More women than ever have become the decision makers when it comes to finances, whether for domestic decisions, life events or planning for retirement. In part, this is because women are either contributing more equally to the family household income or because theirs is the main or only source of household income. More women are also earning higher incomes, which leads to the need for more sophisticated financial advice; however, academic studies suggest that gender bias and stereotyping is getting in the way of these women receiving the most appropriate advice.
Results from various industry-led studies have shown that advisers less frequently explore the personal financial situations of female investors than they do when ti comes to male investors, instead relying on assumptions that women prefer a lower risk tolerance and would only be interested in certain types of investment. This could potentially lead to females being recommended investments that are not optimal for their specific needs.
This unconscious bias is not limited to male advisers, it seems. According to a study conducted by Dr Ylva Baeckstrom, a lecturer in finance at Kings Business School, customers received different recommendations depending on not only their own gender but also the gender of their adviser. The study found that male advisers are more likely to recommend higher risk investments to male customers, whereas female advisers are more likely to rate female investors as having less financial knowledge.
An effective way to eliminate any form of bias is to devise a standard set of questions that can be provided to any investor, regardless of their gender or background. This can then be processed by specialised software for financial advisers, helping to find an appropriate, individually tailored recommendation. A good way to start would be to plan your initial client meeting as if it were a structured job interview, with a thorough set of fact-finding questions that will provide all the information your software needs to generate an accurate financial profile. Such software for financial advisers can be found at Intelliflo and similar providers.
Gathering accurate customer profile information is key to providing the best recommendations and is a regulatory requirement. Software that helps to eliminate any risk of bias in client profiling is well worth the investment.