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How to sell insurance to women

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Prudential Financial’s recently released “Financial Experience & Behaviors Among Women: 2014-2015 Prudential Research Study” focused on women’s attitudes and behaviors toward money and financial goals. The study found that although women are assuming greater overall control of their family finances, they are not any more confident about their financial preparedness than they were 10 years ago. At the same time, though, the findings provide useful insights on how financial professionals can work more effectively with women.

Mixed progress

The current study is Prudential’s eighth biennial survey of women’s financial experiences and behaviors over the past 14 years. That span of time provides insights into how respondents’ attitudes and outlook continue to evolve. One clear trend is that as the economy and financial markets continue to improve since the 2008 financial crisis, women surveyed appear to be less worried about their financial security than they were in the crisis’s immediate aftermath.

That result is an improvement but there are other less positive indications. Despite the lessons of the 2008 financial crisis, the survey indicates that women today feel no better prepared to make wise financial decisions than they did a decade ago. Only 21 percent felt very well prepared then and that response is just 20 percent now.

In 2014, 75 percent of women surveyed say having enough money to maintain their lifestyle throughout retirement is very important, but only 14 percent are very confident they will meet that goal — a “confidence gap” of -61. That result is also virtually unchanged from 10 years ago, when the gap was -62.

Digging deeper

Many women face the combined hurdles of direction, time and money. Over a third of respondents who say they aren’t prepared to make wise financial decisions aren’t even sure what they need to consider when evaluating their options. A lack of money is another major impediment: 31 percent of women surveyed say the biggest impediment to planning for financial goals is simply not having enough disposable income to put toward them.

These findings indicate that financial professionals may need to adapt how they provide information and which solutions they recommend. Women who lack basic financial information and are pressed for time need straightforward educational materials they can review on their own schedules. Prospective clients who lack disposable income will require help developing spending plans that allow them to fund solutions that cover their basic risk management and savings needs.

Another important reason for the overall lack of confidence is that many of the women surveyed do not work with a financial advisor. That’s unfortunate because those who use advisors are more confident than their non-advised peers. More than half the women surveyed who use an advisor consider themselves on track or ahead of schedule in planning and saving for retirement, versus only 23 percent of those who do not use an advisor. While that’s not encouraging news from the financial services industry’s perspective, it clearly illustrates the market’s need and the business opportunity.

There are several possible explanations for the low usage of advisors. One is that technology makes financial information readily available. Misperceptions are another possible reason. Many women believe advisory fees are too high and that they lack sufficient assets to work with an advisor. Among millennials, for instance, 25 percent say they are not in the “right stage of life,” that is, they don’t have enough wealth, to work with an advisor.

What women want

Women’s top long-term goals focus on retirement, health care and debt. Specifically, this means having enough money to maintain their lifestyle in retirement and not becoming a financial burden to their loved ones. In fact, women define financial success as a financially secure retirement — that’s the most frequently cited metric of financial success, although responses vary by marital status.

Women surveyed who are the primary breadwinners in their household are most likely to think about financial success beyond the day-to-day financial concerns that all women have. In addition to a comfortable and secure retirement, they value being able to provide for others and having a financial cushion. In contrast, unmarried women respondents are most likely to define financial success as increasing wealth and being financially independent.

Some of the study’s findings challenge the industry’s self-perception. Only one in five women surveyed feel the financial services industry truly understands their needs. Despite the industry’s extensive, ongoing efforts to serve this market, it seems there is still a need to build relationships built on understanding women’s needs and goals.

Effective communications

Women also have communications advice for financial services firms that would like to help them achieve their long-term financial goals. First, financial professionals need to understand each woman’s unique circumstances and goals before recommending solutions. Financial professionals also need to simplify the advisory process and drop the jargon. It is important that financial professionals be able to explain complex financial topics succinctly and effectively. Additionally, women want financial professionals to look out for their interests and adhere to a strong code of ethics.

Communicating effectively also means recognizing that cultural backgrounds influence attitudes and behaviors because specific ethnic groups’ financial concerns and goals may often differ.

For example, African-American women surveyed appear to focus more on debt reduction — 78 percent say that reducing personal debt is very important. They are the most likely to seek support from the financial services industry and want financial services companies to look out for them, not talk down to them, and demonstrate an understanding of each gender.

Hispanic women respondents appear less confident than other multicultural groups about achieving several key financial goals, such as reducing personal debt, buying a home, giving to charities, being able to help care for other family members, and staying financially secure if they outlive their spouse. However, among women who have taken a bigger role in financial decisions for their households, almost half of Hispanic women say they did so to make sure money is being managed to meet long-term goals — more than any other group.

Asian-American female respondents seem to be the most likely to be on track for retirement. Seventy-three percent say they are somewhere between “ahead of schedule” or “a little behind but catching up” versus no better than 60 percent for the other groups. They also tend to have higher levels of ownership and understanding of investment products.

The opportunity

These results matter because women’s role as earners and financial decision makers is growing. Nearly half of women are the primary breadwinners in their households. Twenty-seven percent of married women now say they “take control” of financial and retirement planning and manage it themselves, up from 14 percent in 2006. Women’s role in family finances continues to expand, which creates challenges and opportunities for the industry and financial professionals.

The industry doesn’t need to resign itself to accepting women’s confidence gap as a static outcome. Prudential’s survey results show that when women start working with a financial professional, they become more confident about their finances. Financial professionals who can educate and clearly explain their products and services can help women close the confidence gap.

For some financial professionals, however, women’s emergence as earners and financial decision-makers might require a change in how they approach clients. For example, with a married couple, it’s no longer safe to assume the husband earns most of the money and makes the decision. If that assumption is wrong, the financial professional risks alienating the woman in that relationship.

See also:

Women seek better benefits to help achieve work-life balance

Advisors must better serve women, social media-savvy millennials

Women and retirement realities [infographic]


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