Women’s socialization emphasizes compassion and active listening, which means female financial advisors are more likely to exhibit these traits – or, at least, clients may make those assumptions.SDI Productions/iStockPhoto / Getty Images
Studies in Canada, Japan and the U.S. show that female physicians produce better outcomes for their patients, especially for women, who are more likely to experience misdiagnoses and medical errors from male doctors.
Some research also indicates women tend to rate higher than men on emotional intelligence, which may be a contributing factor to their medical outperformance. Could higher emotional intelligence also make women better financial advisors?
“A lot of people who reach out to me first are men,” says Julia Chung, co-founder and chief executive officer of Spring Planning Inc., a financial planning firm in Vancouver.
“They’ll tell me, ‘I’ve been the one managing the money. My wife will probably outlive me, and I want her to be with someone she can trust.’ They believe I will have her back – that I won’t be hard-selling or using a lot of confusing jargon.”
Women’s socialization emphasizes compassion and active listening, which means female financial advisors are more likely to exhibit these traits – or, at least, clients may make those assumptions.
“Clients want to be seen and heard,” Ms. Chung says. “As an advisor, I need to understand what’s important to my client as a person. Then I can navigate their finances.”
However, assuming a female advisor will be more attentive or caring than a male advisor is not a sure thing. Just because women tend to score higher in emotional intelligence competencies doesn’t guarantee any given female advisor will be more emotionally intelligent than a male advisor.
“In my experience, people will gravitate to an advisor, male or female, that they can have a trusting relationship with – one that communicates in a language that makes sense to them and takes into consideration their unique personal objectives as well as life concerns and goals,” says Barbara Stewart, a leading researcher in women and finance.
“During my career as a portfolio manager, I’ve seen a lot of emotionally intelligent male advisors,” she says. “Sometimes, the women who make it in a man’s world don’t necessarily behave in traditionally feminine ways, such as a relational type of person.”
Ms. Chung observes that professionals in the financial advice industry are just doing what they’ve been taught. Today, there’s a gradual evolution toward a more human-centric approach from both male and female advisors.
“We’re moving from the money being the client to the client being the client,” she says.
Just as advisors may have certain biases, so do clients. Research shows that female clients with male advisors tend to be more risk-averse, hold more cash, and self-report lower levels of financial literacy than those with female advisors.
There are no definitive explanations for why the male-female dyad would be more inhibiting to female clients than the women-only, unless it’s simply that many women have been socialized to defer to men in matters of money and some of this plays out in the mixed-gender advisory relationship.
“When you think about the financial industry, it was about access to transactions. But that’s changed,” Ms. Chung says. “We’re not the gatekeepers anymore. Anyone can have access to the same information and do transactions, so that’s not where we’re helpful.”
In her experience, both men and women seek similar things from the advisory relationship: analysis, efficiency and portfolio returns.
Ms. Chung’s male clients start focused on performance; once they enter their fifties, their priorities shift to security, wealth transition, family and philanthropy. In contrast, women emphasize the latter consistently, with a slight uptick in interest in financial security in their later years.
Ms. Stewart believes a successful advisory relationship comes down to personal chemistry, regardless of gender.
“Like attracts like,” she says. “You must create a trusting relationship. As an advisor, you need to have the confidence to talk to someone, maybe someone much older than you or with an ultra-high-net-worth, and not shy away from having psychological conversations from time to time because they need it and, deep down, they want it.”