How Advisors Can Meet the Needs of Women and Minority Investors

The financial services industry has historically failed to cater to women and minority consumers. However, in the past few years, many large firms have tried to address these disparities by conducting surveys and studies to discover how to close the gap.  

Sadly, most have failed to embrace the change needed to offer equal investment opportunities.  In an industry that strives to help people, it is hard to grasp that we are failing to meet the needs of a world begging for equality.  

Demographics are indeed changing. America's share of wealth is growing faster among women and diverse segments, with very few programs designed to attract these groups into investing.  

By 2044, more than half of Americans are expected to be people of color, while women comprise nearly 51% of the population today. How can investment advisors, managers, and planners better serve the needs of minorities and women?  

Relationship Building  

It all comes down to relationships. Building trust, educating, and active listening are listed as the top traits women investors look for in an advisor, and 73% of women reported feeling unhappy with the financial services industry. We can do better. (Read more in 10 Questions to Ask Before Hiring a New Investment Advisor)  

Financial firms are still falling short of serving communities of color. According to a CNBC survey, "Half of Black US adults and 49% of Hispanics don't currently own individual stocks, mutual funds, bonds, exchange-traded funds, cryptocurrency, or real estate. Meanwhile, 32% of Asians and 28% of whites reported not being invested.

Broken down by gender, 59% of Black women aren't invested in anything, compared to 48% of Hispanic women, 34% of white women, and 23% of white men." (CNBC Survey, 8-24-21, Michelle Fox)  

There are structural barriers and cultural barriers that need to be acknowledged. The extent of inequity and the disparate financial outcomes that communities of color have long experienced have resulted in a distrust of financial institutions. Firms that address these issues will win trust and grow relationships with empathy and intent.  

Knowing your audience is a good start. Here are a few more ways to build a practice tailored to meet the needs of women and minority clients:  

• Focus on financial literacy - Avoid assumptions and encourage questioning. Lead with education, continually check for understanding and when working with coupled partners, give equal voice to each partner. Avoid financial jargon. Don't just offer access to information. Take the time to help your clients learn the systems and tools of the trade. Encourage discussions based on your educational tools, such as seminars, webinars, eBooks, and blog posts.   

• Offer customized approaches to address specific goals - Identify what type or vintage of investor your client is. These might be based on life stages or values. Many women are more focused on reaching life goals or tying values into investing over pure performance measures. Time horizons may differ due to divorce or the death of a spouse. Many life experiences will influence how they invest. This includes a gender and race pay gap and greater caregiving responsibilities. Many minorities carry more significant college debts or are more focused on building generational wealth. More holistic financial planning is needed instead of just portfolio construction and management. Getting to know your clients will go a long way in building trust.   

• Build representation into the workforce - "64% of Black Americans, 52% of Asian, and 51% of Latinx Americans say they are more likely to work with financial institutions if they see people who look like them working there." (Fortune.com, 1-21-22, Maxwell Young) Data from the CFP board states that 23.1% of certified financial planners (CFPs) are women, while only 3.5% are Black or Latinx. Language barriers can be addressed by offering multi-lingual materials.  

Advisors who demonstrate gender sensitivity and exhibit inclusive behaviors will be able to serve their clients in the coming years much better. Empower through education by offering resources that are jargon-free and bite-sized. Actively listen and get to know what type of investor they are, but also exercise compassion, empathy, and patience. Finally, build trust by acknowledging industry inequities and actively striving to break down structural and cultural barriers.  

Vineyard Global Advisors offers a range of investment strategies designed to allow participation in the market's growth within a dynamic, risk-managed framework that seeks to protect against significant market declines. Our goal is to give our clients greater peace of mind by generating steadier returns over time. Contact us to learn more. 

 Finding a new investment advisor can be a successful experience when you've made the proper preparations. Learn more about Vineyard Global Advisors' long-term investment strategies.