Why advisers should prioritise relationships with a client’s family

In a statement by AUSIEX, the firm argued the importance of advisers understanding the needs of female investors to help them capture, and better serve, the growing market.

“As the number of male Baby Boomers declines, as they age and pass on, it is important for advisers to recognise that it is not guaranteed that their widow will use the same adviser,” AUSIEX said.

Referring to research by the UK’s Centre for Economics and Business Research (Cebr) and McKinsey, the firm said that nearly 70 per cent of women leave the financial adviser their spouse used within 12 months of becoming a widow.

Further highlighting the disconnect, research out of the US, conducted by Cerulli Associates, found that only 19 per cent of affluent investors use the same adviser as their parents. It also revealed that 92 per cent of investors who used a different adviser to their parents did not consider their parents’ adviser in their selection process.

In order to address this, AUSIEX suggested advisers need to prioritise building strong relationships with clients’ families to encourage future professional engagement.

AUSIEX argued that advisers also need to build a better understanding of what female investors want, particularly as women are expected to take on a large amount of assets in the intergenerational wealth transfer over the coming years.

Referencing a Fidelity International white paper, The Financial Power of Women, AUSIEX said the report identified a number of common goals that appeared among female clients that advisers should be mindful of.

Among these were: fully repaying their mortgage, contributing to superannuation, saving for a comfortable retirement, improving financial literacy, and securing their family’s future while building wealth.

Trends among female investors

An analysis by AUSIEX from May 2024 identified a number of differences in how female and male-advised investors have approached investing over the prior 12 months.

The analysis found that, while women’s actual shareholding tended to broadly mirror that of men’s in terms of specific holdings and sector allocations, they hold a greater proportion of consumer staples (8.90 per cent versus 7.29 per cent), financials (42.75 per cent versus 36.49 per cent) and industrials (4.40 per cent versus 4.08 per cent) compared with men.

Furthermore, AUSIEX revealed that women tend to have lower holdings (by value) in exchange-traded funds (ETFs) and are slightly more inclined towards environmental, social, and governance (ESG) investing in their ETF holdings.

The firm said that advisers could use this apparent interest in ESG investing as a point of interest to engage with potential clients and should be considered when constructing their portfolios.

The research also revealed that female clients tend to hold a lower number of unique securities in their portfolios, and they were more concentrated in single stocks with their largest individual holding comprising a larger portion of their portfolio value.

Advised female investors aged between 25 and 49 were also found to have a significantly stronger preference for holdings in ASX 20 stocks, with Australia’s largest stocks by market capitalisation comprising 56.94 per cent of portfolio holdings, compared with 47.91 per cent for advised males.

Notably, the firm also found that the number of advised women with a self-managed super fund (SMSF) is on the rise. AUSIEX suggested this could be attributed to younger female investors looking to take more direct control over their retirement savings.