Small business owners prefer to speak to financial advisors of the same sex, according to a new study by The American College, with men showing a stronger gender bias than their female counterparts.
Sixty-one percent of women small business owners prefer to speak to female financial advisors, compared to 24 percent of men. Seventy-five percent of men prefer to speak to male financial advisors, compared to 40 percent of women.
This disconnect between the preference for female financial advisors by women business owners and the gender composition of the financial advising community becomes all the more alarming when looking at the broader American economy.
According to the Center for Women's Business Research, 10.1 million businesses report women owning 50 percent or more of the enterprise. In addition, one in five businesses that earn over $1 million in revenue are owned by women. Women-owned businesses employ more than 13 million people and are estimated to generate over $1.9 trillion in sales.
"The financial services industry needs to do a better job of recruiting, training and retaining women as financial advisors if it is going to successfully meet the demand of women small business owners," said Mary Quist-Newins, director of the State Farm Center for Women and Financial Services at The American College, which conducted the study. "Failing to diversify could lead to significant missed economic opportunities for financial services companies and reduced levels of financial security for women small business owners."
According to 2010 data from the Bureau of Labor Statistics, only 30.8 percent of women were personal financial advisors.
The study also found that women are more concerned about retirement planning than men and report having taken more action to address this issue.
- More women have consulted with a financial advisor about maximizing business owner benefits (44 percent women vs. 33 percent men).
- More women have consulted with an advisor about starting a retirement plan (41 percent women vs. 29 percent men).
- More women than men list not having enough money in retirement as one of their top three concerns.
- Women and men state that they take an active role in understanding needs in retirement planning (75 percent women vs. 85 percent men), however:
- Most small business owners have not consulted with an advisor about retirement planning (44 percent women vs. 33 percent men) but those who have report being satisfied with their advisor relationship (76 percent women vs. 85 percent men).
- Many have not estimated how much capital they will need to be able to retire (34 percent women vs. 26 percent men).
- Only a few have a formal, written financial plan for managing income and expenses in retirement (24 percent women vs. 34 percent men) or have a formal, written plan for transitioning their business at retirement (11 percent women vs. 28 percent men).
For this survey, business owners were defined as individuals who own 50 percent or more of the business and who make or share in financial and other business decisions. All the businesses contacted in this survey have been in operation for three or more years and have annual business revenue of $50,000 a year or more. 1,255 interviews were conducted.
The American College is a nonprofit educational institution devoted to financial services.