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Dealing With The Fairer Sex

Alison Steed

25 October 2006

In the last two weeks we have seen two thought-provoking Opinions of the Week that have looked, in whole or in part, at women as a distinct client group for wealth managers. The authors recommend that wealth managers look afresh at this segment. Here we examine what the wealth managers themselves are saying and doing about the underserved sex. The number of high net worth women in the world is increasing at a fast pace. For instance they make up nearly half the UK’s 820,000 “demi-millionaires” and are worth a total of £740 billion, according to research, from UK’s Brewin Dolphin Wealth Management, which estimates that the number of people with more than £500,000 of net worth is rising by around 10 per cent a year. The majority of money is tied up in property – around 36 per cent – with a further 23 per cent in financial securities. As if to prove the point that sisters are doing it for themselves, the richest person in China is now a woman. Wealthy women tend to get their assets in one of three ways – they earn it, they inherit it, or they get it from divorce. The latest high profile divorce case to hit the headlines is Sir Paul and Lady McCartney – which is already the subject of leaked documents and allegations of bad behaviour. However, while these methods of gaining wealth are very similar to men, the way women approach the question of dealing with their wealth is very different. Amanda McCrystal, head of wealth management at Bramdiva, a division of UK-based Bramdean Asset Management which was set up specifically to offer services to high net worth women, said: “In terms of the types of investment chosen, women are more likely to have an ethical stance, be cash-based and have a more philanthropic attitude. They take longer to make investment decisions than a man, and are more suspicious of their adviser. They are quite wise to believing that they should not take everything at face value. The same applies to fees.” Donna Bradshaw of independent financial advisor IFG Group, said: “In my experience women are less trusting initially and tend to question the cost of advice more than men do – it is interesting that women in business generally charge less than their male counterparts and on average negotiate smaller packages. Men are more likely to take risks and also to act on tips given by mates in the golf club or in the bar.” The perhaps more cerebral than “gut instinct” approach to wealth generation taken by women does not seem to be ineffective. Investec Bank’s analysis of The Sunday Times Rich List found that the top 50 richest women in the UK has risen by an astounding 70pc in the last five years, from £15.6 billion to £26.5 billion. This is an average increase of £218.2 million a piece. Kim Hillier, chief investment officer of Investec Private Bank, said: “According to the Centre for Economics and Business Research, there are now more women millionaires aged between 18 and 44 than men. This is partly due to the dramatic increase in recent years in the number of women holding senior managerial positions. Women are becoming more financially independent, and this has been reflected in the demographic shift in our client base.” Julie Hurcomb, head of corporate marketing at Coutts, said that a high proportion of Coutts’ clients are referred by existing clients, especially women. But the bank is also using a variety of ways to target wealthy female clients. She added: “We also organise events aimed specifically at entertaining existing female clients and attracting new clients. For example, we have taken clients to Stella McCartney's Paris fashion show to meet Stella backstage; we are staging a fashion show with Alice Temperley at our offices in the Strand in November; we held a ladies racing day at Goodwood; we have a financial planning seminar for women with the City Women's Network in November. We are also involved as a sponsor of the Everywoman Awards and have hosted numerous events for charities supported by women.” The bank has also launched an online magazine for female clients, www.couttswoman.com. Entrepreneurial women tend to have a greater grasp of financial matters because of their work, said Ms Bradshaw. She added: “In my experience, women who have gained significant wealth as a result of divorce are less financially aware and astute than female entrepreneurs. There is a very simple reason for this, they were married to powerful men who more likely than not ran the family finances - many women do not know how much their husbands are worth before they divorce, it has been known for husbands to try to hide some of their wealth in the hope of securing a smaller settlement. “Their entrepreneurial sisters have had to learn about money to run their businesses successfully and will already be dealing with advisors, as a result they are more likely to know the importance of protection and pension planning.” Philippa Gee of UK independent financial advisor Torquil Clark, said she has even come across widows who have “never even signed a cheque”. She added: “They need to start with the absolute basics, the key in this case is acting as less of an advisor but more of a hand-holder and, where at all possible, involving the family.” Of course, the best approach to advising women will come down to individual preference in the long run, said Ms Bradshaw. One of the key differences between men and women is their longevity, and women inevitably have to take this into account when they are considering how to make the most of their money for the long term. For example, if a woman is depending on a single lump sum – even if it is substantial – to provide for the remainder of her life, the decisions needed to make this work are myriad, and critical. Ms McCrystal said: “Women live longer and often have less capital than men, and they have to be clear how they are going to live off the capital they need to. People think that £4 million is a lot of money, but it is not if you are 40 and that’s all you have got for the next 40 years.” Advisors dealing with women need to be aware of these aspects of female finance to ensure they do the best thing for their clients, and to win their trust initially.