Women are not a niche.
In addition to being the majority of the population, they also constitute 9% of all billionaires worldwide. They also refer their advisors to others at four times the rate of male clients. They tend to favor the fee-only wealth manager model at a 2-to-1 rate over the broker or money manager model.
Women control 80% of U.S. household purchases, 50% of private wealth, 40% of businesses and more than 48% of estates worth more than $5 million. They will inherit 70% of the estimated $40 trillion in intergenerational wealth transfers expected over the next 40 years.
In sum, women control over $9 trillion but fewer than 20% of women use a financial advisor. The “female economy” represents a major opportunity for advisors, but they are also underserved by the advisor community.
These were just a few of the takeaways delivered on Saturday by Heather Ettinger (left), co-author of the Family Wealth Advisors Council (FWAC) study of high-net-worth American women, at the FPA Retreat 2013 in Palm Springs, Calif.
Rebutting Sigmund Freud’s famous question, Ettinger, managing partner at Fairport Asset Management in Cleveland, said that “women know what they want,” particularly when it comes to financial advice, and especially those “women who have gone through a significant transition,” such as divorce or widowhood.
Since women tend to be more “kinesthetic, more visual learners” who “don’t want to be told what to do,” Ettinger suggested that advisors act more as educators than experts. “Give them a couple of scenarios” on what they can do in financial planning, including the one that you think is most appropriate. When it comes to what is most likely to “put a financial plan into a tailspin” for women, in her experience it’s one of two things: illiquid real estate (not limited to women) and “supporting adult children in crisis.” Women of every wealth level continue to be the primary caregiver not only for their children but their aged parents, and Ettinger said that 72% of long-term care insurance claims goes to women.
About widows, Ettinger said the median age for when a woman is widowed in the U.S. is 59, and there are 8.7 million widows age 65 or older in the country. Pointing out that in the U.S. 700,000 women a year experience the death of a spouse, particularly nonworking women view the death of a spouse as a major financial risk. Ettinger then dove into suggestions on how advisors should advise widows, many of whom may well fire their existing advisor following the death of their husbands.
“Widows lose all their short-term memory,” Ettinger said, suggesting that when advisors hold an initial meeting with a widow that the woman bring a friend with her to the meeting to take notes. Otherwise, says Ettinger, “She’ll forget everything.”