During this later time of life, women are unlikely to want to embark upon high-risk adventures. Their preference for predictable income, control and visibility needs to be driven by advisers committed to finding the best possible outcomes within those parameters. Further, this demographic group has been identified as the market segment that presents the greatest growth opportunity for financial advisers.
So, it would seem there is a clear correlation between the most eligible new customers and a preference for advisers who can respond to this market segment with a modern approach to fixed income.
The chance for advisers to add substantial value at a time when the client is often at their most personally vulnerable, following a death or divorce, is perhaps the most meaningful intervention they can make over the course of that client’s life-cycle – this is often when a woman starts to seek a different kind of investment performance.
On the advisory side, we are beginning to see a change in mindset around the fixed-income category, driven by the combination of more demanding self-directed investors, a lower interest-rate environment and the new accessibility to bond markets opening up for individual investors. Advisers are less willing to put their clients in yet another fund and are capitalising on the transparency and value afforded by direct ownership of bonds.
I often talk about how we like to keep investors at the financial equivalent of cruising altitude – we have the capacity to remove the turbulence of volatility and provide regular and timely income. This analogy resonates strongly with the mature women’s segment, which finds the risk of equity markets and the illiquidity of property prohibitive. We get consistent feedback from client meetings that security, stability and dignity become all important and the benefits of direct ownership provide another layer of value, along with diversification, control and transparency.
Peter Adkins, financial adviser from Walker Wayland, agrees: “We might see a recently divorced or widowed client and our assessment process might place them at, say for example, a 70 per cent defensive asset allocation in line with their risk/reward profile,” he says. “We find that an overlay of direct fixed-interest ownership on top of indexed-style investment in government bonds at the core provides a diversified fixed-interest strategy with all the added advantages of direct beneficial ownership.”
He continues: “I’m often surprised by my female clients – I have learnt to really listen as often appearances can be deceptive. Where once expectations of income varied widely, today they are very clear on their cash-flow needs. On one hand you can have a client almost entirely focused on the preservation of her estate to hand on to her children, and she is prepared to live modestly, and at the other end you can have women that are quite growth-oriented or seeking to extract higher income from their investments.”
We are asking advisers to consider a fresh approach to how they allocate to fixed-income assets in line with the new products and services we’ve built to optimise opportunity for the women’s segment around critical life events. The control afforded by direct ownership of assets allows the adviser to provide an outcome tailored to the individual investor, and just as control and predictability are critical to the investor, so too is smooth reporting and administration for the adviser. Our mission is to keep both the investor and the adviser at a comfortable cruising altitude.
Grant McCorquodale is the head of private clients and intermediaries with FIIG Securities
