Trust and Transformation: Emma Wheeler on Women's Wealth
Emma Wheeler, Head of Women’s Wealth at UBS Global Wealth Management, spoke to us about the increasing importance of gender-smart investing solutions for advisors and how the financial services industry is unlocking women’s wealth.
You recently spoke at the GenderSmart 2022 Virtual Programme. What were the main takeaways?
I spoke about ‘Unlocking Women’s Wealth’ and how we can continue to help women build their financial confidence and start investing. This is so important.
Women are increasingly owning and controlling wealth in the world, currently at 32%, and this growth is outpacing the growth of men’s wealth. We need to support them and recognize the commercial and social opportunities linked to this trend.
And wealth managers have a large part to play. The whole industry needs to reimagine their approach to how they advise women, knowing that they have different needs when it comes to investing.
UBS’s 2021 Investor Pulse survey (US) showed that 68% of women had started talking more about finances within their families. However, only a fraction of these followed through with the actions they intended to take.
This is research from our US team but it reflects what we see globally. Women need to be encouraged to take part in financial decision-making, particularly long-term decisions. We know that over 80% of women have to take control of their finances at some point in their lives.
What is the disconnect between intention and action? Is it a reflection of a lack of confidence or something more fundamental? How can we work to encourage positive action in this space?
UBS have been supporting women and their wealth for a number of years. We are also an active supporter of the GenderSmart Investing Summit. We have five years of research into women’s attitudes and the type of training and support they need. We recognise that women need to be encouraged and guided when it comes to engaging with investing.
The disconnect between intention and action happens for a variety of reasons, including complacency, deference of financial control to a spouse, time constraints, or a lack of confidence. These reasons suggest that the issue often lies with the women themselves, rather than external influences or a lack of opportunity. However, it’s not about fixing women but rather offering them tailored support by training advisers to unlock conversations with female clients. The wealth management industry and the men who participated in our survey are all in support of this approach.
In our view we need to reimagine wealth advice rather than creating ‘pink’ products. We need to keep talking publicly about the impact that the Women’s Wealth initiative is having to drive industry change, build awareness and create opportunities for females to invest in the way they want to.
Based on EY research, 67% of female investors globally stated that their wealth managers misunderstood their goals. Women tend to have greater confidence in getting their money invested when their values are aligned with their investments and when they see a social benefit. Sustainability-focused advice and solutions can drive positive impact, not only by encouraging more women to invest, but also through certain underlying investments’ ability to contribute to positive social or environmental progress. How is the industry addressing this?
Firstly, it’s not only sustainability that interests women investors. They like sophisticated products, for example alternatives and leverage, and they invest in similar ways to men in terms of selecting the investment solutions we provide. However, they do tend to place greater emphasis on the relationship and advice with their adviser.
It is critical that we advise women in the right way, not only to ensure the best outcomes for our clients but also to be able to unlock capital at scale to unleash its economic potential. UBS has identified a number of factors that women need and want from client advisors in order to start investing:
Women embrace holistic, trusted advice. They want to be understood and to understand
Women want to align their investments to their values. They want to see positive social outcomes and know that their wealth has purpose
Generally, women tend to perceive and value wealth mainly as a source of security, not opportunity. They tend to focus on being financially secure and able to afford a certain lifestyle for themselves and their loved ones over the long term
They need financial planning according to their life stages – this is very important to women as they lean towards planning, security and goals-based investing
Financial confidence is very closely associated with risk tolerance, which in turn depends on risk perception. Perception of risk shapes the expected utility curve and underlies the rationale for a person’s choices. Recent research has confirmed that greater familiarity with risk is associated with reduced risk perception. This suggests that more experience with investing should reduce risk aversion, and that if women do not gain investing experience, they will continue to perceive investing as riskier or more daunting. What is the opportunity here?
We know that when women are actively investing they are very diligent investors and often less emotional than men in their decision-making. They often take a more holistic approach. They respond less to market lows and trade less often. It’s a misconception to say women are risk averse, rather they are calculated risk takers or risk aware.
An article from the London Business School suggests that “women are [not] less risk-averse. That’s a cultural perception that has been perpetuated. There might be a greater element of empathy in how women invest but that is not the same as less risk-taking. If anything, it’s just more effective.”
