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Retirement Planning > Retirement Investing

Addressing the Needs of Female Clients

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By the time female clients find themselves sitting in Carol Idone’s office, they are usually very willing to listen to advice on retirement planning. Just the very fact they are there typically indicates a major life-changing event has happened, Idone says. That usually means divorce or death of a spouse.

“Even before a client gets here, it is more likely that a man rather than a woman would walk through the door,” said Idone, a financial advisor with Strategic Benefit Services in Rensselaer, NY. “It is especially less likely that women would walk in by themselves.”

That is the unfortunate reality for most retirement planners because the people that may need your services the most are the ones that may be the least likely to seek them out, Idone said.

Why this disconnect? For one thing, at the risk of sounding politically incorrect, Idone said many women are not actively involved with their household finances. As a result, they do not have high “financial literacy.” This is not a comfort zone for those individuals.

Equally important, the fact that a life-changing event potentially brought the client to your door means they are in a very emotional period. They may be experiencing extreme grief, depression, fear and anxiety, or combination of the above, Idone said. They may feel lost and desperate.

All of these factors mean that retirement planners really need to be on their best game when advising female clients. That means fostering a relationship of trust at the outset. And it especially requires the ability to be empathetic to the person’s personal situation.

The good news here is that regardless of how the first conversation or two with these clients unfolds, they are likely to feel much better right away, Idone said.

“They come into the first meeting with nothing. They may say, ‘I know I need help. I don’t know what to do. Help me. By the second meeting they typically feel good. They now know the challenges they face, but they know they’re doing something about them,” he said,

One of the great ironies of retirement planning is that in most marriages, husbands handle most of the retirement plan details, while their wives ultimately depend on the majority of the retirement benefits.

“Women tend to outlive their husbands. Only one-third of women over sixty-five are married, and on average women will survive their husbands by 15 years,” according to the Women’s Institute for Financial Education. “The combination of being on their own and living longer means that women need far more retirement income than do most men.”

The Financial Literacy Gap

Liz Davidson certainly needs no convincing. As president and CEO of Financial Finesse, Davidson tracks the literacy gaps between men and women when it comes to financial and retirement planning.

“There is a significant gap between men and women’s financial literacy that is causing more risk for women than ever before since other factors make it even more difficult for women to retire and support themselves financially throughout their lives,” Davidson wrote in a column for Think Advisor. “This year Financial Finesse’s research found that not only to women continue to lag behind men when it comes to their financial literacy and knowledge, but the gap between the genders seems to be growing.”

So how does that gap measure up? According to research from Financial Finesse, women are at a significant disadvantage when it comes to having basic money management skills or confidence in their investing knowledge:

  • 43% of women reported having an emergency fund in place to cover unexpected expenses or to pay bills for a few months, compared to 63% of men;
  • 52% of women said they were comfortable with the amount on (non-mortgage) debt they had, compared to 71% of men;
  • 25% of women reported that they rebalance their investment accounts to keep asset allocation plans on track, compared to 49% of men; and
  • 37% of women say they have taken a risk tolerance assessment and were aware of their investment risk strategy, compared to 57% of men.

There is an immediate remedy to these statistics, Davidson says: retirement planners can do a much better job of engaging women in retirement planning conversations at a much earlier age—well before they near retirement age.

“Women are accompanying their husbands more to meetings with retirement planners,” Davidson said. “But I don’t believe they are engaged. Their husbands tend to be the ones responsible for the investments. It is important for the planner in this meeting to establish common ground for the couple, and to engage both of them.”

The benefits of this approach will be both immediate and long-term, Davidson said. On the short term, the couple will make better decisions together, and will be on the same page with all aspects of their financial plan.

In the long term, when these women do eventually near retirement age, and often find themselves alone through divorce or death, they will be in a better position to handle retirement decisions.

Focusing on Dreams not Dollars

In the event that a female client is making their first real appearance in your office near retirement age, Idone recommends that the first conversations not be about retirement plans and investment assets. Instead, the planner should focus on relationship-building.

“I like to spend time talking about what they would like to do in their retirement,” Idone said. “I am looking for a sense of feelings more than of numbers.”

The single most important question the retirement planner can ask is ‘When do you want to retire?’ Idone said. That doesn’t mean at what age, but specifically, ‘on what date would you like to retire?”

That gives the planner a specific date to measure against and work back from.

Of course there are some things that automatically take precedence: a crisis situation, needs of children, etc. This makes having a Plan B important. But by making the conversation about when the woman would like to retire it helps them reprioritize their goals, Idone said.

Davidson also recommends that the planner spend the first few meetings easing talk on dreams and goals down a notch each time, and take time spent on actual investment strategies up a notch each time.

“Triage the things that are most important to them personally. And take it in small chunks,” Davidson said.


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