Even as the number of female wealth creators and decision makers increases--along with the amount of assets they control--surprisingly large numbers of women are disappointed in the treatment they receive from financial advisors and managers.

Yet a recent study from the Center for Talent Innovation (CTI) shows that although women are opting out of traditional private bank and broker-dealer models, those with a financial advisor strongly prefer to invest their money through boutique firms. In the U.S., women are 6.4 times more likely to work with a boutique firm than a private bank (45 percent vs. 7 percent), and 61 percent more likely to work with a boutique firm than a broker-dealer (45 percent vs. 28 percent)

This offers an enormous opportunity for small firms to provide their clients a more holistic wealth management approach and customized planning, investments and charitable giving strategies.

More and more women create, control and influence an enormous amount of wealth around the globe. In Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth report, CTI surveyed women in the United States, the United Kingdom, India, China, Singapore and Hong Kong and found that 75 percent of female wealth creators describe themselves as the primary decision makers for their household's investable assets. Surprisingly, so too do 66 percent of inheritors and 43 percent of women whose spouse created their household wealth.

Yet this robust market is startlingly untapped. In the U.S., 47 percent of wealth creators and 75 percent of women under 40 in our sample don't have a financial advisor. Of those women in our sample who have an advisor, more than two-thirds (67 percent) feel their advisor does not understand them or is not interested in them.

Why are women leaving so much money--in the U.S., this may amount to more than $5 trillion in assets--on the table? Simple: The wealth management industry isn't connecting with women.

Bias is one reason that high-net-worth women feel large financial institutions are profoundly out of touch with them. But bias is just the tip of the iceberg.

Many women were seeking an advisor but struggled to find one who wouldn't just market to them but would actually serve them by understanding their differentiated value proposition and how they make decisions. Several high-earning women complained of being shown product-centric pitches and detailed, transaction-based spreadsheets, when what they wanted to see was a portfolio reflective of and framed by their broader life goals. They felt sold to rather than listened to, and pushed to make purchases rather than encouraged to articulate goals that might help them align their investment decisions with their values.

Women do not necessarily prefer a female advisor, but they do expect their advisor to demonstrate gender smarts and exhibit inclusive behaviors. Advisors who take pains to understand their female client are 42 percent more likely than advisors who don't to earn her trust and loyalty (64 percent versus 45 percent). And advisors who are sensitive to women's time constraints and manage details women do not have time to attend to are 69 percent more likely than advisors who aren't to forge a satisfactory and enduring relationship (61 percent versus 36 percent).

What can small firms do to attract this market? The lessons from these large institutions can be readily adapted to boutique advisory groups:

  • Build an inclusive culture. Research finds that women want to invest in organizations with diversity in senior leadership. A 2013 report, Innovation, Diversity and Market Growth, powerfully demonstrates the market-grabbing innovations that result from the one-two punch of a speak-up culture where those with insight into the burgeoning female market feel empowered to share their ideas combined with senior management with the gender smarts to give those ideas the backing they need to grow. One way EY has committed to building inclusive cultures is through their two-day immersion program, Leadership Matters, for employees promoted to manager. As a part of the immersion, participants work with a coach to formulate a strategy to become consciously more inclusive. Ultimately, by surfacing and addressing their biases, they hone not only their cross-cultural competencies but also their ability to bridge gender, service-line, and performance differences. Morgan Stanley also has a vested interest in creating an inclusive and diverse culture. During the recent Harnessing the Power of the Purse report launch, Gregory J. Fleming, president of Morgan Stanley Investment Management, underscored the company's commitment to accelerating women and diverse talent into senior leadership roles. One way they are doing this is through their Leader Engagement and Development (LEAD) Program, a four-month program designed to equip participants with skills needed to advance their careers and provide access and exposure to senior leaders and key stakeholders, as well as an influential network of professionals to leverage their careers.
  • Give women the visibility, support and leadership development they need to succeed. Give rising female talent the visibility, support, advocacy and leadership development they need to succeed in the business. As described in the book Forget A Mentor, Find A Sponsor, by CTI Founding President Sylvia Hewlett, sponsors help their protges make critical career connections, navigate career inflection points, crack the code of executive presence, and find the projects that will elevate them to the top. Goldman Sachs sows the seeds of sponsorship through regularly scheduled get-togethers where the firm's senior leadership in wealth management and top female advisors newer to the business compare notes, swap stories, and make connection.
  • Create a differentiated client experience. Forge a deeper understanding of the highly nuanced nature of the female marketplace and craft strategies accordingly. Financial firms can win women's business by adopting a holistic approach to financial planning and portfolio construction, making sure that product and service offerings align with women's values, fulfill their aspirations, and grant them the agency they seek to realize their personal, financial and social returns on their investments. When Standard Chartered introduced all-women branches in two cities in India, within a year, sales in those branches were more than double the average among the bank's other 90-plus Indian branches. Standard Chartered hopes to make all-women branches a new standard throughout India.

Women are the world's largest emerging market for financial services. Boutique firms just need to convince women that an advisory relationship is the best way to grow their assets, fulfill their needs and achieve their dreams.

Published on: Oct 22, 2014