Ample research has been done on the differences in financial behavior between men and women, and today, many financial advisors who are incorporating behavioral finance principles in their practices are taking note of these elements.
Now, though, more advisors are going to have to figure out the best ways to relate to women. According to the most recent “Financial Experience & Behaviors Among Women” study by Prudential Financial, a growing number of women are becoming the sole breadwinners for their families and are increasingly, if not wholly, responsible for their families’ financial futures.
More importantly, though, the study showed that women are less confident about their financial planning capabilities, admitting to a lack of knowledge about financial solutions that can help them.
Whether it’s because more women are reaching the top levels in their chosen profession, or because the economic downturn has resulted in their spouses losing their jobs, the increase in the number of women as primary breadwinners seems to have “an indirect correlation with a decline in confidence,” says Caroline Feeney, president of agency distribution at Prudential Financial. “Women can manage their households, they want to be able to ensure that any education plans that were started for their children continue and so on, but in facing these tougher economic times, women are also worrying more about what they should do. They’re not feeling confident enough to be able to maintain their lifestyles in retirement.”
In today’s unsure economy, where more women are going to be in charge of their families’ financial futures and many are feeling the pressure thereof, the challenge to financial advisors, Feeney says, is threefold: Understand women’s financial planning behavior, boost their confidence, and do so without being patronizing or condescending to them.
“As much as we as a company have found that women are less confident about their financial abilities and as much as we see there’s a need to educate more women about finance and financial planning, we feel it’s most important for an advisor to first listen to a female client,” Feeney says. “Advisors need to understand first what’s important to women, and they need to realize that they cannot push women to take decisions they are not comfortable with.”
Working with women today, Feeney says, is not about pushing and directing: It’s about building a strong relationship that creates trust, which in turn will build greater confidence in more women.
Financial advisors working with women can also help a great deal in boosting their confidence by reinforcing the areas that women are strong in, says Lee Ann Fatalo, a financial representative at BayState Financial Services. Studies have shown that women are more confident with respect to managing their household finances, she says, and women are more focused on protection and risk management than men. Addressing these characteristics will help create a platform from which an advisor can help women overcome their concerns over their financial health, she says, and open the door for a more in-depth dialogue on the investments and financial strategies that are important for their and their families’ futures.
“If an advisor understands where a woman’s concerns are coming from, they will be a lot more successful in helping her,” Fatalo says.
There’s no denying that women are an important and growing segment of the market; this means that financial advisors must be able to adjust to women and their needs, Feeney says.
“Women are not going to adjust to us,” she says. “We are going to have to adjust to them, and our financial professionals are going to have to understand what is important to women and work around them: their buying preferences, the way in which they take their time to make decisions, and even what’s easiest and most convenient for them in terms of organizing meetings.”