they pertain to making financial decisions. For purposes of this project, we have defined the following generations by age group: Baby Boomers (ages 55 to 70), Generation X (ages 35 to 54), and Millennials (ages 25 to 34). It is noted that there is some variation in determining the precise ages for these generations in popular literature. However, these ages corresponded to the literature we used for this project, so for the sake of consistency, we have adopted them.

GENDER-based financial decision-making

Historical Trends and Changes

Although financial decision-making has historically been a responsibility delegated to men, roles are reversing in the United States. There are five key considerations motivating this trend. First, research has indicated that women are more decisive when making certain strategic financial decisions, such as planning aspects of retirement, electing Social Security benefits, and understanding health insurance coverage. Second, as women's earning power has increased, they have become more likely to make financial decisions. It is estimated that 38 percent of women out-earn their partners, and by 2022, women are expected to control 60 percent of all personal wealth in the United States. Third, there is a growing trend in the United States for women to become more involved in financial planning. Fourth, women are increasingly becoming more educated on financial matters, and younger women in the United States "feel strongly that they have received more financial education and are more attuned to financial decisions than their mothers were." Finally, women are believed to be more in tune with the emotional elements of financial decisions than men. For example, while men may seek to arrive at "yes or no" decisions about money, women are more likely to explore the gray areas associated with finances and accurately assess the intricacies of financial matters.

The Majority of Women Make Financial Decisions

Corresponding to the aforementioned role reversals regarding financial decision-making, our findings indicate that across all generations of women in the United States, an estimated 97 percent of women participate in some portion of financial decision-making, regardless of their comfort level. It is reported that 56 percent of women share in household financial decision-making, while 41 percent of women are the sole financial decision-makers in their households. While 63 percent of women who make all financial decisions in their homes are unmarried or divorced, over one-third of sole female financial decision-makers are in long-term relationships. Less than 4 percent of women in the United States do not contribute at all to financial decision-making.

Comfort Level: Men Versus Women

Despite increasingly participating in financial decisions and demonstrating a commitment to successfully evaluating certain key personal finance decisions, research indicates that women are less confident than men at making financial decisions. Overall, women also demonstrate less financial literacy than men. Although a typical Wonder request utilizes resources published within the preceding 24 months, we have included the results of a study from 2014 on this topic, as we did not find more recently published data that duplicated these highly relevant findings on gender gaps in financial literacy and confidence.

In one experiment regarding financial self-confidence and financial literacy, women demonstrated consistently poorer performance on three key variables. First, women were less likely than men to answer basic financial questions correctly. Data published from this experiment indicate that men provided correct answers on 91.9 percent of financial questions, compared to 84.4 percent for women. Second, women were more likely than men in this study to indicate they do not know the answer to a financial question, suggesting an overall lack of confidence in their financial knowledge. Additionally, women underrate their financial knowledge, even when it is correct. For example, when the option to respond "do not know" to a financial question was removed, women provided more correct answers. This finding suggests that women have adequate financial knowledge in many cases, but unless they are forced to demonstrate it, they will underrate their own abilities. Finally, women were more likely to self-evaluate their financial knowledge as inferior when compared to their male counterparts. Even when women provided one correct answer on a financial survey, they were not confident that they could provide three subsequent correct answers. After providing one incorrect answer, women's confidence in providing subsequent correct answers was diminished even more significantly.

While these results provide qualitative information about women's confidence in financial matters, we also identified quantitative data that indicates that women are less confident than men at certain aspects of financial decision-making. It is estimated that 82 percent of women feel confident in managing daily budgeting, but they are less confident in their ability to make long-term decisions about financial planning. For example, while 79 percent of women are confident in their abilities to manage their checkbooks, only 28 percent of women are confident in their abilities to make smart long-term financial investments. This trend is exemplified by the fact that only 18 percent of women have invested in stocks in the United States, compared to 40 percent of men. Approximately 60 percent of women in the United States are anxious that they have not made appropriate financial decisions to ensure they will have sufficient financial resources in retirement, and 53 percent of women are not even confident enough about personal finance to discuss money with a professional financial planner. It is believed that 80 percent of women have refrained from discussing financial issues, for a variety of reasons that will be explored in greater detail below.

