The journey to engage women more fully with their money has been a long and, so far, not very successful one. Studies continue to show that women are less financially confident than men, despite decades of effort put into making them more comfortable with money and investing.
I've been deeply interested in this puzzle since the early 1970s, when I started my psychotherapy practice specializing in women's issues. Over the years, it's become clear to me that helping women take charge of their money does more for their self-esteem and sense of inner serenity than years of therapy focusing on peripheral issues. Still, the proportion of financially knowledgeable women has hardly budged. Too many women lack the initiative to take charge of what I call their "money lives" and get the help they need before a crisis intervenes, like the death of a spouse, a divorce, or a debilitating illness.
While advisors and the marketing experts who counsel them often start with the notion that a successful advisor must focus on a certain niche, the majority of the population remains underserved and, often, ill-served.
But recently I learned about Direction$, a new venture that proposes to make a substantive difference in this situation. It's the brainchild of three experienced, visionary financial planners--Eleanor Blayney, Peg Downey, and Elizabeth Jetton--who want to help advisors make their offices feel safer and more attractive to women, to help women "get in the door" emotionally, and to facilitate the kind of dialogue that will encourage women to do preventive financial planning for themselves and their loved ones.
When they agreed to let me interview them for Investment Advisor, what they had to say was so inspiring that I offered my own expertise to help them succeed. The challenge they are taking on seems vital to women's financial, and emotional, future. I would argue that all advisors, men and women, can learn important lessons from the insights of these three visionaries and how they have changed their own approaches to serving men, women, couples and families.
What was the catalyst for Direction$?
Eleanor Blayney: In 2007, I gave a talk about charitable giving to women who were fund-raising volunteers at Mount Holyoke College. These women were professors and elected officials; they had authority and responsibility. Because they were fund-raisers, I expected all of the questions to be about the more technical nuts and bolts of charitable strategies. But what I got instead was "How do I find a financial planner?" and "How do I talk to my parents about money? They were asking "Where do I go?" "What do I do?" They were stuck at the very beginning.
This opened my eyes to the fact that even very competent women were fairly uneducated and overwhelmed about financial matters. And it got me thinking about how well the financial planning profession is serving women. I use the metaphor, "We need to get them into the room." Right now, they're not even opening the door.
In 2008, after my wake-up moment, I incorporated Direction$ LLC to improve financial advice to women-- "Directions" because women, unlike many men, are willing to seek help and ask for directions. My personal mission is to empower, educate, and engage women.
Why haven't efforts to educate women about money been more successful before now?
Peg Downey: Women feel so isolated with their finances.
They feel like ...
... they need something different. They're not becoming clients or seeking out financial advisors in the same age as male clients. We know that women tend to go to advisors when they have a problem, not proactively.
Eleanor Blayney: Any woman will take her children to well-baby checkups, and she probably does it religiously, but we're not finding the same engagement or commitment to preventative financial well-being.
Peg Downey: During my 30 or more years of working with women, it has become clear to me that you need to talk to women about finances in a very different way than you talk to men.
What's wrong with the way we do it now?
Peg Downey: Most planners, whether men or women, have been trained to address clients in the traditional manner, which is more appropriate to men's ways of learning than to women's.
Eleanor Blayney: The whole language of investing is hostile to women. It's no accident that the format of CNBC looks exactly like ESPN, with streaming scores. It's all about winning and losing. A man says, "Okay, I made 3% this quarter. Is that more or less than the market? And is it more or less than the other guys?"
Elizabeth Jetton: We need to look at how we define success. As Eleanor says, when you have an investment performance conversation with a man, he wants to know how his return compares to the S&P 500 and other benchmarks. Women want to know, "What does this mean? Can I redo the kitchen? Can I retire?"
And if you think about how the financial planning process is set up, it's one person and one advisor. But women process through conversation. Why in the world are we not gathering women together in a group to improve their financial lives? To come together to learn, to share their stories, and inspire each other?
Eleanor Blayney: Women are collaborators. Since the beginning of time, we've done our work in circles: quilting bees, sewing circles, and so on. Women talk in order to problem solve and make sense of life.
Peg Downey: I think it's fairly well known within the financial planning profession that women have special challenges: they live longer, they're in and out of the workforce so their Social Security check is smaller, the average age of widowhood is 56, etcetera. But the ways women learn, the ways they communicate, and the ways in which they experience money, are different. That's the core of what we're addressing.
The Differences Between Men and Women
Why are women's needs so different?
Eleanor Blayney: I see four clusters of differences. The first is biological: Women are the childbearers, whether we have children or not. So far, we live longer; and we're much more apt to suffer from disabling conditions and chronic diseases. We have a higher likelihood of being widowed, and are more likely to need long-term care.
The number one predictor of poverty in old age is not just being female, but being a female with children. What does that mean? It means that women haven't been able to accumulate enough wealth because of paying for children. They've probably been out of the workforce to care for children and possibly aging parents. These are hard differences, and the result is that women are arriving in retirement with considerably lower resources than men.
Peg Downey: It's not just their savings that are lower, but their pensions and Social Security. Planners are aware of these huge differences, but they may not ...
