From the July 2012 issue of Investment Advisor • Subscribe!

Women Are Not a Niche

Working with women clients doesn’t require special skills—just respect

At a recent Barron’s Top Independent Advisors conference, an audience member rose to pose a question to me and my counterparts from other top custodians. “What are you doing to help advisors create a niche market with women?” he asked.

In a way, the question seemed irrelevant, a flashback to the 1970s and ‘80s. Yet the recurring statistics around how quickly widows fire advisors after their husbands die and surveys validating how poorly women in general are treated by so-called financial professionals make this a persistent issue even in 2012.

The question contained a nuance that I personally found most irritating: the reference to niche. How can a group that represents 51% of the U.S. population, according to the U.S. Census Bureau, be a niche? The U.K. Centre for Economic and Business Research found that in the U.K. there are more female millionaires between the ages of 25 and 44 than male millionaires. At some point in their lives, 80% of all women will take sole responsibility for household financial decisions, according to a June 2011 study by The Spectrem Group.

Further, women comprise two-thirds of the U.S. work force, and more than half of women with business-related degrees out-earn their husbands, according to Allianz’s “Women, Money and Power” survey, a fact that shatters the image of women as secondary earners. Finally, the Center for Women’s Business Research found in an October 2009 survey that the 8 million women-owned businesses in the U.S. have a combined GDP that exceeds that of the U.K., France and Italy.

The issue is not how to target or sell to women. The issue is that women investors want to be treated equally to their male counterparts.

It may surprise some advisors that women are just like people. They’ve accumulated their wealth through business ownership, high-paying jobs, inheritance, lottery tickets and yes, in many cases, divorce. More than half of all heterosexual marriages end in divorce, and many women fire their financial advisor within one year of this event. Advisors must recognize that their client couples comprise two individuals of equal importance; relationships must be cultivated with each, and often whatever the man thought made the advisor cool is not often shared by the woman.

According to a recent study sponsored by Pershing, “Women Are Not a Niche Market. They are a Significant Business Opportunity,” equal treatment does not translate to identical treatment. Because women and men often have different life circumstances, different degrees of financial experience and a different approach to communication, advisors may have to modify their approach to building productive relationships. Get to know your clients beyond stereotypes, which may require ditching some bad habits. (For a copy of the study, e-mail me or go to Pershing.com/women.)

Not too long ago, my wife invited me along when she went to purchase a new car. The whole experience was filled with atrocities, especially for a luxury car dealership, but one in particular involved the interaction between the salesman (they called him a sales consultant) and my wife. As we entered the dealership, he approached us, looked at me and asked if he could help. I told him that Arlene would like to buy a new car. He looked back at me and asked me which model she was interested in.

Of course, I knew this was the moment he lost the sale, but we continued to humor him for a few more minutes. Arlene had prepared well for this purchase and knew exactly what she wanted but had some questions. We sat at the salesman’s desk, and she began her inquiry. After each question, he’d smirk as if indulging her then look at me to respond as if we had some special male bond. It may have taken only three exchanges like this before I got the look from my wife that it was time to leave.

While you may attribute this behavior to a line of work that some regard as just a notch above a congressman, women report that they experience the same sort of treatment from financial advisors whether they are alone or meeting as a couple. Single women and married women tend to have the same point of view on this, though being labeled a secondary income earner or housewife adds acid to the mix.

Women as a group are less satisfied than men with the performance of their financial professionals. According to the 2011 Sullivan Investor Trust Study, women rated financial professionals lower in communication, management, service and product offering or investment choices. In general, women did not feel their advisor made them a smarter investor and indicated that their advisor generally failed to articulate the downside risk of investments.

In an interesting twist on this discussion, an article in the April 2012 issue of Forum, a Canadian trade publication for advisors, noted that if you really want to irritate a female advisor, ask her what she brings to the table as a result of her gender. Neither women advisors nor women clients want to be isolated in a pink bubble. The article says that while women advisors have been dismissed over the years because of traits regarded as feminine, ironically they may actually hold the exact skills required to be successful consultants to both sexes.

In other words, there is growing recognition that having an emotional quotient helps people read another person and shift the conversation based on reactions. As the role of a financial advisor has evolved from transactional to advisory, collaboration with clients is key. Working together depends on mutual respect, open communication and a willingness to listen, learn and teach.

The Forum article noted that while advisors recognize the need to be more relationship-oriented and holistic in their view of clients, there is also a general decline in empathy in our society. While this may reflect a generational shift, Scientific American points out the decline may relate to isolation caused by the rise in technology and decline in time spent reading literature.

Regardless of societal trends, the reality is that the advisory firm of the future must make changes in its approach to a population that is as diverse as the general population in terms of its values, sources of wealth and behaviors—a population that is growing in economic impact and influence. While women are not a niche, all advisors must implement tactics that view women as equals in the setting of goals and the design of plans.

The natural tendency to pander or talk down to them will cause women with money to go where they are respected. Further, the failure to recognize this powerful economic force will cause many advisory firms to miss an opportunity for growth among a new set of accumulators.

The concept of providing financial advice is not about marketing, sales or targeting, but the application of a respectful, interested and interesting approach to helping this constituency achieve their goals and manage their risks. The greatest indignity one can commit against another human being is to underestimate them, a condition that appears to be running rampant in the industry. To become a more relevant and effective advisor, give all clients equal respect, but recognize that how you listen, communicate, advise and manage each relationship may require muscles heretofore underdeveloped.

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