Strengths and Weaknesses: Men Versus Women

Despite their overall lack of confidence in financial decision-making, women outperform men in many areas of personal finance. For example, 76 percent of women (compared to 73 percent of men) have determined their Social Security benefits. It is estimated that 57 percent of women and 55 percent of men have comprehensively evaluated their retirement expenses. At least 41 percent of women have made an effort to estimate the lifespan of their existing financial assets, but only 38 percent of men in the United States have done the same. Approximately 44 percent of women have evaluated the health care coverage they are likely to need during retirement, but in contrast, only 37 percent of men have made the same undertaking. Finally, over 40 percent of women have created a long-term strategy to ensure adequate income flow in retirement, versus only 34 percent of men. In comparison, 55 percent of men have determined their projected retirement income, compared to 53 percent of women. The most significant gender gap in personal finance is observed in determining investment income and assets available for expenditure in retirement. At least 60 percent of men have evaluated these figures, compared to only 44 percent of women. These findings indicate that men focus on personal finance decisions pertaining to income and revenue, while women are more likely to evaluate financial expenses.

Financial decision-making pain points

Nearly 80 percent of women in the United States have chosen not to discuss financial issues with friends and family, primarily due to their lack of confidence in their financial abilities, knowledge, and decision-making skills. We identified eight pain points experienced by women on the topic of financial decision-making. It is estimated that 37 percent of women do not feel confident discussing financial decisions because they have not yet done what they feel is adequate research on the topic. Approximately 36 percent of women expressed a lack of confidence based on their previous experience with financial decision-making. It appears that overall confidence is linked to past success, as 25 percent of women who do not discuss financial decisions with friends and loved ones indicated that they have not been successful in navigating these conversations previously. Approximately 36 percent of women who are hesitant to discuss personal finance do not know where to obtain advice, while 18 percent are waiting for recommendations by a trusted party before they solicit counsel on financial decisions. Approximately 25 percent of women who express a lack of confidence in financial decision-making indicated that they do not have adequate time to dedicate to educating themselves, while 12 percent reported their lack of confidence was linked to a non-supportive spouse. "Other" reasons were identified by 9 percent of women surveyed.

Generational differences in female decision-making

Baby Boomers

American women in the Baby Boomer generation (ages 55 to 70) are the most likely group by gender to make all financial decisions in their households. Approximately 53 percent of female Baby Boomers are the exclusive financial decision-makers in their homes, compared to 49 percent of Millennial women and 42 percent of women in Generation X. We identified three trends that illuminate the increased comfort of women in this age group when making financial decisions.

First, women in the Baby Boomer generation consider themselves "more engaged with their finances," as they have had the benefit of accruing a lifetime of financial wisdom. Over three-fourths of women in this age group have committed to long-term financial planning, and they are confident that these plans will prove fruitful. Second, 64 percent of female Baby Boomers have sought financial advice from a professional, and they report increased feelings of security and confidence regarding both their financial decision-making skills and their overall financial situation. It is estimated that 62 percent of female Baby Boomers report feeling a "strong sense of control" regarding long-term financial planning, compared to only 58 percent of Millennial women and 51 percent of women in Generation X.

Finally, the perception of responsibility and the necessity of making financial decisions at this stage of life are key factors for women in the Baby Boomer generation. Even for women in this age group who do not feel inherently comfortable in their financial decision-making acumen, they may have no choice but to make financial decisions. Approximately 91 percent of Baby Boomer women report it is their responsibility to understand their financial situations, and as they edge towards retirement, they may feel required to make financial decisions, regardless of comfort level. Women in this generation are the most likely group to be the sole financial decision-makers in their homes. However, while 53 percent of female Baby Boomers make all the financial decisions for their households, only 35 percent of these women feel that their financial knowledge is superior to their partners. Additionally, only 23 percent of female Baby Boomers actually enjoy making financial decisions. Among married female Baby Boomers, only 11 percent of women are primary financial decision-makers. These findings may suggest that female Baby Boomers who make financial decisions do so out of necessity, such as the lack of a partner in the household to assume responsibility for the task.

