To grow your advisory business, it may be wise to heed Aretha Franklin’s warning and show women a little more respect.
Studies show that women continue to be subjected to gender bias. For example, a recent venture capital experiment sought to identify gender discrimination to better understand why women continue to be underrepresented in entrepreneurship. In the study, 80,000 “promising but fictitious startup” pitch emails were sent out to 28,000 venture capitalists and angel investors using distinct male and female names. In an unexpected twist, female-generated pitches were favored by 9%.1 However, female-led businesses receive very little actual investment – in 2018, only 3% of total venture funding, according to Harvard Business Review.2 The article explained that in-person pitches invariably favor men and that when identical pitches were given, men “outperformed” women.
Similar biases in wealth management
Attitudes affecting individual investors are no different. Women still tend to be regarded as less capable investors and tend to feel less confident about investing. In addition, women often feel patronized by their advisors. This is despite the fact that some studies, including one by Fidelity, indicate that women, tend to be better investors than men, performing better on average by 40 basis points annually, an amount which can be substantial over time.
Money (and advisor?) in motion
It is no secret that we are in the midst of a huge transition in wealth, frequently to a surviving spouse, and usually to women, who tend to outlive men. This represents a substantial risk to advisors who may be consciously or subconsciously biased in their approach to working with women. A bias against women can cost you. In fact, according to Credit Suisse Research Institute’s 2018 Global Wealth Report, 70% of widows change financial advisors.
Advisors that are succeeding are finding that a more collaborative approach that helps women build knowledge and confidence in managing their money is effective. Many are actively trying to add women advisors to their rosters to support their efforts. Others are dedicating specific sales and marketing efforts to different niches, including women. The winners will be those that remain dedicated and consistent in their efforts over the long term through this fundamental shift in investor demographics ─ because when a woman is about to give an advisor her money, all she’s askin’ for in return is a little R-E-S-P-E-C-T.
1Gender, Race, and Entrepreneurship: A Randomized Field Experiment on Venture Capitalists and Angels, W. Gornall, A.A. Strebulaev, University of British Columbia Sauder School of Business, Stanford University Graduate School of Business and NBER, August, 2019.
2How the VC Pitch Process Is Failing Female Entrepreneurs. Hassan, Kamal, Varadan, Monisha, Zeisberger, Claudia. January 13, 2020. Harvard Business Review.