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Industry Spotlight > Women in Wealth


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By the late 1960s, U.S. car manufacturers had grown complacent. Each year, they made only cosmetic changes to their cars, and then called them new and improved, despite the fact that they hadn’t made significant changes that were meaningful to their consumers. Many cars were alike under the sheet metal. The executives who ran the car industry resisted change. They weren’t responsive to the needs of their consumers and were, to a certain extent, arrogant. Yet they were very profitable.

Big, heavy gas-guzzlers with shoddy workmanship were the only options that most American consumers had. The manufacturers didn’t have to bother spending money on consumer research and new product development because there was almost no competition. Of course, the Germans were importing the air-cooled VW Beetle and van, and the Japanese were importing small cars to California, but nobody in Detroit paid much attention.

Then, the oil embargo of 1973-74 hit, and everything changed. With long gas lines and sky-high prices, small, efficient Japanese and German cars found a solid niche in the hearts and minds of many American consumers. American auto manufacturers’ market share has dropped from almost 100% in 1970 to just over 50% today. A recent article by an auto industry expert predicted that American manufacturers would soon control less than half the U.S. market for new cars.

Listen to Your Customers

What happened? When I was growing up in the 1950s, anything made in Japan was considered junk. But by the 1970s, this was no longer true. The Japanese raised the quality bar for themselves, and ultimately forced the entire industry to raise their standards. Ironically, the primary agent for this dramatic change was Edward Demmings, an American management consultant whom many U.S. manufacturers thought was a crackpot. He found an eager market for his innovative statistical process controls in Japan, the underdog.

A couple of other things distinguished the Japanese auto manufacturers’ attitudes from the Americans. Rather than resisting change, they were eager for change because they were the outsiders. They were very adaptable. They were humble, and they were willing to squeak by on razor-thin profit margins to penetrate the U.S. market. Not only did they have fuel-efficient cars, but the cars tapped into the emotional needs of a large group of consumers who were fed up with Detroit’s giant land yachts.

Today, many people love their Japanese cars. In addition to making excellent cars, the Japanese have figured out how to create a total consumer experience that generates positive emotions for consumers who drive Japanese luxury cars. The Lexus tag line, “The relentless pursuit of perfection,” is not just an advertising slogan, it is a way of life.

This same market drama is playing out in the financial services industry. I think we are about where the auto manufacturers were in the ’74-’75 aftermath of the oil embargos. A recent CEO Summit hosted by financial industry consulting firm Tiburon Strategic Advisors brought this picture into sharp focus for me.

The managing principal of Tiburon Strategic Advisors, Chip Roame, started the conference by saying, “The biggest challenge facing the investment industry today is that almost no one in the industry understands their customers, the affluent American investor.”

The next day, Tiburon Research Manager Jeff Gombyer and I facilitated a wide-ranging workshop discussion on life planning, family offices, and wealth management. Jeff shared Tiburon’s research on these topics and defined these three nebulous areas of our industry. I spoke about the need for meeting clients’ subjective as well as objective needs, and gave examples of how other industries increased their value proposition in commoditized industries. I even gave examples of how advisors are providing holistic advice to maximize their clients’ satisfaction and emotional engagement.

Jeff and I felt like we were advocates for the investors, sharing with the audience our research and experience of what it really takes to create satisfied clients. My basic premise was that you must appeal both to the left brain, which is logical, and the right brain, which is emotional, if you want to have lasting relationships with highly satisfied clients. Money is simply a means to an end. If investment advisors understand what their clients are trying to accomplish with their money, they can provide better advice and create a deeper and more meaningful connection with them.

Yet during the discussion, we got the usual objections about providing any service beyond core investment products. Many participants in the audience felt that performance was the primary result that clients were looking for, and that without it, clients would leave. Obviously, performance is an important factor, but research indicates that without an emotional connection, clients are likely to leave whenever a better-sounding offer comes along.

The Insiders’ View

After our workshop, Chip Roame facilitated a panel on the future of the industry. The question was, “Which channel will win the wallets of America’s affluent investors?” Chip had representatives from wirehouses, independent broker/dealer channels, banks, insurance companies, and discount brokers. I was shocked to hear an executive from one of America’s major wirehouses argue that, “In the end, the wirehouses will win, not because we have the best salespeople, but because we have the most aggressive salespeople.”

It seems simple-minded to believe that America’s affluent investors will choose to invest their money with aggressive salespeople as opposed to client-centered advisors who actually provide services that are meaningful to them. This might work with inexperienced investors, but as investors become more sophisticated, they will gravitate toward advisors who add value in a way that they define.

This executive demonstrated the same attitude that American auto manufacturers exhibited before the foreign-car invasion. I sensed a giant chasm between what investors want from their advisors and what the industry is focused on providing. The message from the top executive was loud and clear: Whoever sold the hardest would ultimately win the game.

But no matter how hard American car manufacturers try, they continue to lose market share. After 30 years, they are still out of touch with their customers. Without understanding their clients, neither the American auto industry nor the financial services industry will win the hearts and minds of America’s affluent baby boomers.

The Investors Speak

The giant chasm between the industry and advisors’ ideal clients was dramatically brought home in the next panel, which many participants felt was the highlight of the event. Two advisors interviewed four affluent investors. Coincidentally, all the investors happened to be independently successful women. One was a senior securities attorney and partner in a major law firm. Another was a successful fashion designer who worked for a huge clothing manufacturer. The third was an entrepreneur who had built a lucrative business presenting business workshops. The fourth was a management consultant who specialized in organizational transformation.

As the advisors interviewed the women, each expressed either displeasure or outright anger at the way the investment industry had treated them.

The fashion designer had met with a slick sales type who gave her lots of data and tried to sell her products, but took no time to try to understand her needs and desires.

The senior securities attorney said that she trusted her advisor to look out for her interests, but she did not trust the firm itself to do so. She often found out about important policy or service changes at the company by reading about them in the newspaper. Changes were not communicated to her, nor, presumably, to her advisor. She was clearly conflicted about her relationship. She liked the comprehensive services her advisor offered, but not the company’s values and ethics.

The management consultant had worked with an advisor with a national financial planning firm. At first, she was pleased with her financial plan, but after it was implemented, she was dismayed to find how much money she’d paid the advisor in commissions. She said that if she had known how much it would cost, she would have checked out other options.

The entrepreneur had never developed a positive relationship with any financial advisor. Although all her workshop attendees were financial industry executives, she didn’t feel comfortable with anyone she had met.

It was clear that if these women met a client-centered advisor who took time to understand their needs, spoke to them in plain English, and helped them make smart choices about their money and their lives, they would have moved their accounts almost instantly.

The Growing Influence of Women

Women will grow to be a major market for financial advisors in the future. Today, women manage most of the household finances in America and are involved in many of the investment decisions. Four out of five surviving spouses are women.

As an industry, we have a responsibility to help the aging baby boomers make smart choices about their money so they can achieve a secure retirement. If we continue to focus on our needs instead of our clients’, we will lose our clients’ hearts, minds, and wallets. They may decide that having no financial advisor is better than having one they can’t trust. Ultimately, it will not be the most aggressive salespeople, or the most self-serving companies, who win the battle for the American investors’ wallets; it will be the advisors who are the most client-centered. Will you be one of the advisors who leads the charge? I hope so.

Steve Moeller is president of American Business Visions and author of Effort-Less Marketing for Financial Advisors. Call American Business Visions at 800-678-1701, or visit