Generation x

Our findings indicate that women ages 35 to 54 report the highest levels of anxiety relating to financial decisions among the three generations of American women studied for this project. Only 42 percent of Generation X women report they are the exclusive financial decision-makers in their households, and this percentage decreases to 22 percent among married women. Only one-quarter of Generation X women report they enjoy making financial decisions, and less than half of these women believe they have more extensive financial knowledge than their partners.

We identified three key trends affecting the confidence of Generation X women in making financial decisions. First, women in the Generation X age group are the most likely to be impacted by the significant financial strains associated with caring for both aging parents and growing children. Second, Generation X women are the most likely group to have recently experienced a major life challenge. Twice as many women in this age group have been impacted by a child's entry to college compared with female Baby Boomers, while three times as many Generation X women have been affected by a divorce compared with older women. It is estimated that 16 percent of Generation X women have confronted job loss in the last five years, while nearly one-quarter of these women have experienced a significant loss of income or other financial assets. Finally, Generation X women are not satisfied with the manner in which they managed these life challenges; only 25 percent of Generation X women who confronted major life challenges felt that they ultimately made the best financial decision for their circumstances. These findings suggest that their perceived lack of appropriate management of the financial difficulties associated with life challenges has negatively affected the long-term confidence of Generation X women.

Millennials

Among women ages 25 to 34 in the United States, we observe the most consistent levels of both participation and confidence in financial decision-making. Nearly half of Millennial women report they are sole financial decision-makers in their homes, and among married Millennial women, 38 percent are primary financial decision-makers. It is estimated that 50 percent of Millennial women believe they are more knowledgeable than their partners on financial matters, and 41 percent of women in this age group enjoy making financial decisions.

The relative confidence of Millennial women in making financial decisions is underscored by two trends. First, women in this age group are unlikely to have experienced significant life challenges, such as buying a home or having children. As a result, they have neither been burdened by the actual financial hardships associated with these events nor have they had an opportunity for their confidence to be affected by regret at the financial decisions they made (as is the case with Generation X women). Second, women in this age group feel adequately educated and prepared to make financial decisions. It is estimated that 63 percent of Millennial women were educated on financial matters by their parents, and they have access to educational resources and tools, which they actively utilize to broaden their financial skills. Overall, these findings suggest that Millennial women are more likely to make financial decisions because they enjoy this task, and they feel confident in doing so.

However, Millennial women are likely to experience conflict in the area of soliciting professional financial advice. The need for professional financial advice is often perceived as unnecessary by Millennial women, perhaps due to their perception that they are already adequately educated to make financial decisions. Additionally, many professional financial advisors experience a difficult transition in adjusting to this population, as the bulk of their clientele has previously been women in the Baby Boomer generation.

CONCLUSION

In summary, women are less likely than men to answer financial questions correctly, less confident in their financial knowledge, and less confident in accurately rating their financial decision-making abilities. While the majority of women are confident in making short-term financial decisions, only 28 percent of women are confident in their abilities to make long-term investment decisions. When compared to men, it has been demonstrated that women are more confident in making financial decisions about expenses than revenue. Significant generational differences exist between women of different age groups when exploring confidence related to financial decision-making.
Part
03
of three
Part
03

Market Sizing - Investment Products From US Banking Organizations That Are Marketed To High Net Worth Women.

The market size (by revenue) of investment products offered by any banking organization such as trust companies, savings bank, investment companies, and safe deposit banks, for high net-worth women in the United States as of 2016 was $72.27 billion. The estimated investable assets for these demographics was $7.07 trillion in the same fiscal year. The approximate population of high-net-worth women in the US was 2.16 million.

