We all know the cliché of the older divorcing couple: The husband, in the throes of a midlife crisis, dumps his aging wife for a younger cutie who will shore up his self-esteem and rouse the envy of his peers.
This may be one more stereotype that baby boomers are shattering. AARP has found that among couples aged 40 to 79 who split up, it’s twice as likely to be the wife who initiates the divorce.
Last month, in “The Baby Boomer Bust-Up,” we explored the increasing rate of divorce among older couples. That rate doubled between 1990 and 2009 for people aged 50 and older, according to a recently released study by sociology professors Susan Brown and I-Fen Lin of Bowling Green State University.
It’s particularly significant that divorce tripled in that time among women 65 and older, according to Brown and Lin. Since women typically own fewer retirement assets and live up to five years longer than men, they have greater need of solid financial advice after a divorce. You may think that’s not an issue with your wealthier female clients, but when a couple splits up, the ex-wife often fires her legacy financial advisor.
What Have You Got to Lose? $14 Trillion
Divorced, married or single, many women are high earners with substantial money to invest. As Bernie Clark, head of Schwab Advisor Services, told Investment Advisor’s Jamie Green in July 2012, women now control $14 trillion of U.S. wealth, which could more than double over the next 30 years. More than half of wives with business-related degrees out-earn their husbands. And as a Family Wealth Council study reported last year, up to 95% of women will have to manage their own finances at some point in life. Why, then, do so many advisors regard women as a niche market?
Part of the problem is that they work with couples primarily through the male spouse or partner, even if the woman has assets of her own. And women are noticing. Female clients who responded to the 2011 Northstar/Sullivan “Rebuilding Investor Trust” study rated advisors lower than did male clients in every category, including “making me a smarter investor” and “clearly [articulating] downside risks of investments.”
After the husband dies, more than 70% of widows fire their advisors within a year, according to 2011 Spectrem research. There’s no reason to think the relationship is any more permanent for divorcées. If a woman associates you with the negative experience she’s escaping, she may well “divorce” you, too.
Indeed, losing a female client after divorce is usually a result of having underserved her when she was part of a couple.
What Do Women Want From You?
First of all, your gender doesn’t matter much, as a Schwab Advisor Services study found earlier this year. What’s important is what you do, not which sex you are.
Some clues about what your female clients may be missing came out of a 2012 Schwab study of women with at least $1.3 million in investable household assets. Among the wants of these high-net-worth clients:
• Continuous, good investment performance. Some 58% of HNW women preferred long-term consistency of results to short-term financial gain. To women, investing is about having enough for what they want to do, not “winning” or beating the market.
• To be treated as individuals. Women aren’t a homogeneous population, but “a hugely diverse swath of the population,” as Schwab’s Neesha Hathi put it in a June interview with AdvisorOne.com. They want to be known by their advisor as individuals with unique values and needs.
• To be included in conversations equally with their husband or partner. One-fourth of women surveyed said that hiring an advisor was their decision; 37% said it was a joint decision with their spouse or partner, and 21% said their partner made the decision. Does that make you feel comfortable about retaining a female client you haven’t paid much attention to? We doubt it.
• “Face time” to help establish trust. HNW women prefer in-person meetings, with phone contact as the second-best option. Less personal electronic communications aren’t as popular.
Some other requests from wealthy women:
• More education and validation than men need. This is a huge factor in keeping female clients on board, says Eileen O’Connor of McLean Asset Management in McLean, Va. In a TD Ameritrade webcast, O’Connor added that women who don’t feel valued and listened to are more likely to end the relationship at the first opportunity.
• A relationship that’s not just business. “It’s OK to ask emotional questions,” such as “‘I notice that you are not as upbeat as you normally are. Can I ask why?’” O’Connor says. “I find that clients appreciate advisors asking those questions, and it gets easier asking them over time.”
• An advisor who is a fiduciary. For 80% of HNW women polled in the Family Wealth Advisors Council’s 2012 “Women of Wealth” survey, this is a sign that an advisor has their best interests at heart.
Building Relationships Before a Divorce
The solution to retaining divorced clients starts well before any fracture lines appear in a couple’s marriage. Consider the guidelines Liz Davidson of Financial Finesse shared in her June AdvisorOne.com blog:
• “Treat wives like they matter, even if they’re not directly making the decisions.” This should go without saying, but it’s easy to overlook—especially if the husband dominates the conversation and the decision-making process.
• “Create a community of female clients to attract new ones.” Ask female clients who are happy with your work to share their experience with others. Consider hosting events where they can bring friends to talk about shared concerns and brainstorm solutions with your help.