Warning to Advisors: Ignore Women’s Market at Your Peril

Pershing study guides advisors on why, and how, to serve and attract female clients, and on what not to do

“It’s time to change the conversation” about women and advisors, argues Kim Dellarocca of Pershing LLC. In a media conference on Tuesday, the Pershing director noted that not only do women represent a “crucial client opportunity” because of their control of household financial decisions, but also because of their expressed dissatisfaction with those advisors with whom they already work.

The opportunity and the threat are explored in a new guidebook for advisors published by Pershing called “Women Are Not a ‘Niche’ Market,” and was the subject of the gathering which, in addition to Dellarocca (left), known for her practice management acumen at Pershing Advisor Solutions (see previous AdvisorOne interview with Dellarocca on advisor succession planning), featured a presentation by the author Susan Hirshman. The guidebook is the first of three reports to be published by Pershing on specialty markets for advisors, and is meant to help advisors “secure and service women clients at every stage of their lives.”

Dellarocca cited a number of research findings, many from the Sullivan Trust Study on which the guidebook is based, that place the opportunity and threat in stark relief:

  • Women comprise 60% of the working population in the U.S.
  • Forty percent of working women outearn their husbands, and more than half of married women with business-related degrees outearn their husbands
  • Women control roughly two-thirds of annual household spending, or about $12 trillion
  • Eighty percent of American women will be solely responsible for their household finances at some point in their lives
  • Only 49% of women said their advisors focused on “making me a smarter investor,” compared with 60% of men
  • Only 57% of women said their advisors “clearly articulate the downside risk of investments,” compared to 66% of men

Hirshman, a former JPMorgan advisor and executive who has written extensively for Investment Advisor and for the Wealth channel on AdvisorOne, recently completed a yearlong tour in which she presented the findings of her book, “Does This Make My Assets Look Fat?” which is intended to give women of every station in life an understanding of the investing world. Many women, said Hirshman, only become involved in their finances and those of their families after a life-changing event such as the death of a spouse, a divorce or a layoff. Too many women, she said, are “If-onlys,” which she defined as those say after that life-changing event, “If only I had paid attention” to their finances and the investing world before they were forced to.

To help overcome many women’s lack of confidence in the world of financial services—not a lack of ability, Hirshman pointed out, they need only break down what they need to know to four areas: what is their current financial status; where do they want to go with their finances; what’s the plan they need to reach those goals; and how to assess how well the plan is going.

Susan HirshmanRealizing that “the industry has not done a great job of communicating what investing means,” Hirshman saw the need to “translate investment-speak into a language women can understand,” which is why her book is presented in the form of a diet plan.” With the understanding of those four areas, and with greater confidence in how investing works, women can be given the power to judge the value of an advisor, Hirshman (left) said.

(See this prior AdvisorOne article on Hirshman, her book and how advisors can better serve women clients in retirement.)

As for how advisors can more strongly engage existing female clients and attract more women to their practices, the guidebook suggests the following:

First, review your current relationships.

Among your clients, identify and list the divorced, single or widowed women and for all of them, ask yourself:

  • How much do I know about their financial and retirement goals?
  • Have I ever asked about topics that go beyond the obvious investment categories—such as elder care, children’s education or health care?
  • Are there areas of interest or apprehension that I have detected but never delved into?

For each of your clients who are part of a couple, list the wives or partners and ask yourself:

  • Have I ever met the wife or partner?
  • Has she been attending my regular client meetings?
  • If not, have I made an effort to invite her?
  • If so, have you taken the time in meetings to direct questions her way and to include her in the conversations?
  • Have you collected her e-mail address so she can receive the same communications as her husband or partner?

Second, consider opportunities to attract new female clients to your firm through:

  • Offering education on pertinent topics such as divorce and bereavement
  • Hosting lifestyle events, perhaps featuring high-end products and services
  • Becoming certified as a financial planner in divorce situations
  • Joining or serving on the boards of organizations in which women are leaders or that deal with women’s issues
  • Presenting on investment topics at conferences where affluent, professional women will be in attendance
  • Conducting local workshops that deal with topics that may be of special interest to women, like elder care finances, college planning or managing divorce.

For additional news and analysis on advisors and women clients, please see these recent AdvisorOne articles and blogs:

Consultant and new AdvisorOne blogger Kristan Wojnar's posting on how advisors can be a "values" manager to their women clients.

AdvisorOne staffer Joyce Hanson's interview with advisor and former NAPFA chair Peggy Cabaniss on the unique tax issues to consider with your woman clients.

Mary Zimmer of RBC Wealth's Soapbox in the March issue of Investment Advisor on how greater female representation among the advisor force will pay off for the industry.

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