Female of The Species

About 25% of high net worth individuals in Australia are female – estimates from ABS data and CoreData research show.

These tend to fit into three distinct groups; those who have or had their own business, those who own or owned a business with their husband and divorced, and those who have inherited a business or its assets after their husband died.

However, what is more interesting about the female HNW is while males feel comfortable having a mix of relationships with financial planners – females appear to be completely black and white about the idea of advice.

It seems they either have an adviser and think the world of him or her or don’t have one and dislike the idea of engaging one.

For the approximate 25% of HNW females who have a financial planner, it seems the planner fills the fundamental role of navigator – guiding and advising them how to invest their funds and making all the significant decisions for them.

In these instances female HNWs generally describe the partnership as a good one.

For the 75% of HNW females who don’t have a financial planner the core drivers of this decision appears to be that they:

a) Don’t trust planners – claiming that they are in the business of selling something, or;

b) Have had a previous negative experience with a financial planner and have rejected them since.

What’s curious about this is that a similar study conducted in America by Pain Webber and UBS found that 72% of HNW females used an adviser and were happy with the relationship - almost the inverse of the Australian data.

The US data also showed a very heavy weighting to managed funds, while the Australian data displays no such weighting – with assets split between cash, direct shares, property and managed funds.

In a recent focus group of HNW in Sydney, which featured four females – one who had acquired sole ownership via divorce of a business she and her husband had built, one who had inherited a business and two who had been left substantial investment and property portfolios following the death of their husband – the mood was distinctly split on advisers.

Albeit from a small sample but neatly modelling the Australian female HNW population, one of the HNW females in the group had an adviser, as well as an accountant and used them for absolutely every decision that she made.

“I love him, I talk with him, I guess about once a month – he calls me with recommendations or we talk about opportunities for making money or making investments in the share market and I always follow them. He really knows what he is doing and over the years we have done very well together. Female 62 Focus Group NSW.

The other three had rejected the idea of advice because as far as they understood, financial planners all worked on commission and they were simply sales people – no more, no less.

“I went to see one at Goldman Sachs and he came up with a plan for me, and in the first year he wanted to charge me 6% of what we had, so I said no, I’ll just keep doing it myself thank you.” Female 66 Focus Group NSW.

I suppose I should have an adviser or a self managed fund, but I am talking to my family about it and I think I will get them to help me. Female 71 Focus Group NSW

This sentiment was also echoed in previous CoreData-brandmanagement research which revealed:

• Women struggled to make appointments with a financial planner (making on average four calls to get an appointment as compared to the male average of 1.2) • Women spent on average half the time that men did with a financial planner (the female average appointment was 44 minutes, while a male spent just over an hour with each planner) • Women sought a different type of utility from a financial planner.

While the first two points tend to indicate that the current financial services system isn’t geared to the single female of any age seeking financial advice – the final point is crucial.

For most male HNWs planners need to be able to display likability – that is one of the critical skills that they need to have is to be able to form a rapport with their prospective client – quickly and smoothly – for female HNW it became transparent that they were seeking utility; how much are you going to charge, what are you going to do and what can you promise me.

The interesting thing about female HNW’s is that the industry, by necessity is going to have to learn how to deal with them – there will be more of them, both absolutely and as a percentage of the population and they have very specific needs driven by elements which are relatively unique to them.

• They tend to retire earlier (48 as compared with 54 for men) • They tend to live longer (men tend to die at 76 and women at 82) • Women are earning more (between 1982 and 2000 female salaries went up 2.8 times while male salaries increased by 2.5 times) • Women are increasingly single (33% of marriages end in divorce) • Current nuptial rates indicate that 26% of women will never marry