Every second, our brain receives 11 million pieces of information. However, its capacity for absorbing information taps out at less than 50 pieces per second, according to Encyclopaedia Britannica. Thus, to make quick, efficient decisions, our brains rely on unconscious assumptions. In fact, leading neuroscientist Michael Gazzaniga estimates that as much as 98 percent of all brain activity occurs in the realms of the unconscious.
Our unconscious assumptions, or mental models, are informed by life experiences, pop culture, history and other societal standards, and we start building them as young children.
Children as young as four or five have been shown to exhibit bias, picking up on verbal and nonverbal cues from the adults and media around them. In some cases, these assumptions can be helpful, but in others, they are not only incorrect, but harmful too. Indeed, these biases have far-reaching consequences in both the personal and professional aspects of our lives.
One oft-overlooked area that bias can affect is client service, and particularly the service of female clients. While everyone carries unconscious biases, the fields of financial advice and wealth management are particularly vulnerable to the implications of these assumptions.
Historically, wealth in the US has not been diverse. Women only began controlling significant wealth in the US less than half a century ago, enfranchised by legislation that allowed their economic independence and access to credit. New regulations also removed some of the obstacles in the workplace. Consequently, the proportion of wealth held by women in society has expanded at a rapid rate over the past few decades, and the number holding the title of ‘primary household breadwinner’ has increased fourfold since 1960 – to 40 percent, according to a report by the Bank of Montreal.
This shift in economic power has been swift, but cultural and social references still frame men as the primary decision-makers and wealth creators. For this reason, our mental models have remained stagnant – outdated, out of touch and still referencing a time gone by.
While the face of wealth in the US has become increasingly diverse, the advisor community has not. According to research by asset management firm Cerulli, 86 percent of advisors are male, and 43 percent are over the age of 55. This is a critical area in which the industry is falling short.
Data published in Tim Smedley’s The Inclusive Workplace found that teams that are representative of their target client are up to 158 percent more likely to understand their client, and firms with diversity in leadership are 70 percent more likely to be able to open a new market.
In addition, a report by the Centre for Talent Innovation (CTI) entitled Harnessing the Power of the Purse found that advisors with ‘gender smarts’ with regards to women are 27 percent more likely to help their female clients align their investment and life goals, allowing them to deliver on women’s desire for tailored advice. And yet, only a small fraction of wealth managers view gender as a key client segmentation factor.
To serve current clients well and to adapt to the wants and needs of future clients, wealth management firms must change. Getting diversity right is key for wealth managers, but it won’t happen overnight.
With this information in mind, it comes as no surprise that women feel they are underserved and misunderstood by their financial advisors. They report being spoken down to and sometimes not even spoken to at all. An advisor may assume that the female client is not the primary decision-maker, or make assumptions about a client’s goals and priorities based on gender or family composition.
He or she might direct substantive questions to only the male participants in the meeting and limit interactions with the female client to small talk about family. These experiences are not merely anecdotal, but are shared by female clients across the industry.
Female clients complain their advisors do not look at them in meetings. This serves as a cue to the client that she is unimportant
The CTI report found that 67 percent of US women with a financial advisor feel their advisor either does not understand them or is not interested in them. It is no wonder, then, that 62 percent of women are willing to consider changing their wealth manager, compared with 44 percent of men, according to EY’s Women and Wealth report.
Such an endemic problem can be difficult to root out, but the solution lies in developing an awareness of the unconscious biases that undermine client relationships, and fostering trust with clients of all genders, cultures and backgrounds.
The next logical question would be: what do women want? In many industries, companies have attempted to tailor their products and services to women by ‘pinking and shrinking’ them. However, when it comes to financial guidance, women want the same thing as men: excellent service and customised advice focused on their needs and goals.
Actions related to this demand involve building trust and loyalty. Indeed, CTI’s report showed that advisors who help female clients align their investment and life goals are 41 percent more likely to build a satisfying relationship.
For financial advisory firms to be able to attract and retain a diverse cohort of professionals and clients, creating a culture of conscious inclusion is imperative. Conscious inclusion involves constructing an environment of involvement, respect and connection, where a variety of ideas and perspectives are harnessed to create the best experience for each client through thoughtful, intentional, client-centric services.
Such environments necessitate that every client feels included in the conversation. Through involving every client and bringing all stakeholders to the table, financial advisors can help families make better decisions.
There are three key elements in the process of creating a culture of conscious inclusion: awareness, training and behavioural design. Awareness helps people identify the symptoms and diagnose the problem, training is the treatment, and behavioural design implements preventative measures to pre-emptively circumvent behaviours motivated by unconscious bias.
Part of this process involves advisors reflecting on how they create and sustain client relationships. Advisors must become conscious of their unconscious behaviours, including both verbal and nonverbal actions. For example, female clients frequently complain that their advisors do not look at them in meetings. This lack of eye contact, an unconscious action, serves as a subtle cue to the client that she is unimportant.
Everyone has preconceived notions of gender and how it may influence their clients. The implicit association test (IAT), developed by Harvard University, measures implicit bias by testing the strength of associations between concepts and evaluations or stereotypes. This method reveals underlying attitudes and beliefs that people may be unwilling or unable to report.
of women are willing to consider changing their wealth manager
of men are willing to consider changing their wealth manager
Data from Harvard’s Project Implicit reveal that 75 percent of test-takers correlated men with work and women with family. Taking the IAT can be the first step for many towards recognising automatic associations.
Unconscious bias training further develops an awareness of practices and behaviours that undermine inclusion. Firms must invest in training that brings a level of self-cognisance to relationship management and client communication.
This training should be intentional, informed by client feedback, and include best practices tailored for the end user. It must also be supplemented by an open, communicative workplace culture that encourages constructive feedback.
However, developing an awareness of unconscious bias and working to change existing behaviour only goes so far. The very nature of unconscious bias is that we are at least partially unaware of it and, in many cases, it is the result of our brain taking the ‘path of least resistance’ in the decision-making process.
The most effective way of eradicating unconscious bias is to create systems that disincentivise behaviour motivated by bias. Good behavioural design makes it easier for our biased minds to make unbiased choices, and ultimately leads to better outcomes.
For example, in 1952, when the Boston Symphony Orchestra was looking to diversify its mostly male orchestra, it conducted blind (and barefoot) auditions to disguise the gender of the musician. This led to women comprising almost 50 percent of the applicants that made it past the first round of auditions.
When it comes to financial advisory firms, behavioural design that combats bias could exist in the form of an onboarding checklist that explicitly asks about communication preferences, or even a simple reminder about best practices on a computer screen.
The industry’s capacity to serve its increasingly diverse clientele hinges on its consciousness of the impact of its underlying biases. When it comes to women, including them in the conversation, valuing their voices at the table and effectively engaging them in the decision-making process should underscore our interactions.
It is our responsibility as advisors to create spaces where women are actively involved and invited to participate and ask questions, which allows both confidence and trust to grow.