... necessarily respond to them differently. We need to be paying more attention to such things as maximizing Social Security, looking closely at the use of annuities for women, using tax-free withdrawals from annuities to pay for long-term care, planning for widowhood, and evaluating housing and care options for older women.
Eleanor Blayney: The second difference is systemic. In this country, unlike in Europe, we value paid work. Women are not compensated for unpaid work that supports the family, like raising children. Social Security bases its computation of benefits on the highest 35 years of employment. But women work an average of only 27 years outside the home, so this calculation method works against us. There's no Social Security credit for raising children at home.
As the caretakers, women are disproportionately responsible for child care and housework. We choose jobs that will let us leave at 5 p.m. because we have this other work to do. Also, many benefits, like health insurance, are premised on full-time employment. That can be highly detrimental to women who need to work part-time because of family responsibilities. Finally, our economic system values paid full-time work done by men more than work done by women.
Peg Downey: Since the Equal Pay Act of 1963, women's pay has gone from 59 cents to 78 to 80 cents for every dollar men earn. That's not much of an improvement; less than half a cent a year for almost 50 years!
Eleanor Blayney: It's been reported that 22% of married women brought home more than their husbands in 2007, compared with 4% in 1970 (Source: please!). That sounds like a lot of progress has been made, but it needs to be put into context. There's been almost a 50% increase in women working full-time over that time period, so it doesn't seem particularly surprising that 22% now outearn their husbands. With women now making up 50% of the workforce, why don't 50% outearn their husbands? That would be true parity.
Elizabeth Jetton: Women are judged for earning more money than men. There are negative stories and stereotypes about women like me who choose to work and compete.
Peg Downey: Many of my female clients have asserted their unwillingness to make more substantial incomes--they fear that they would look threatening to the opposite sex.
[I agree 100% with Peg. In my 2001 book written with Sherry Christie, that identified self-limiting beliefs and action steps to help women harness their money power--Money Shy to Money Sure: A Woman's Road Map to Financial Well-Being, we devoted a full chapter to helping women overcome the fear that if they get too good at this "money stuff," they'll antagonize intimates or even end up alone. --Olivia Mellan]
Eleanor Blayney: The third difference is in the area of socialization and culture. As planners, we've been driven by the notion that financial planning is all about your balance sheet. But there's more to it than that. Women are more attuned to other forms of capital: our skills, our job knowhow, our capacity to earn money. That's the human capital or social capital that Elizabeth often talks about.
Elizabeth Jetton: There are a number of different forms of capital or resources to create a thriving life in times of uncertainty and difficulty. Our physical well-being, our health, etcetera, how do all of these resources come into play? We need ...
... to have that kind of conversation with women. Do you have a church? Do you have friends? Community plays an important role in women's lives, since they will spend more years living alone.
[I found myself nodding nonstop here. In all my money coach talks to advisors and consumers, I try to instill the notion that social connection and life balance are prime determinants of people's true serenity and security in old age. --Olivia Mellan]
Eleanor Blayney: There is a tremendous need for advisors to help women manage and maximize their human capital by focusing on career choice, taking more risk in the workplace by asking for promotions and higher salaries, learning negotiation and bargaining tactics, being more strategic about their choices to have children and when. Or at least understanding the costs of these decisions.
The fourth area of difference is stylistic. Women have a different way of relating and thinking. We often seek points of commonality and inclusion. In the workplace, for instance, a woman manager who wants input from everyone may be perceived as weak or indecisive, but many times she's just gathering input before she makes up her mind. By comparison, men are more interested in the hierarchy of "Who's on top?" It's no surprise that investing is seen as a sport.
Capitalizing on the Differences
How can we work with women's relational style to create community around money?
Eleanor Blayney: How do women do important work? They gather together. Women's investment clubs are growing, book clubs . . . it's the way we learn, explore, and experiment.
Elizabeth Jetton: These are great examples. Think about Weight Watchers: they gather you together to tell your story. This is a way that women can get inspired and motivated and be held accountable.
Peg Downey: The Friday Night Knitting Club is a novel about women coming together, ostensibly to knit, but the fact of their coming together makes them all stronger. Women loved this book: It was a big best-seller.
Four or five years ago, I created a new approach to helping women do their own personal financial planning. It involved a series of weekly group sessions, which combined knowledge, group support, and a recognition of the emotional issues around money.
I really do think that this is something new that has not been seen in the financial planning world. I envision our approach being shared with women and with men, to help both men and women advisors work with women clients. Our task is to determine what would be most helpful to planners in terms of working with women as clients.
What should advisors be doing?
Eleanor Blayney: We know education is imperative, that is, education in the way women want to be educated. The amount of wealth the female market represents is enormous, and ...
... a lot of companies are competing for it. The way they are doing that is by making things basic. Unless this is done with sensitivity, it can feel like talking down to women.
Peg Downey: But the messages are still full of charts and graphs, and they're all about winning or losing. I don't think I've seen a discussion anywhere about different approaches for women. With all of the biological issues, and the ramifications of lower income and lower benefits, planning for women requires different strategies.