Investment products include bonds, auction rate securities, certificates of deposit (CDs), exchange-traded funds (ETFs), hedge funds, money market funds (MMF), private equity funds, real estate investment trusts (REITs), stocks, among others. For this research, investment products are also referred as wealth management products as they consist the same type of products and services. High-net-worth individuals (HNWI) are defined as those having a net worth of $1m to $10m investable assets. Very-high or ultra-high-net-worth individuals (more than $10m assets) were excluded in this research.

The above-presented figures was derived through triangulation from industry reports, the latest statistics available, and from news article's data.

INVESTMENT AND WEALTH MANAGEMENT MARKET SIZE IN THE UNITED STATES

According to IBIS World report, total investment banking and securities dealing revenue in the United States was worth $131 billion in 2017. This market size industry scope includes only a fraction of the total investment products. The scope was limited to underwriting services (debt), trading and related services, underwriting services (equity), advising fees and loan syndication.

A report released by Autonomous Research revealed that the size of the US investment and wealth management industry was $376 billion in revenue in 2016. The scope covers products such as ETFs with a total of $3.1 trillion invested assets in 2015, mutual funds with $15.7 trillion and all other wealth and investment products consist of about $18.1 trillion invested assets. The $376 billion market size was derived based on the total investable assets of $36.8 trillion, which are defined as household net worth from retail households with <$100k ($5.6 trillion), emerging affluent households with $100k-250k ($2.6 trillion), mass affluent households with $250k-$1mn ($8.5 trillion), high-net-worth households with $1-10mn ($16.9 trillion), and ultra-high-net-worth households with $10mn or more ($3.2 trillion). According to Statista, 29% of North America's HNWIs invested their assets in real estate.

In 2016, industry revenue from high-net-worth households' investment and wealth products was worth $160.6 billion, or a 42.71% share from the total.

($160.6 billion/$376 billion)*100 = 42.71%

INVESTMENT PRODUCTS' MARKET SIZE FOR HIGH NET-WORTH WOMEN IN THE UNITED STATES


In the North American region, the total number of HNWI in 2016 was 5.15 million and was 4.78 million in 2015. The United States alone is a home to 4.8 million high-net-worth individuals (HNWIs) as of 2016, according to the annual World Wealth Report compiled by Capgemini. In 2015, HNWIs in the U.S. had 4.5 million.

According to a statistics released by Shurwest in 2017, 45% of the millionaires (HNWIs) in the United States are women and about 48% of estates worth more than $5 million are owned by women as compared with 35% that are controlled by men. In 2013, a separate report by the Census Bureaus stated that there are 3.4 million female-led high net-worth households ($500,000 net-worth or more) as compared to 2.3 million male-led high net-worth households.

If the total population of HNWI in the United States was 4.8 million in 2016 and 45% of these HNWIs are women, then we could say that there are 2.16 million high-net-worth women currently living in the country.

4.8 million * 45% = 2.16 million

If the total investment products market size for HNWI was worth $160.6 billion in 2016, and using the 45% population share of high net-worth women and assumed it to be similarly proportional with revenue, then the total market size for these demographics was $72.27 billion.

Estimated market size of high net-worth women
= $160.6 billion * 45% = $72.27 billion

% share from total
= ($72.27 billion/$376 billion)*100 = 19.20%

Estimated investable assets of high net-worth women
= $36.8 trillion * 19.20%
= $7.07 trillion

CONCLUSION

In the United States, a population of 4.8 million are considered high net-worth individuals, and 2.16 million of these are women. Revenues from investment products marketed to high net-worth women are estimated to worth $72.27 billion in 2016 as derived from more than $7 trillion investable assets. From a survey conducted for high-net-worth women in North America, 98% of these women revealed that they are "either the sole or joint decision-makers on daily banking and 84% are fully or partially responsible for the family investment portfolio."

Sources
Sources