No matter what kind of product a company is selling—from cars to shampoo to craft beer—it tailors its messaging for the intended audience. So why should financial products be any different? According to a recent New York Times column titled “Financial Advice by the Demographics ” (Feb. 20, 2015), financial services companies like Fidelity are starting to realize the benefits of addressing specific demographics instead of adopting a “one-size-fits-all” approach in their communications. They’ve begun to target their outreach to women in particular, as well to certain generational, cultural, or behavioral segments—such as older clients, Latinos, or those who borrow heavily from their retirement accounts—instead of categorizing customers simply by the size or type of account they hold.
In the case of Fidelity, the latest product messaging addresses women as a key audience with potentially different needs and communication styles than men. Fidelity’s new approach is based on the company’s recent research findings, which show that a customized approach is more effective. When speaking to a woman client, for example, a Fidelity representative is now more inclined to “frame the conversation around her longer-term goals or the important people in her life—perhaps a child with a college savings account, or an elderly parent,” writes Tara Siegel Bernard, who authored the New York Times column. Representatives will be more likely to use a chatty conversational style, she notes, and to explain how certain financial decisions could impact a client’s lifestyle and goals.
“With men, many want a Reader’s Digest conversation—they want what they came for. However, reps realize that women appreciate hearing what it means for them and want a deeper explanation,” says Jeanne Thompson, a Fidelity vice president who took part in the research, in a quote in the same New York Times column.
Women’s World Banking has long drawn similar conclusions in developing countries worldwide, where our research has shown that women tend to ask for more information than men before trying a new financial product; are generally more risk-averse; and have different financial needs than men, depending on their stage in life. We also know that gender segmentation is only the first step: A woman’s financial goals, risk tolerance, and other factors also depend on her age, marital status, and psychographic outlook—including her attitudes and values.
Income level is also important to consider: Even though an individual’s approach to money isn’t necessarily tied to income, tailoring messages to low-income segments can have a meaningful impact. Low-income women, for example, may have less experience or exposure to formal financial services, and often have lower literacy rates, so they might need more support when introduced to a new product or service.
“Women will ultimately receive the same guidance that would be offered to similarly situated men,” writes author Bernard in the New York Times article, explaining Fidelity’s new approach. “Fidelity said its goal was not to patronize women or to wrap its mutual funds and services in frilly pink bows. Instead, it says it wants to connect with different people—including women—about savings and investing in a way that will resonate….”
For Fidelity, and other companies like Lincoln Financial that are also adopting segmented messaging, simply creating and announcing new financial products is not enough anymore. To achieve or maintain a leadership position in a competitive market, they need to take their communications one step further. Financial institutions are increasingly seeing women as a viable segment— with multiple sub-segments according to the factors mentioned above. Not to mention, women are the primary breadwinners in a growing number of households around the world.
The New York Times article placed a spotlight on the value of tailoring financial messages by gender and other criteria. As for Fidelity, it’s promising to see that one of the U.S.’s largest fund managers is catching up to Women’s World Banking in understanding the needs of women as clients with specific needs and goals—and as a customer base that financial institutions cannot afford to ignore.