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Gender-orientated financial advice


Understand your options

It’s a touchy subject in this day and age – should the provision of financial advice be tailored differently for men and women? There is a school of thought that demands absolute equality – with an actuarial adjustment for differing mortality rates (on average men die before women) and there is an opposite school of thought that detects: a problem when women aren’t given tailored advice; and that there is an omission in the range of financial products women are offered. Does gender affect financial advice?

Where clients are married we (Flowers McEwan) prefer to advise jointly – especially where the results of our advice will impact both partners. Some of our clients are single or handle their finances on their own. In all cases we have to be alert to our inbuilt and unconscious biases and avoid stereo-typing.

Nevertheless, research shows that men and women approach financial planning differently (for whatever reason – nurture or nature!). But the financial services profession is dominated by men, with a male approach to financial planning and using products designed with men in mind.

Some examples where differences between men and women appear:

Risk Tolerance
Men will commonly take more risk in investment – both in their approach and in their selection of funds. And yet, women should be the ones to take more risk because their money will have to produce better returns to reach the same goals (they will generally earn for fewer years and will call on their funds sooner). Interestingly, despite their more aggressive approach, men’s portfolio choices will generally underperform women’s over time (by about 1% per annum).

Holistic Financial Planning
Women will be more likely to respond to an holistic approach whereas men will often focus on investment returns and competing with the market. Wives and mothers will have provision for children and protection of the family as a dominant concern whereas men will often be thinking about charges and technical product issues.

Where a man is the main bread-winner the woman will be the one most in need of life and illness insurance – on the life of her husband. Crudely put, if she were to die, his earnings wouldn’t change whereas if he were to die and the family were reliant mainly on his earning, the impact would be significant. Obviously, if a woman is the main earner the reverse applies. This makes joint-life insurance policies unsuitable because they assume the same level of cover is needed for both parties.

Sustainable Investment
We don’t have enough research yet to guide us but in the years to come it will be interesting to see if women and men approach the realm of Sustainable investment any differently (see separate article on this subject).

In reality men and women need the same things from their financial adviser. They need someone who: (1) they can trust; (2) can help them make good decisions; and (3) will bring great solutions to the table. We are committed to being great financial advisers to all our clients: male, female and couples!


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