As bias of all kinds and in all spheres is being examined, potential gender bias in financial planning is getting a serious look. The results are encouraging.
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“I’M 73 YEARS OLD. MOMENTS OF SEXISM have never changed,” Elizabeth, a retired attorney from the Midwest, says when asked about meetings with financial advisors. Gianna, who is 40 years younger and a media executive in New York, says, lightly, “Sure, I’ve definitely felt bias.” Becca, an engineering project manager in her late 30s, who invests in real estate in Texas alongside her husband, says that certain advisors she’s worked with “look to him instead of me.”
When it comes to women and money, stereotypes are hard to shake: Women aren’t knowledgeable about finances and want handholding on investments. Women are inevitably more risk averse. Men take the lead in joint decisions. At a moment when Americans are confronting a constellation of wide-ranging biases that have long gone unexamined, and often unacknowledged, the wealth management firm Merrill is digging into whether stubborn narratives about women and wealth may be influencing investment advisors or affecting the quality of guidance for clients like Elizabeth, Gianna and Becca.
While all three women can recall past investment experiences that revealed bias, they’re also quick to point out that such experiences have been, in Elizabeth’s words, “minor and not worrisome.” They all say that these missteps have been occasional and that financial advisors who’ve stumbled are often quick to redirect and self-correct. Overall, none say that they have lasting negative feelings about advisors’ assumptions; nor do they feel that gender bias has affected the quality of the investment advice they receive. All insist that they’ve never considered switching financial advisors because of any observation of gender stereotyping.
The trio’s experiences square with the results of Merrill’s study, “Seeing the Unseen: The Role Gender Plays in Wealth Management,” which included a survey of thousands of active investors, in-person interviews with women investors and wealth advisors, and the analysis of numerous real meetings between financial advisors and their clients. Ultimately, only 8% of women investors — and 3% of men — reported a past negative experience with an advisor arising from gender-related expectations.
Of course, the intersection of various assumptions adds to the situation’s complexity; as Gianna explains, she’s often perceived that advisors may be making assumptions involving her age, ethnicity or financial assets: “It’s really tough for me to say these particular actions were tied to my gender.” In keeping with the low number of reported negative experiences, rates of satisfaction among women investors were high: 70% were so happy with their investment advisors that they said they would recommend them to a friend, and 40% claimed they would follow their advisors to a new firm.
Women, in fact, were more content than were men: 65% of men said that they were satisfied with their financial advisors, and only 30% would follow an advisor to a new company. For that 8% of women who had a bad experience, though, the root of the problem was often incorrect assumptions on the part of the advisor, or misaligned priorities between investor and advisor. The stakes for financial advisors who fail to recognize this can be high: Women investors are more likely than men to switch advisors after a negative experience, rather than confront the advisor or file a complaint.
Furthermore, the survey shows that the younger generation of women investors are more knowledgeable about wealth management and more likely to manage their investments themselves than older women investors are. As a result, they want self-aware, proactive and unbiased guidance from their financial advisors. As more and more millennial women reach the stage in their careers when they’re eager to invest, it is imperative for advisors to adapt to these priorities, to both support their clients and help to forge an equitable path forward.
In investor-advisor meetings, researchers were on the lookout for moments when financial advisors leaped to conclusions about women’s financial priorities or the power dynamic between men and women investors — the kinds of subtle missteps that Elizabeth, Gianna and Becca all note. There was room for improvement here: Researchers recorded what they call “mild but frequent miscues,” documenting an average of 10 examples of subtly biased behavior in each 30-minute, in-person meeting. Although financial advisors who are men made these blunders about twice as frequently as women advisors, both men and women were prone to mistakes, a reminder that no one is immune to unconscious bias.
Gendered missteps also were more common when heterosexual couples consulted financial advisors together, rather than when women met with their financial managers alone. This fact was highlighted when researchers used eye-tracking: Heat maps generated by analyzing advisors’ sight patterns showed that advisors focused on the man’s face 60% of the time. (As with inadvertent examples of bias, though men advisors had higher rates of visual fixation on other men’s faces, women advisors also focused on men more.) This is a behavior that women investors seem particularly aware of: One survey respondent from New York described “feeling like I need to make my voice heard because I never know if that person is going to just focus in on my husband”; Elizabeth, too, says that financial advisors “always look at my husband right off the bat”; and Becca remarks, “When addressing financial assets I share with my husband, people will absolutely defer to him first.”
Ultimately, Elizabeth, Gianna and Becca all indicate that, although they’re conscious of gender stereotypes, they can recall only scattered specific instances where that sort of bias manifested, and no instances where the financial advisor didn’t subsequently follow cues from the investors and adjust. And it’s worth noting that one type of misstep doesn’t necessarily mean that others will follow: Gianna has never had a financial advisor who stereotyped her as averse to risk, and, in fact, says she gets offered “a lot of higher-risk investments, which I think of as adventurous opportunities.” Similarly, despite Elizabeth’s frustrations in meetings with her husband, she says that her financial advisors have never expressed a belief that women are warier of risk than men are, nor have her financial managers made her feel that her decisions on joint investments don’t carry equal weight.
According to study participants and individual women investors, women often take the burden on themselves by striving to be proactive and set the tone in meetings, so as not to be disappointed or misunderstood. Gianna makes sure that she has clear documentation of her record, explaining, “Once I had the portfolio to prove that I knew what I was talking about, that’s when the tone and conversations shifted” in meetings. “If you know your own mind,” Elizabeth says, “and make that clear, you can zero in on the thing that matters most: what financial advisors know about investments.”
Like Elizabeth, many women investors have long made sure to assert their own independence and judgment in front of financial advisors in case they run up against bias. Becca and her husband, for example, make an effort to consult each other equally when meeting with advisors, to demonstrate the nature of their partnership. Elizabeth makes sure to differentiate “my interest in the stock market from my husband’s caution about it,” so that financial advisors know she and her husband strategize independently on their individual investments. And Gianna lets advisors know of “my own background in finance . . . and my investment portfolio” so that her team can home in on what’s important to her.
While these all are useful strategies for women investors to express their financial priorities clearly, as the study’s white paper says, “Women adapt to the industry, but the industry should adapt to them.” The high rates of satisfaction and low rates of negative experiences among women investors are due, in part, to their lower expectations: Women are used to encountering gender-based assumptions in all areas of life. However, as millennial and Gen Z women invest in larger numbers, they’ll bring different expectations about gender equality to the table and likely will be less willing to overlook or forgive missteps. A failure to tackle unconscious bias in the way that the study recommends may have increasingly negative effects on advisors’ relationships with women investors.
Merrill hopes that financial advisors and experts in wealth management will use the volume and diversity of data collected in the recent research to progress even further toward the awareness of unconscious bias, counteracting even subtle missteps and serving women clients in the fairest and most effective way possible. The Merrill study’s surveys and one-on-ones with wealth managers revealed that they don’t consciously ascribe to stereotypes, but financial advisors sometimes have difficulty identifying moments when unconscious assumptions influence their behavior. In any sphere, it’s impossible to eradicate implicit bias completely — the human brain processes information efficiently in part by using shortcut assumptions — but how people let those assumptions manifest is within their control.
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