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Affluent investors spending more on advice: US report
The willingness of affluent investors to pay for financial advice services is growing significantly in the United States, but there are marked differences in the way men and women approach the prospect of seeking financial advice that should be heeded according to new research from Cerulli Associates.
The latest Cerulli Edge – US Retail Investor Edition report shows that between 2020 and 2023, interest in financial advice grew 5 per cent (58 per cent to 63 per cent) for men and a staggering 9 per cent (52 per cent to 61 per cent) for women, with Cerulli highlighting an increasing awareness among the affluent of the complexity of the issues they face, the importance of financial outcomes and the overall benefit that a financial adviser can provide.
The research dovetails with the state of the Australian financial advice market, with data from both Investment Trends and platform provider Netwealth highlighting the growth of the mass affluent market and the increased opportunity set amongst advisers with an increasingly engaged consumer base.
However, while awareness and interest in financial advice increased in the US, it wasn’t a parallel incline among the sexes, with some significant distinctions emerging between men and women around how they engage with the service.
In the US, a common starting point for people to begin taking an active hand in investment decisions is engagement with their employer’s retirement plan, which in the US takes the form of tax-advantaged “401k” retirement savings plan.
“According to the research, women are more likely to say their financial advisor came with their employer’s retirement plan (14 per cent) than are men (11 per cent),” says Cerulli research analyst John McKenna. “Further, 23 per cent of women say their selection of an advisor was either based on a family referral or a choice made by a spouse or parent, compared to 20 per cent of men.”
“There are key differences in marketing to clients of different ages and investable assets, and appealing to both men and women sometimes also requires different acquisition strategies,” McKenna continues, while noting that the preconceptions and baked-in attitudes of both sexes continue to evolve over time due to a confluence of factors.
“As women take on more financial decision making, either independently or on behalf of their families, having a multi-faceted approach to client acquisition can be a major advantage in both attracting new customers and keeping clients’ families in the fold.”
There are also differences in the types of entities men and women prefer to deal with, the report notes, which provides important opportunities on the marketing side.
“Overall, as the financial wealth of women increases, advisors and providers must understand best practices for acquiring women clients and focus on the aspects of service that women want from their financial providers,” McKenna says.
“With targeted marketing efforts highlighting the value of advice specific to each segment, advice providers across the wealth management landscape have substantial client acquisition opportunities.”
