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Designer Bag Ladies: Understanding Female Clients

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An independent advisor I know focuses on working with successful women, like her, and hosts an informal study group for successful women. A couple of years back, she mentioned that after such a meeting, one of her wealthiest clients revealed that her biggest fear was running out of money and becoming destitute. The advisor said she just couldn’t understand it: Poverty for that woman was less likely than Kim Kardashian winning a best actress Oscar.

I suggested that it was a clear case of the “bag lady syndrome”: that a high percentage of women, including successful or wealthy women, are secretly (or not so secretly) terrified of ending up penniless. My advisor friend called horse-hockey — not only did she not share that fear, she didn’t know any women who did. So I challenged her to bring it up at her next women’s group meeting. She did, and as she incredulously reported back, every one of the two dozen women in attendance admitted to having the bag lady syndrome.

Today, there are more successful, wealthy women in America than at any time in our history. As Eleanor Blayney, in her work in Directions For Women, has pointed out, this growing trend offers huge opportunities for female financial advisors, but it’s a trend — and an opportunity — that male financial advisors can’t ignore, either. Yet capitalizing on this growing opportunity poses a much greater challenge for male advisors than for their female counterparts. “Women relate to money very differently than men do,” Blayney wrote in her book “Women’s Worth.” If male advisors don’t understand this, and if they approach female clients the same way they do male clients, they won’t attract many female clients or be very good advisors to the ones they do.

To understand women as clients, male advisors need to realize that women have a perspective on money that’s very different from their own. It’s a perspective most men will never fully understand, but I believe that we can understand it better. One way we can gain some insight is to listen to knowledgeable women when they articulate their perspectives on money. I recently came across an excellent example in a new book, “The Money Queen’s Guide: For Women Who Want to Build Wealth and Banish Fear,” by Cary Carbonaro, a practicing financial planner and a managing director of United Capital Financial Advisors.

Now before you get started: Yes, this is a book for financial consumers, not professionals. But it’s also a personal finance book written by a woman for women. Believe me when I say it could only have been written by a woman. This book’s insights into how women relate to money and how they can better relate to money can only come from someone who understands both at a core level. But for male advisors who want to better understand female clients (or for female advisors, like my friend mentioned above), this book is a very good place to start.

Carbonaro got my attention right from the start, stating that she and her clients don’t have the bag lady syndrome, “they have the designer bag lady syndrome.” But, probably like many of you, I have to admit that I was a bit put off by the title: “Money Queen” is a moniker that would seem a bit more fitting for, say, Janet Yellen, Mary Jo White or Abby Johnson. But we have to remember that the book isn’t for men or advisors, so whether the title resonates with either demographic isn’t really important.

What is important are the differences between how men and women relate to money. As Carbonaro persuasively points out, the differences between men’s and women’s attitudes about money are more than different perspectives: They are based in different cultural realities. In my experience, most men believe (rightly or wrongly) that we can always earn a living: If the job we have doesn’t work out, we’ll get another one; if our industry shrinks, we’ll find one that is growing; if we aren’t making enough money, we’ll work harder, etc.

Women don’t often share this sense of optimism (hence the bag lady syndrome), Carbobaro writes, and for good reasons. While job opportunities in most industries are better for women than ever before, our society hasn’t yet reached full equality in the workplace. To succeed, many women still feel the need to work harder, outperform and “get along” better than their male counterparts.

At the same time, while society has focused on increasing equality in the workplace, we haven’t really figured out how working women are supposed to do all of the things that are still expected of them (if only by themselves) on the home front: raising children, maintaining a home, caring for relatives, etc. Consequently, the pressures on today’s working women can be far greater than on men — and equally important, can create financial and emotional dependence on “being married,” even among successful women.

Much of the power of this book comes from Carbonaro’s own experiences in this regard and the lessons she learned from them. The daughter of a banker father and a CPA mother, Carbonaro was comfortable with money from an early age. She worked on Wall Street at JPMorgan Chase, Citibank and Lord Abbett Investments, before becoming a successful financial planner. And she was not a victim of the bag lady syndrome, designer or otherwise: “I was confident in my ability to support myself,” she wrote, “and clearly financially independent — or so I thought.”

But a nasty divorce from her venture capitalist husband, whose ventures she was supporting, devastated her both emotionally and financially. “My ex-husband felt that he was entitled to much of what I earned and almost all that I built. During the divorce, I was bleeding cash. I was in the red every month for the first time in my life. But I was fortunate to have an emergency fund, and it allowed me to get through the four years of negative cash flow.”

It was this emergency fund that enabled her to get out of the bad marriage and bought her time to pull herself together emotionally and start her life over. That made Carbonaro realize how empowering a nest egg can be throughout the inevitable ups and downs of a woman’s life.

“It’s something I advise all of my clients to have,” she wrote. Consequently, for Carbonaro, the key to personal finance for women is to create such a nest egg, not to retire on or to create financial security at some point in the distant future, but to build financial security as quickly as possible to create freedom and control throughout their working and personal lives.

Most of the financial planning in her book is basic, but is tailored to women, especially the focus on creating a financial reserve fund. “We can all agree that saving and financial security should be at the forefront of your mind,” she wrote. “Saving isn’t cool, but it is necessary because the stress you cause by not saving is far greater than the stress you experience by not having X or Y. Not making that purchase today will yield you 10 times that purchase sometime in the future.”

At the same time, she stresses the need for women to manage their emotions: “Remember, much of our spending is emotionally driven. We spend because we want, because we think we need, because we are angry, because we are celebrating and because it is advertised to do so. At the core of each of these behaviors are our emotions. This may be the most import lesson I can impart to you: Don’t let all your emotions control your financial decisions. It is simply a recipe for disaster.”

Carbonaro’s book details the specific challenges that women face in every phase of their lives — marriage, careers, an empty nest, caring for parents and finally retirement — and offers strategies to deal with the finances and emotions at each stage. Taken together, it’s a blueprint not only for women to deal with the financial and emotional ups and downs as they move through their lives, but for those who advise women as well. It’s a must-read for all advisors, and they should also give this book to their female clients to help them better deal with their own unique financial issues — and to demonstrate that their advisor understands these issues, too.

As Carbonaro wrote: “This book discusses many of the topics and important money related issues we, as women, experience on a daily basis: including the struggle, the fight and the battle to manifest a healthy relationship with money.”


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