Sustainable investments strike chord with female clients

While designing and offering women-labeled products would be the wrong way to target this overlooked client segment, some types of investment solutions particularly resonate with female clients. 

“Women tend to want to invest at least a portion of their wealth in investments that are aligned with their personal values, which broadly speaking is akin to impact or ESG investing,” says Stephanie Luedke, CEO, Citi Investment Management at Citi Private Bank in New York. 

“This is something female investors across the wealth spectrum share with millennials, and therefore it is most prevalent with female millennials,” she states.

Almost 90 per cent (88 per cent) of women want to invest in organisations that “promote social wellbeing”, according to UBS. 

Better suited

“Women are more accustomed to multi-tasking and parallel processing, because of the multiple roles they play in the society, so they have a greater ability to understand sustainable investing and ESG integration,” believes Erika Karp, founder and CEO, Cornerstone Capital, a financial services firm based in New York focused on ESG investing and  advising on almost $1bn of client assets.

“Also, they are uniquely positioned by virtue of history to think about stewardship, which is about trust and consciousness of all forms of capital, including financial, human and natural capital.”

Moreover, transparency is at the core of sustainable investing, and women do like to be thoroughly informed before acting, adds Ms Karp, previously head of
Global Sector Research at UBS Investment Bank. “This is why we are seeing women migrate towards sustainable investing a little bit more quickly.”

But she warns against the huge proliferation of products targeted to women, such as ‘gender lens’ funds, which are particularly hot now, as many of them lack depth of analysis and governance and do not offer predictive investment insights. 

“If some of these products underperform, it is going to undermine the efforts we are making in this area,” she warns.

Aligning interests

“Women are more aware of their passions and have this need to impact the world by their doing, aligning their personal positions in their life, at home and work,” states Lily Engelhardt, senior vice president and founder of The Lily Group at Morgan Stanley Wealth Management in the US. 

The four-woman, goal-based advisory team, including a mother-daughter duo, focuses on impact investing and manages “hundreds of millions of dollars”, the majority of which is held by women. But that does not mean female investors are not interested in performance. Research has shown impact investing generates better or equal returns and is associated with lower volatility than traditional investments, says Ms Engelhardt.

“We serve women, men, trans genders, and we have no preference. We just find that women in particular like working with us, because we have always catered to women and we have taken the time to educate them,” explains Natalie Engelhardt, financial adviser, and Lily’s daughter. 

A friendly service, more attuned to their needs, does make a difference in terms of attracting female clients. At the Lily Group, this includes providing snacks and crayons to keep children occupied when their mothers meet their advisers, arranging meetings late at night or taking calls at the weekend.