Women are the sole or primary decision makers for as many
as 80% of all purchasing decisions. Women make the choice
on new bank accounts 89% of the time, in DIY 80%, in cars
60% and in choice of holiday, 92% of the decisions are made
by women. Women's wealth is growing ' between 1970 and
1998 men's median income rose by 0.6 percent while women's
median income rose by 63%.
The importance of developing products and services that
meet women's needs cannot be overstated. When purchasing
financial products, wealthy women have particular needs and
concerns which are quite different to those of men.
Understanding why and how women create wealth, where they
invest and why is critical to those who wish to sell
financial service products to this potentially huge and
poorly catered for group.
In 1998 the average male millionaire in the UK was worth
£2.7 m (US$5.42m), while the average female
millionaire owned just £1.28 m (US$2.56m). By 2006,
women had caught up considerably, with the average female
millionaire worth £1.97 (US$3.94m) compared with
£2.96 m (US$5.92m) for men.
The increase in female wealth has not been limited to
developed countries. In 2006, the female paper tycoon
Zhang Yin was listed by the Hunan Report as the wealthiest
person in China with an estimated US$3.4 bn.
So how are women creating this wealth? The traditional
sources of wealth for women have been inheritance from
their parents or their deceased husbands or financial gain
from the divorce of a wealthy husband. Whilst these
methods for achieving wealth are still evident, an
increasing number of women have created their wealth
through their job or through the ownership of a business.
Whilst men's major motivation for starting a business is
financial gain, women tend to cite flexibility, freedom
(from corporate structures and politics) and financial gain
as the main reasons for setting up on their own. Holly
Sargent, Senior Associate Dean for Advancement and Senior
Director for University Women's Studies at Harvard
University points out that when women start a business it
often does not have the sole purpose of generating wealth.
"The businesses are more likely to be family orientated,
less commercial and more socially or more 'gap in the
market based'....A lot of innovative products are created
around female-oriented gaps in the market."
Income from investments has become an important source of
wealth for wealthy women. Up to 38% high net worth women
in Asia cited income from investments as one of their three
most important sources of wealth. In Europe, this was
lower at 24% with 64.6% stating income from their job as
one of the three most important sources of income. Whether
income comes from investments, ownership of a business or
through a salary, women are creating their own wealth,
independent of their husband or family.
Motivations for amassing and protecting wealth are almost
identical for men and women. Financial security in
retirement is seen as the main priority followed by a
better personal lifestyle and enjoyment of the finer things
in life. In other words the goals appear to be neatly
divided between spending on the present and saving for the
future. More intangible factors such as status and the
sheer enjoyment of making money, come much further down the
list.
Women create wealth in order to enjoy a better lifestyle.
They spend their leisure time and disposable income on
holidays and home improvements, just like men. The only
significant difference in spending is that men are likely
to spend a greater proportion of their disposable income on
cars and gadgets whilst women focus on clothes, jewellery
and watches ' so far the cliché holds true.
However, women do invest quite differently to men. Women
are far less likely to take risks with their money, whether
in their personal finance or business affairs. Research
suggests that more men than women invest in financial
products that are considered to be at the riskier end of
the financial spectrum such as hedge funds, private equity,
structured products and derivates.
Women take longer to come to a decision about what to
invest in and are less likely to go to a third party for
advice than men. Men are more likely to consult tax
specialists, accountants, private banks, brokers and the
media. The only source of advice that is more widely used
by women than men is the high street bank.
This does not mean they are less successful or able
investors than men. In Tom Peters book ReImagine! he
quotes the National Association of Investors on the returns
of investment clubs. Whilst men only clubs delivered 15.6
percent returns, women only clubs delivered 17.9 percent.
Wealthy men are more likely to use personal trainers,
chauffeurs, chefs, alternative health practitioners,
property search agencies, lawyers and private banks than
women. However, wealthy women are more likely to use what
may be considered 'lifestyle' services such as personal
concierge and shopping services, life coaches, personal
stylists, bodyguards and private doctors.
Women tend to invest to reach a particular goal, for
instance, a college fund, retirement, a major holiday.
Once the investment goal has been reached, women are more
likely to 'protect' the fund rather than put it at risk
through further investment.
So what are the conclusions that can be drawn about
marketing financial products and services to high net worth
women:
1. Whilst products do not have to be marketed as a 'women
only' product, they do need to provide clear, comprehensive
information from which the individual can make an informed
choice. As many of the women will be making investment
choices without the benefit of advice from independent
advisors or tax specialists, everything produced must be
jargon free and in plain English. To support research,
information gathering and decision making processes,
provide an on line help desk or information line.
2. Build a relationship through education. Educate women
about financial matters that may concern them depending on
their age or lifestyle.
3. Develop products 'themed' around issues such as
'wedding', 'college fund', 'retirement' Encourage
continuing investment in multiple closed end funds
4. Women do hire personal trainers and are prepared to pay
for the personal touch. A 'financial coach' may be the
incentive a woman needs to invest in a particular product
or organisation.
----------------------------------------------------
Pam Kennett and Crispin White are Directors of Chiswick
Consulting Limited, a management consultancy which provides
advice and direction to clients in marketing and human
resources. They have particular expertise working with
professional service companies. Contact them at
crispin@chiswickconsulting.com or
pam@chiswickconsulting.com or visit
http://www.chiswickconsulting.com for more information.
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