In many ways, Sallie Krawcheck said, women are a larger emerging market than China.
Krawcheck, chairwoman of the Ellevate network for professional women, spoke to the crowd gathered on Monday morning in New York for the IMCA 2015 New York Consultants Conference about the significant opportunity available for financial advisors in the largely untapped market that is women.
“What if I told you there’s a potential client base that holds a majority of wealth in this country, represents 45% of U.S. millionaires, will inherit 70% of the $41 trillion that enters generational wealth transfer over the next 40 years?” Krawcheck said. “Ninety percent of them control their money on their own at some point in their lives; they represent today 60% of college students and a greater percent of graduate students and still growing. They start more businesses at twice the rate of the rest of the population. They’re first-time homebuyers at a greater rate than the rest of the population. They’re breadwinners or co-breadwinners in 60% of households, and they live longer than the rest of the population by 6 to 8 years and they’re healthier while doing so. You’d say, ‘That’s one helluva market, Sallie.’”
This potential client base Krawcheck is talking about? It’s women.
“Women are huge and they’re underserved,” Krawcheck said. Adding, “When we step back and think about it, our business is a business by men, for men. I always say here, ‘I have nothing against middle-aged white guys. I’ve been married to a couple of them.’ But we’re going to have to think differently if we want to attract and approach and engage with this enormous market.”
The majority of woman-held wealth is unmanaged, Krawcheck said, pointing to data gathered by weekly polls of the nearly 34,000 professional women that are Ellevate members.
Just 14% of the women in the Ellevate network said the industry meets their needs well, and three-quarters of Ellevate’s members do not have a financial advisor.
“And these ladies, I’m telling you, are right in the spot of what’s attractive to our industry,” Krawcheck said.
Of the Ellevate members that do have a financial advisor, two-thirds of them said the advisor doesn’t understand them.
“Women report that they feel this industry talks down to them, patronizes them and doesn’t meet their needs,” she said. “It’s no wonder that women rank our industry 33 out of 33 — dead last — of the industries that serve them.”
So, what can be done? Krawcheck gave a number of suggestions to help advisors better serve women.
- “Women report back that our industry is way too complex, way too complicated. And the language we use, the jargon we use? Way too much,” Krawcheck said. Women don’t care what an “alpha” is, a “bip” is, a “standard deviation” or a “Monte Carlo simulation” is, she said. “And when we use jargon with them,” she added, “they pull back.”
- “Women tell us they’re not interested in talking about IBM stock vs. HP stock, non-issue and large-cap value vs. small-cap value, or this money manager with this performance vs. that one, or this active ETF vs. that managed account,” Krawcheck said.
- Most women, according to Krawcheck, aren’t interested in where the stock market is going. “They’re not particularly interested in whether their investments are outperforming because it doesn’t directly matter to reaching their goals,” she said.
- Women also aren’t interested in the “whiz-bang products we have, the latest innovation in liquid alts, what an inverse ETF does,” Krawcheck said. What do women want? “They want to be served, not marketed to. Served, not marketed to,” Krawcheck repeated for emphasis, adding, “And they know the difference.”
Overall, Krawcheck said women look to advisors to provide them a safe place.
"It might be trite to say, but what comes back overwhelmingly for us — in terms of what women want — is that they want to reach their goals," she said. "And that goal is not to beat the market. They want to believe that they and their family are going to be OK, they’ll have enough money, that they will be safe."
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