Eleanor Blayney: When a new client or prospect comes in, anxious about talking about their money, about what they don't have or haven't done, the best way I can empower them is to say, "That's perfectly normal" or "I've heard this before; it's not unusual."
I have a wonderful colleague who tells clients when they're feeling ashamed of something they're sharing, "Listen, this conference table has heard everything!"
Do You Have to Be a Woman to Serve Women Clients?
Do women prefer a female advisor?
Eleanor Blayney: According to a "Women, Money and Power" survey done by Allianz Insurance (see InvestmentAdvisor.com for a copy of the report), those women who have a gender preference for their advisor do prefer working with a woman by 2 to 1.
Peg Downey: I've certainly found this to be true. It's what my clients, who are primarily female, tell me all the time: they have been searching for someone who would understand them and not talk down to them. They often leave their first visit to my office saying, "I thought this would be like going to the dentist's office, but it was actually fun!"
Elizabeth Jetton: One of the things that women planners bring to the relationship is a willingness to be honest about their own struggles, and to hold that empathy for others.
Eleanor Blayney: The reality is that there are three male CFP practitioners for every female practitioner, so even if women wanted to be choosy about this, there are just not enough women advisors to go around. Women need competent, caring advisors, of whatever gender, who are committed to changing the way they talk to women about personal finance.
Are there differences in how advisors should deal with client couples?
Peg Downey: It's important to help clients recognize that the woman in the couple is in most cases apt to spend a significant number of years alone, often as a widow. The average is 17 years.
Eleanor Blayney: A professional partner of Elizabeth's made the comment that he doesn't work with couples; he works with two individuals.
Elizabeth Jetton: So we send out two questionnaires, two annual renewal meeting update forms, etcetera--never just one for a couple.
Eleanor Blayney: The core financial planning strategy in working with couples is to ...
... help women and men define their goals and, in the case of misaligned goals, work for strategies that are acceptable to both partners. Everyone feels better and works more purposefully if they are working toward clear goals they themselves have created and committed to.
What about planning for the probability that a woman will be alone in her later years?
Elizabeth Jetton: Women in the third and fourth stages of their lives, from 50 or 60 on, are a specialty area for advisors. Nobody tells you that you might live till 100, but that is beginning to happen more and more. People are unprepared for it. Are you going to have to move in with your kids? How involved do we get in talking to women (and men too) about how they take care of themselves? The whole conversation needs to be expanded to home, geography, health self-care, community, and purpose. Women tend to have richness in many other resources: community, relationships, clarity of purpose, service to others; and all of these contribute to the ability to thrive, even in the face of uncertainty.
Eleanor Blayney: This is an interesting area. At a session with women advisors, one participant said she had observed that when a woman loses her partner, she can change completely. Suddenly she's revealing herself in a way that is not evident before.
The Tools to Get and Serve Women Clients
What kind of content and skills do you hope to impart to advisors who want to reach women, but don't know how?
Elizabeth Jetton: Everything from what an office looks like to make it attractive and appealing, to what is the structure of a great meeting. Up to now the approach has been more like "I'm an expert and I'm here to teach you stuff." We're talking about facilitating a conversation, and having a more collaborative approach. That includes using stories and analogies to make points and present recommendations, along with more emphasis on listening, being patient, and often being prepared for more questions.
Peg Downey: We want to challenge planners to look at the differences and develop new answers and new strategies, and even new products that meet women's needs.
Eleanor Blayney: We should be looking at annuities. We should be talking to providers to tell them what we need for our women clients. I also think we should be talking about reverse mortgages. They're not a popular subject because the fees are very high. I know I need to be more expert in this field because my clients in general may need one, especially women who are left in their home with limited assets after their spouse dies.
Elizabeth Jetton: What we are saying here is that given the greater potential longevity of women (and men), and the volatility of the equity markets, our profession and the product developers need to focus on creating sources of sustainable income.
How do you envision Direction$ benefiting today's advisors?
Eleanor Blayney: In our view, the financial interests of women can be best served by qualified, competent advisors. Women need relationship and eye contact with an advisor they can trust. One of the goals of Direction$, therefore, is to help advisors rethink their outreach to women, to go where women are in their lives, rather than expecting women to come to them. This may involve rethinking every aspect of what they do--from the look of their offices, to their presentation materials, to the services they offer, to the skill sets and networks of allied professionals they develop.
At the same time, we want to talk to women, to make financial planning feel safe to women. We hope to deliver them into the hands of qualified professionals who agree that we have to change the conversation.
Elizabeth Jetton: There is so much rich material on how women think, relate, and make financial decisions in the fields of behavioral finance, cultural anthropology, mythology, psychology, and so forth, that we would love to enlarge planners' thinking by introducing ideas and concepts from these other areas.
Peg Downey: Over the years, I've come to understand that men and women are really different. And it's time now for women to be empowered to handle their finances competently. We want to create new models to demystify finances for women. The whole field of finance needs to be rethought in this way.
Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Client Connection: How Advisors Can Build Bridges That Last. She can be reached at email@example.com.