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Affluent women begin to make their mark felt

A staff reporter

30 January 2005

Both the ranks of affluent women and those among that number who are responsible for financial decision making are swelling fast, according to two new surveys. For the first time ever, women represent nearly half of all investors with $100,000 or more in investable assets, laying to rest long-held perceptions that money and investing are the exclusive domain of men. Women investors are also achieving success younger and faster, according to research by UBS PaineWebber. The Women and Investing III report suggests that success in the workplace, combined with the reality that women often outlive their spouses, has made them a virtual powerhouse among investors. In the past two years alone, the number of substantial women investors has increased 11 percentage points, jumping to 47 per cent from 36 per cent. Moreover, those investors achieved success quicker, averaging 12.1 years in the markets versus 13.3 years in 1999. More than half of those surveyed, at 51 per cent, are financially independent, primarily funding their investments through their salaries rather than relying on their spouse, family or an inheritance. The vast majority of women said they were in control of their financial and investment decisions, acting as head of household with responsibility for their families' decision making. Importantly, nearly three quarters of substantial women investors have a financial adviser, most of whom described the relationship as a good partnership. The perceived value of the client-adviser relationship is increasing as women grow older with those aged 54 and above placing the greatest emphasis on their advisers' recommendations. A survey by US consultancy Spectrem found that the proportion of women in affluent households who shared in major financial decisions increased 25 per cent between 1995 and 2000. In 2000, half of all affluent households had men and women sharing the major financial decisions, compared with just 40 per cent in 1995. Laurie Cochran, a director at Spectrem, said the importance of the research for financial services was profound. "Most firms are set up to contact one individual on behalf of a household. Those companies that can identify shared decision-making and address both individuals will receive more receptive responses," said Cochran. Spectrem's research found that the differences between men and women with regard to their investing attitudes and behaviours are diminishing. Cochran said historically affluent women were more time pressed, making convenience a key driver in their investment behaviour. "In addition, they were less apt to take risks when investing and weren't as confident in their decision making abilities. However, a careful analysis of our 2000 data reveals very minor differences between the two sexes related to investment behaviours and attitudes." Some differences remained, however, between women who are the sole financial decision makers and those who share the responsibility. More than 60 per cent of female sole decision makers own mutual funds, with an average balance of $205,000, compared with just over 50 per cent of female shared decision makers, who have an average account of $129,000. Likewise, a little more than 50 per cent of the sole decision makers own individual securities, compared with just shy of 40 per cent of the shared decision makers.