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Advisor News Women want investment plans that reflect their personal values

Women are taking a more informed role in their families’ investment decisions.

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I grew up in a family of all boys. In my house, I never felt a distinction between male or female. I competed equally for food at the table or fought for the TV remote without a thought about gender.

I now find myself in a similar scenario working in an investment industry predominantly skewed toward male advisors. Much like my upbringing, my desire is to empower all women to be equally confident at the table as men – particularly as it relates to investments.

This goal is more important than ever. There has been a gradual but tectonic shift of attention toward women and wealth – and that has the investment industry taking notice. Advisors who want to remain relevant and thrive must adapt to this trend by better understanding the expectations of female clients.

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Kim Thompson, senior vice-president and head of credit union wealth management at Credential, part of Aviso Wealth Inc., in Vancouver

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Investment-related income reported by women has grown at a higher rate than for men, according to recent research from Strategic Insight. The share of total wealth controlled by women is expected to grow to almost half (48 per cent) by 2026 from 36 per cent today.

Consider that $500-billion in wealth is anticipated to be transferred from husbands to their wives – and $400-billion from widows to their daughters during the same time. Women are taking a more informed role in their families’ investment decisions. As a result, advisors need to ensure that their conversations with couple clients must always be inclusive. Specifically, the “know your client” process should be focused on the household and both partners should always be present at annual meetings.

After the transfer of wealth does take place, women are taking a predominantly conservative approach to investing and their financial well-being. According to the Strategic Insight research, women’s priorities when it comes to investments are financial security over prosperity; assured outcomes over investment performance; and a stable income stream. When wealth transfer happens later in life, women are more inclined to preserve as much wealth as possible so that it can be transferred to their children later on. That’s especially true in cities such as Vancouver and Toronto, where real estate costs are high.

In addition, women want a well-defined investment plan that reflects their personal values. In many cases, the resulting product mix they prefer includes exposure to responsible investments (RI). Together with millennials, women are increasingly choosing investments that incorporate environmental, social and corporate governance (ESG) criteria. Advisors need to be well versed in RI.

The Responsible Investment Association published a survey in April of 2016 that found the majority of women investors believe it’s important to consider ESG factors when making an investment decision. Furthermore, women were about twice as likely as men to express uncertainty about RI rather than rule it out altogether. As a result, women polled significantly higher than men in believing that it’s important for their advisors to be knowledgeable about RI-related issues and trends.

Education is key to empowering women as investors. We sometimes do a good job in this industry of making investment products sound more complicated than they should be. As a result, there remains an intimidation factor. Advisors need to empower people – particularly women – so they feel comfortable asking any question.

Much like my time growing up, everyone, regardless of gender, should feel equally confident about their investments and their ability to oversee their financial affairs.

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Kim Thompson is senior vice-president and head of credit union wealth management at Credential, part of Aviso Wealth Inc., in Vancouver. The Women’s Executive Network named Ms. Thompson as one of Canada’s top 100 most powerful women in 2013.

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