Three Ways To Help Finance Achieve Gender Parity

As Women Are About To Inherit Two-Thirds Of The World’s Wealth, They Have Not Been Given The Education They Deserve

Talk of “the Great Wealth Transfer” has appeared omnipresent in financial advisory media over the past decade. However, much of the conversation overlooks the fact that, as of 2030, two-thirds of U.S. wealth will be controlled by women. This is more than a transfer of wealth from one generation to another, this is a paradigm shift. 

The attitudes, solutions and practices in the wealth and financial services industry need to evolve to meet this dynamic. Advisors have a tremendous opportunity to level-up their offerings, catering to the differentiated needs and expectations of their female clients. For those who choose to uphold the status quo, this evolving dynamic represents a threat. 

For years, the wealth management industry has centered its value proposition on the needs of male decision-makers. Most financial advisors are white men, and offerings have long been tailored to the needs of male breadwinners. These realities continue to serve as a serious impediment to women and other underserved communities’ participation in wealth-building activities and engagement with the industry at large. But this can and will change. 

Women are flexing their purchasing power and demanding tailored solutions and conversations. To bring more women into the fold and make them confident and comfortable with their finances, we can’t just, as I like to say, “pink it, shrink it and charge a pink tax.” Women aren’t a monolith, and we shouldn’t think of them as such. 

With that said, women tend to have distinct needs, preferences and behaviors when it comes to managing their money and building wealth. There are tangible steps that the wealth management community can take to make sound financial advice more accessible to them (and other historically underserved communities). 

Speak Plainly

Be clear – no jargon!

This is good advice not just for serving female clients, but for fostering better relationships across the board. When communicating about one of the most important components of a person’s life – their financial health – it is prudent to use language that is decipherable to everyone. When we use jargon and acronyms like “alpha,” “bps” and “inverted yield curve” without simple explanations, we convey that we are part of an exclusive club of understanding. 

This can be intimidating to folks outside of our advisory world. (And let’s be honest – our business school professors aren’t here to grant credit for correctly inserting the aforementioned terms into our daily conversations.) By doing so, we may be distancing ourselves from our clients, potentially leaving them with more questions than when they came to see us in the first place. 

If you don’t enjoy or appreciate a doctor speaking in jargon as they explain a loved one’s life-saving procedure or care plan, don’t do the same thing to your clients. Speak plainly and earn your clients’ trust.

Start Education Sooner 

The United States is in the midst of a financial literacy crisis. However, women’s financial literacy tends to lag that of men. Financial literacy is directly linked to financial confidence in decision making. 

The impact for women is particularly magnified when you think about the 20% wage gap a white woman and the 30% or worse wage gap a woman of color experiences throughout her career that can equate to over $500,000 less than her male counterpart for retirement. If one also considers that this woman is, statistically speaking, more likely to outlive her male peer, it’s clearer than ever that she needs financial smarts to carve out the retirement of her dreams.

Teach girls finance in grade school

It’s not enough to offer young, emerging professionals pointers for starting their new, independent life and think we’re doing them a favor. While this information is necessary and important, it’s also being delivered far too late. We should start teaching young people, especially girls, financial concepts in grade school and continuing throughout their educational experience. 

Not only will this lead to more financially sophisticated adults, it also has the benefit of giving girls and young women the confidence to pursue careers in financial services.

As advisors, we can volunteer with organizations that support financial literacy like The Girl Scouts, Junior Achievement or other local financial literacy programs. We can work with our local schools to add financial literacy to school curricula or after-school activities. Let’s give women all the tools they need to build the financial life they want and steadily provide them with this valuable information throughout their life.

Fund The Future

No access to capital

Women continue to face disparities when it comes to securing venture backing, with female-founded companies accounting for just 1.9% of all venture capital funding allocated. If you focus specifically on fintech, that abysmally small number dips down to less than 1%. Let that sink in for a second. If women don’t have access to the capital and resources they need, innovation will stagnate. 

I’ve seen throughout my career that women will go through round after round of fundraising talks, only to receive a fraction of the financial backing that their male counterparts receive, which can become a self-fulfilling prophecy if this cycle continues. 

While there are myriad reasons that women are getting less funding, a notable reason is the lack of women as a key investment partner in venture funds: Only 16% of these positions are held by white women and fewer than 3% by women of color. Women as partners of venture firms bring a different perspective when evaluating opportunities led by other women, often from a consumer demand perspective.  

Very often, women founders create businesses focused on women’s unique needs – think of Madison Reed (haircare), Spanx (shapewear) or Bumble (dating service led by women).  Matching these founders to venture firms that understand them will lead not only to successful women-led firms, but expansion of current and discovery of new industries.

This lack of funding for female-led firms is part of the reason there aren’t more women in financial services. And while women don’t necessarily need to see themselves in their financial advisor, they do need someone who can understand and empathize with them.

Women need to flex a lot to get to where we should be – and we will. We will do it with the help of allies throughout the industry and elsewhere. We need to start at the beginning and pull it around.


Jennifer Dempsey Fox is an Executive in Residence at F2 Strategy.

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