Throughout her career, Mary Hastings has observed that in making investment decisions, women are more diligent at understanding where they are putting their money than men.
“Women are much better at learning, and often they will come with a list of questions they want to understand,” says Hastings, a managing director of investments with Wells Fargo in Boston. “They do their homework, whereas men ask, ‘What do you think,’ and then tell you to go ahead, though you know they don’t really understand.”
That savvy is one possible reason why high-net-worth female investors are more inclined than their male counterparts to keep alternative investments in their portfolios, according to recent study by MainStay Investments, a New York Life company.
More than half of the female investors surveyed had increased allocations to alternative investments over the past year, and more than a quarter were planning to do so in the next five years, the study noted.
Female high-net-worth investors were also more supportive of the notion that alternative investments would become core holdings over the next decade. The results were derived from a national survey of more than 800 high net worth investors, aged 40 to 65.
Hastings notes that among the high-net-worth women she has advised, there is a longer perspective on investing. “They are very open to saying this is not a six- to 12-month investment, this is three to seven years,” she says. “Looking back at the [2008] downturn, I don’t recall any of my [female] clients calling to say, ‘I think I want to sell.’ They called for reassurance.”
She notes that Wells Fargo offers a free investment-goal assessment for any client. “For women that’s a great comfort, and all wirehouses should be encouraged to do these plans,” she says, adding that the industry needed to do a better job of listening to female investors, something that has helped build her client base.
“Eighty percent of our clients are three generations, and they say, ‘I want you to work with my daughter, my mother, my wife,’” Hastings says. “I think part of the reason is the woman-to-woman aspect, but also because they know I genuinely care about them. It’s critical to listen — that’s the biggest thing. When a high-net-worth female investor or any woman comes in, give their question the respect that it deserves. Overall, it boils down to level of trust.”
Adri Miller-Heckman, a Connecticut-based marketing specialist who coaches wealth advisors on how to serve female investors better, agrees that the relationship with an advisor is the most important factor determining the investment trends for female investors.
“High-net-worth women really depend on the trust they can build with an advisor, because the primary concerns across the board are safety and protecting their wealth so they don’t outlive their money,” she says.
Miller-Heckman adds that in the past decade, the financial industry has experienced a shift. “Women investors want to be educated and want their advisor to understand them,” she says. “The No. 1 criterion is rapport — as an advisor you have to show you respect and understand women. I coach financial advisors to tell a personal story on why women are important. They have a much higher probability of getting the account.”
The wirehouse industry needs such perspective, as it hasn’t done enough to develop financial counseling for high-net-worth female investors, says Meredith Jones, founder of Nasvhille, Tenn.-based Alternative Investment Research firm.
“It’s like medicine, if you think about it: Drugs are tested on a 180-pound man, but then are prescribed as if everyone is a 180-pound man, [and] sometimes the dosage is too much or too little,” Jones says. “In finance, it seems the offerings are for the 180-pound man, but we know women respond to stress differently, different things make them nervous, and they have different goals.”
Jones, who is working on a book about female investors, says she has observed differences between men and women in managing investments. “Women tend to be more attentive in the research aspect of investing,” she observes. “For them, it’s not all about the numbers. They want to understand more, and they are longer-term investors who stick to a strategy once they have it.”
Jones acknowledges that separating investors along gender lines carries a bad connotation, but argues that there is a valid reason for doing so. “It’s just the approach that’s different; everyone is trying to reach a good outcome,” she says. “There’s not a one-size fits all. Even in a room of investors, you couldn’t say that they are all homogenized. Investors have different volatility and liquidity requirements, and that’s true whether you are a man or a woman.” ows
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