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Are You Running the Risk of Losing Your Female Clients?

By Grace Williams May 11, 2018

The age-old question “Why can’t a woman be more like a man?” wasn’t asked to discuss matters of finance and investing -- but it could have been. It’s no secret that no two investors are identical, but can that notion apply across the board when drawing the line between male and female investors? New York Life set out to discover just that in its latest white paper, appropriately titled: "What Women Want: How to Gain and Retain Female Clients."

The firm reports that by 2020, women are slated to control $22 trillion and to inherit $28.7 trillion over the next 40 years. The impressive numbers stop there, however. A paltry 10% say they feel “very confident” they will retire with a comfortable lifestyle. Less than one-third have a financial advisor and 10% feel advisors pay equal attention to them as to their male counterparts. The report also notes that 90% of women feel more “sold to” than “educated” when it comes to interaction with their advisor and 70% of widows break up with the advisor they used with their husbands.

There are many factors that contribute to this trend. But according to Erika Karp, founder and CEO of Cornerstone Capital Group, a firm with offices in Denver and New York City and over $1 billion in assets under management, says part of the disconnect comes from an overall misunderstanding about how and why women clients prioritize they way they do.

“I don’t want to make a sweeping generalization,” says Karp in an interview with FA-IQ. “But women might be thinking about interrelational stuff. Maybe a larger grouping of responsibilities beyond work and finance: health, health of the family and planet, relationships ... there is more multitasking going on.”

Indeed, New York Life found that over 50% of women over the age of 50 with assets of $1 million or more said their advisor didn’t understand them. Notably, at one point or another, two-thirds of women are expected to find themselves in the position of caregiver. This entails working non-traditional hours or taking time off from work to care for children or aging parents. The start-stop patterns found in women’s career pathways have a direct impact on their retirement, according to the report, which notes that a typical woman’s median retirement savings was $34,000, compared to the average man's at $115,000.

Yet despite these discrepancies, women are increasingly more interested in learning about how to be more financially empowered. Jennifer Failla, director of financial planning for Strada Wealth Management, found that one way to bridge this gap was to simply reach out. Failla has a longstanding family tradition of women working in finance in some capacity. When couples came to discuss their finances at the firm, located in Covington, La., Failla noticed right away that the husbands often showed up without their wives, which created a disconnect, given the communal nature of a family’s finances.

It was key to insist that wives be involved in meetings going forward, Failla stressed, “Statistically, the husband could die and the woman isn’t going to know what’s going on because she doesn’t have a seat at the table.” Once given a seat, however, Failla discovered, her female clients had plenty of questions and comments.

“Women are more open to asking uncomfortable questions,” says Failla, whose firm has $115 million in assets under management. “Whereas men might want to be less likely to appear to not know something and as a result won’t ask a question about it.”

Personal connection also plays a crucial role, according to the report. New York Life found that 90% of women on the hunt for an advisor said they can’t find one they connect with. But making that personal connection goes beyond simply having a money chat. Asking clients what matters and showing genuine interest in what they care about can make a difference, according to Karp. She recently received a call from a newly-widowed 75-year-old woman, who was looking to jump ship because she felt that the advisor her family had used for years wasn’t paying attention to her.

“We talked about sustainability, gender lens investing and animal welfare,” she says. “She was excited. When you genuinely care, you are telling them that you have aligned sensibilities with them.”

If this news has you rethinking your current interaction with female clients, rest assured that a few purposeful steps now could save you the loss of clients later.

For Bobbie Munroe, senior planner and investment advisor of Supporting Your Choices, a fee-only advisory in Havana, Fla., it’s often a matter of dispelling age-old urban legends, including the notion that women can’t wrap their heads around money matters.

“Many women are raised to think they can’t do the ‘money thing,’” writes Munroe in a note. “I assure them that men do not have an extra money gene that gives them some sort of leg up on the process.”

Similarly, Munroe says, female clients’ traits and instincts can actually pay off when it’s time for them to get paid. “Women’s returns are often better than men’s as they don’t see as much need to tinker with the investments” or “to chase some new, hot idea,” adds Munroe.