Talk to Me: A Guide to Advising Women and Couples

Susan Hirshman GOT the motivation to write her new book–Does This Make My Assets Look Fat?: A Woman’s Guide to Finding Financial Empowerment and Success (St. Martin’s Press; September 2010)–from advisors she met while doing presentations during her stints at JP Morgan, where she was in turn a VP, planning strategist, MD and wealth advisor.

Hirshman is a long-time contributor to Investment Advisor and WealthManagerWeb.com (and is speaking at our Retirement Income Symposium November 8-9 in Chicago). When other advisors would buttonhole her after her talks to write a book, during the presentations she couldn’t help but notice that “when I was in a room there would be eight men to every two women” advisors. Following up, she learned that women have achieved parity in higher education–women account for nearly 50% of law school and medical school attendees in the U.S., though business schools lag in student gender balance–but also discovered that “in a few years women will start holding a majority of the wealth in this country.”

However, she also knew from personal experience that even highly educated, accomplished female professionals “didn’t know anything about their financial security.” She writes starkly in the introduction to the book that “the level of financial literacy in women is not increasing.”

Knowing, too, that she would often hear other advisors talk about “my client and his wife,” she believed there was a need to clarify for advisors how they should communicate with women and couples, and for women to take charge of their own financial lives before they were thrown into the planning fire, which happens for many women by choice or chance through separation, divorce, or widowhood.

What Hirshman’s provocatively titled new book does is to give women the tools to assume more control over their financial lives by setting out a course to follow that in its language and process resembles a diet plan.

“I knew I wanted to write a book for women,” Hirshman recalls, and since “I’m always trying to think of better ways to talk to clients,” certain words kept coming up in relation to good financial planning: “focus” and “discipline,” “balance” and “moderation,” which she recognized as “the exact same language of dieting.”

Advisors, Hirshman says, tend to speak a language “unto ourselves. We talk about alpha, beta, returns. We think that because we’re in it every day” that clients should understand the terms as well. Instead, Hirshman wondered “What is a common experience that women have?” and realized, ‘Oh, we’ve all been on a diet!’”

Group Editor-in-Chief Jamie Green interviewed Hirshman on several occasions in late July and early August.

Why the ‘personal financial planning as dieting’ approach?

As I started thinking about the behaviors that make a successful investor, or not to succeed, it occurred to me that the view was so similar to what makes a dieter successful. If you weigh yourself every day it causes you to have a tendency to feel really happy if you lose weight and to feel really sad if you gain weight. So getting on a scale every day leads to erratic behavior, because then you feel ‘Oh, I lost weight! I can eat whatever I want!’

If you’re checking your portfolio daily you feel great when the market is up and bad if the market is down; similar types of behavior patterns can cause a lack of success in dieting.

So the positives are very similar to dieting and the negatives, the behavior patterns, are so similar to dieting.

Then I was thinking that in every stage, understanding where you’re starting from, understanding about balance and moderation, that’s what diets are all about.

Okay, but don’t most diets fail?

That’s because of people’s bad behavior. Investing takes focus and discipline. It’s also not just about using an advisor. It’s about you: What do you want? What is the lifestyle that you need to make you happy? One thing that we cover in the book is to understand your priorities and goals and tradeoffs. My first chapter is about setting goals, and about separating them into three buckets–must have; nice to have; and dream to have–because only then, can you understand what you’re trading off.

So just like in a diet, if you have that second glass of wine, that’s fine, but you should know what you’re gaining and what you’re losing…