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The Rising Tide of Gender Equality in Wealth Management

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.

This article first appeared as sponsored content on NewYorker.com

“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 advisers. 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 advisers 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 hand-holding 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 advisers or affecting the quality of guidance for clients like Elizabeth, Gianna, and Becca.

At a moment when Americans are confronting wide-ranging biases, Merrill is digging into whether stubborn narratives about women and wealth may be influencing investment advisers.

While all three women are able to 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 advisers who’ve stumbled are often quick to redirect and self-correct. Over all, none say that they have lasting negative feelings about advisers’ 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 advisers 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 advisers, and the analysis of numerous real meetings between financial advisers and their clients. Ultimately, only eight per cent of women investors—and three per cent of men—reported a past negative experience with an adviser 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 advisers 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 per cent were so happy with their investment advisers that they said they would recommend them to a friend, and 40 per cent claimed that they would follow their advisers to a new firm.

Rates of satisfaction among women investors were high: 70 per cent were so happy with their investment advisers that they said they would recommend them to a friend.

Women, in fact, were more content than were men: 65 per cent of men said that they were satisfied with their financial advisers, and only 30 per cent would follow an adviser to a new company. For that eight per cent of women who had a bad experience, though, the root of the problem was often incorrect assumptions on the part of the adviser, or misaligned priorities between investor and adviser. The stakes for financial advisers who fail to recognize this can be high: women investors are more likely than men to switch advisers after a negative experience, rather than confront the adviser 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 advisers. As more and more millennial women reach the stage in their careers when they’re eager to invest, it is imperative for advisers to adapt to these priorities, to both support their clients and help to forge an equitable path forward.

Tapping Technology to Measure Unconscious Bias

In investor-adviser meetings, researchers were on the lookout for moments when financial advisers 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 ten examples of subtly biased behavior in each 30-minute in-person meeting. Although financial advisers who are men made these blunders about twice as frequently as women advisers, both men and women were prone to mistakes, a reminder that no one is immune to unconscious bias.

Gendered missteps were also more common when heterosexual couples consulted financial advisers 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 advisers’ sight patterns showed that advisers focused on the man’s face 60 per cent of the time. (As with inadvertent examples of bias, though men advisers had higher rates of visual fixation on other men’s faces, women advisers 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 advisers “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.”

One survey respondent 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.”

Ultimately, Elizabeth, Gianna, and Becca all indicate that, although they’re conscious of gender stereotypes, they can only recall scattered specific instances where that sort of bias manifested, and no instances where the financial adviser 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 adviser 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 advisers 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.

Women Playing Offense

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 advisers know about investments.”

As millennial and Gen-Z women invest in larger numbers, they’ll bring different expectations about gender equality to the table and will likely be less willing to overlook or forgive missteps.

Like Elizabeth, many women investors have long made sure to assert their own independence and judgment in front of financial advisers, in case they run up against bias. Becca and her husband, for example, make an effort to consult each other equally when meeting with advisers, 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 advisers know she and her husband strategize independently on their individual investments. And Gianna lets advisers know of “my own background in finance . . . and my investment portfolio” so that her team can hone in on what’s important to her.

A New Generation’s Expectations

While these are all 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 will likely 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 advisers’ relationships with women investors.

Merrill hopes that financial advisers 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 advisers 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.

For more insights, read “Seeing the Unseen: The Role Gender Plays in Wealth Management.”

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