Women have emerged as a sizeable economic force in recent years. In the Middle East, women's wealth in 2019 amounts to $786 billion, and the total asset under management (AuM) is valued at $3.16 trillion.
Driven primarily by greater political and economic stability, as well as continuous improvements in healthcare, educational access, entrepreneurial activities, and wage equality, the annual compound average growth rate (CAGR) of wealth is estimated to rise to 9 per cent by 2023 from 7.8 per cent between 2016-19.
At the same time, the growth rate of women's wealth in the UAE and Saudi Arabia is expected to grow by 5.1 per cent to $103 billion and 8.3 per cent to $224 billion, during the same period.
These figures not only illustrate the rise of women's wealth in the Middle East, but they also indicate that the segment will strongly contribute to the overall wealth. Yet, despite their increasing spending power, women do not receive the same attention and interest the region's wealth management community because of these factors:
• Lack of segmentation: More often than not, women are treated as a homogenous group, dismissing the different needs of female clients.
• Unconscious bias: Inaccurate assumptions regarding what female investors want, together with an inadequate understanding of their actual behaviors and preferences, have resulted in substandard service.
• Traditional roles: For years, women have been less involved in financial decision-making processes, which has limited opportunities in financial affairs.
The coming years look set to represent another milestone period for women's wealth – robust growth is expected to accelerate despite the ongoing economic impacts of COVID-19. If firms begin to appreciate and subsequently accommodate women's specific needs, they too can benefit from this growing wealth market.
Wealth managers must immediately create a culture of social inclusion and eliminate long-standing biases. There is a need to create recognition of unconscious biases around the requirements of female investors. Training regimes and diversity education should be updated to mitigate biases and increase cultural competency.
Diverse teams should be established to achieve a culture shift towards being more inclusive and client-focused. At the same time, standardized questioning should be adopted in the onboarding process to reduce bias effectively.
Make it about the individual
At the same time, rather than focusing on gender, wealth managers should concentrate solely on the individual by adopting a personalized approach tailored to their financial objectives. Create a portfolio that aligns with their vision. Advisors must treat women clients the same way as men, but understand that the dialogue needs to be different – determine the specific outcomes these clients wish to achieve and what drives their vision.
Doing so will create a more thorough understanding to provide and ultimately deliver better services and results.
Together with the current amount of women's wealth and the robust growth forecasts emphasizes the importance of a strategic rethink for wealth managers. Not only must they manage the different cultural perception and unconscious bias within wealth management, they must also ensure approaches are implemented that ultimately result in meeting the financial aims of women.
- Mustafa Bosca is Managing Director and Partner, BCG.