Women often seek financial advice at pivotal life moments. For example, after divorce we see many women wanting to make a fresh start. But it’s important that we start engaging with women early on, prior to these pivotal moments.
Interestingly, we have also found that legacy is a great conversation starter with women. Legacy often means more than passing wealth down to the next generation. It gives clients confidence that their children are safe and content in their lives, as well as positively impacting the lives of others.
How can we educate women on the investment process and help them feel more comfortable with non-traditional investments and portfolio allocation? What gives women more confidence in managing their investments?
It’s about enabling client advisors to be able to connect with women through applying a higher level of emotional intelligence. We need to offer women client-centric advice, something UBS prioritizes.
Behavioural science is a great way to adapt our approach to different target groups. A Morningstar article suggested that it “has spent much of the last decades cataloging the shortcomings of people when they make decisions. [Nudge theory or] Choice architecture is the careful design of the ways in which choices are presented with the intent of improving the outcomes and quality of decision-making. It takes the focus off self-discipline and intrinsic knowledge to facilitate decisions that are in your best interests.”4
We have a financial confidence self-assessment test which can be a great way for women, or anyone, to take the first step towards investing. It’s based on the three components of financial confidence as we see it: trust, awareness and expertise. Many women find they are a “wanderer” personality type i.e. that they have a low levels of trust, awareness and expertise when it comes to financial investing. The test allows you to download information to get you started on your financial journey, or if you are already on your way, it shows you the next steps to take. Its goal is to help women improve their investment understanding and ultimately achieve ‘pioneer’ level - the most sophisticated personality type within our financial confidence test.
Once women are beginning to invest they can then decide if they want to be more or less involved with the investing process.
What is UBS currently doing in this area to partner with women?
We create tools, publish research and speak publicly about the Women’s Wealth initiative at our own and partnership events.
PIMCO suggested that 72% of women, and 81% of millennial women, said the investment system was “set up to be confusing.” One contributing factor was the use of jargon. Women found such jargon more off-putting than men. What is your view?
With regards to investment jargon, we need to recognize that men are often more exposed to topics around investing and finance, and are encouraged by their peers, friends and family to invest. Women often miss out on this social education, meaning that investment terms, processes, and concepts are not so familiar or well understood.
And finally, taking a broader look, the 2021 UBS Women’s Wealth 2030: Parity, power and purpose report suggests, “we also expect a material increase in gender lens-investing.” and looks at how transformational this decade will be for women’s wealth. Are we starting to see this as a broader industry-wide trend?
Gender lens investing is now a megatrend. Within this growing sector, investors increasingly see the opportunity to invest in female-led businesses and those businesses creating products and services for women and girls.
The commercial opportunity is clear. Research shows that businesses led by women tend to outperform those led by men. McKinsey Research’s Delivering through diversity (2018) report shows not only that the business case remains robust but also that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. We are encouraged to see that an increased percentage of female board members is a growing trend across the financial industry.
In Europe, only 2% of venture capital (VC) goes to all-female teams, while 5% goes to mixed-gender teams. The reasons for this seem to be that many decision-makers stick to what they know and, unfortunately, that is often based on gender-bias.
Forbes suggests that, “The biggest hurdle women face in raising money is that people won’t take the leap of faith and fund female managers. We know diversity drives returns, but often women aren’t given the chance to prove it.”
We need more products for women and girls and more exposure within the VC community on these opportunities. As an industry, we need to continue to encourage our female clients to invest and present them with female founded businesses as investment opportunities, ensuring there is aligned capital to support these businesses. If women and men were to participate equally as entrepreneurs, global GDP could rise by 3-6%, boosting the world economy by USD 2.5-5 trillion.
To conclude then, we believe UBS and the financial services industry have the power to mainstream the challenges and opportunities discussed. This gives us a real opportunity to support female led investment opportunities and align capital to support growth in this critical area.
Take the UBS Financial Confidence Quiz
This content is for informational and educational purposes only and should not be relied upon as investment advice or the basis for making any investment decisions. The views and opinions expressed may not be those of UBS AG, its subsidiaries and affiliates. UBS does not verify and does not guarantee the accuracy or completeness of the information presented.