By Lynn Eastep
Women, long the keeper of the household checkbook, are increasingly taking charge of the family investments as well. Increasingly, women are stepping into the role of family CFO. America is becoming a “Femocracy” with women making the key purchasing and investing decisions in millions of households – in effect, making “Mom” the chief executive officer, chief financial officer, chief purchasing officer, and chief operating officer.
Word of mouth is hugely influential among women when making financial decisions. More and more of those recommendations are coming in the form of social media engagement, particularly for financial decision-making. According to Oppenheimer, women manage 1 trillion dollars a year, yet they still often lack the knowledge and confidence to invest their money. Increasingly, women are looking to social networks for advice and information—not just on life issues but on financial decisions. A survey commissioned by Citigroup’s Women & Co. unit, which offers financial services aimed specifically at women, found that 63 percent women themselves the CFOs of their households—responsible for making the majority of financial decisions. Additionally, women are no longer waiting for one of life’s big transition events — like divorce, widowhood — to develop a financial plan.
Women are increasingly empowered by the abundance of financial services information online, but the onslaught of information can be overwhelming. Women are strongly influenced by word-of-mouth (WOM) and look to their friends for advice. With the rise of social networking, blogs and viral video, this group has many user-generated sources for information about financial services. The fact that women favor WOM, combined with their use of social networking, indicates they are a strong audience for financial WOM marketing efforts.
Women investors have taken to social media in big numbers, and they are listening closely to what their peers have to say. A 2008 study by Cogent Research, which examines the impact of social media on investment-related decisions, reveals the following primary trends:
- Women investors are highly engaged in social media;
- WOM influences a majority of investment decisions;
- One out of every four U.S. online adult is engaged in WOM that deals specifically with personal finance and investing;
- Social media leads investors to question the accuracy of information delivered by official sources (advisors and investment firms)
Social media offers financial services companies the opportunity to engage online, connect with women in a personal manner and subsequently become their trusted resource. Many financial services companies are missing opportunities to an leverage social media to educate, inform and engage women. To remain relevant, financial services companies need to create lasting, valuable relationships with women by responding and engaging through WOM.