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Financial Planning > Behavioral Finance

Couples Therapy: Working With Widows

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I have to admit that I’m not a big advocate of trying to attract more of one gender or another into a given profession, such as financial planning. Seems to me a better approach would be to work on removing any gender-based barriers to entry or advancement so that anyone who wants to be a financial planner (and meets professional qualifications) can succeed.

With that said, I do believe there is a growing body of evidence that independent advisory businesses would be more successful if they had more female financial planners. An excellent example of this is the TIAA-CREF Asset Management Survey (of 1,004 Americans at least 21 years old with $100,000 or more in investable assets, and who currently work with a financial advisor) released last June. It concluded, among other things, that “70% of women leave their financial advisors within a year of being widowed.” As we all know, women tend to live longer than men, which means firms that fail to build solid client relationships with both spouses face the prospect of very high turnover among their wealthiest clients.

In our work with advisory clients, we recognized this potential problem many years ago and actively work with our advisor clients to create and maintain great relationships with their clients of both genders, but especially their female clients — who, as the TIAA-CREF survey shows, are more likely to become alienated. Here are some of the things we encourage our clients to consider:

View couples as a target client market. We’ve found that at most advisory firms, failure to build strong relationships with women in client couples is most often a client service model problem. That is, if a firm has identified couples as one of its target client groups (and virtually all advisory firms do), then the firm needs to create a collection of services designed to meet the financial needs of that group.

What many firm owners fail to recognize is that male and female clients often have different needs, especially in the way financial matters are discussed. (Much has been written about these differences, including Eleanor Blayney’s “Directions for Women” project, and Cary Carbonaro’s book, “The Money Queen’s Guide: For Women Who Want to Build Wealth and Banish Fear.”) We highly recommend that advisors of both genders make an effort to understand the perspective of female clients.

Change the service model, not the advisors. Once they become aware of the different needs of male and female clients, many advisors of both genders try to adapt their style to meet the needs of female clients. While socially commendable, in our experience we’ve found that advisors are far more effective if they just try to be themselves. Some advisors (both male and female) relate better to men, while others relate better to women. We like to think of this as a matchmaking game: putting the right advisors with the right clients. That way, both partners in a couple will have an advisor with whom they form a bond.

Work with couples in teams. In our client firms, we use our “diamond teams” strategy: creating advisory teams consisting of one lead advisor, two associate advisors and one junior advisor. We find this strategy offers many advantages, including providing maximum leverage for the lead advisor, and invaluable client experience for associate and junior advisors. Because they include four advisors, diamond teams also create a high likelihood that one of those advisors will connect with each partner in a client couple. Consequently, we recommend that all advisors work with couples in teams, which might include both male and female advisors, but must include at least one advisor who relates well to women and another advisor who relates well to men.

(Read “Diamonds in the Rough: Reorganizing the Org Chart” for more on diamond teams.)

Embrace different approaches to personal finances. A big reason more advisory firms don’t have advisors who relate well to female clients is that many advisors are not comfortable with other advisors who approach financial advice differently from them. We have the same problem with some of our consultants: We find many of these same differences between our male and female advisory clients, and hire consultants who relate better to one gender or the other.

We experience a similar friction when those consultants team up to work with advisory firms that have both male and female owners. When that happens, we tell our consultants: “Of course you have differences. Your team was designed to have differences to better serve your clients. Get over yourselves, learn to work together and do what each of you does best.” This usually works in our business, and we find that it works in most advisory businesses, too.

Focus your service model on working with both partners in a client couple. The TIAA-CREF survey found that 41% of couples did not include one spouse in the decision to hire a financial advisor; 44% assign one partner to handle their advisor relationship; and 60% entrusted one partner to make most of the financial decisions. Is it really any mystery why most widows leave the couple’s advisor?

To keep those widows as clients, advisors need to change the nature of those relationships. Working in teams that relate to both partners helps, but firms need to do more: If you’re going to work with couples, you have to insist upon working with both partners, equally.

Sure, some of the partners in client couples won’t like it. But we believe owner-advisors need to stand firm on this point: Can you deliver professional-level financial planning without getting the total buy-in of both partners? Would that really prepare the surviving spouse to manage her financial affairs alone? Yes, insisting on having a real relationship with both partners might cost you a client or three, but we find that the stronger relationships you do form more than make up for any losses — in increased client trust, higher client retention rates, higher widow retention rates and much higher referral rates because, as it turns out, women tend to be better referral sources than their husbands.

Market your services to couples. Once you’ve gone to all the effort of creating advisory teams to work with couples, maximize your return on investment by attracting as many couples as possible. That means marketing directly to couples, just as you would to any other target client market.

The first step is delivering great service to all your client couples. The goal is to give every client couple the same experience every time. To do that, advisory firms need to create a client care process, which details what each member of the firm should do and say at every point of contact with client couples: when they initially contact the firm, during sales meetings, when onboarding them as new clients and during each phase of delivering client services. Every employee should know exactly what he or she is supposed to do at every step in the client process — and how they are supposed to do it. Everyone who interacts with a firm’s client couples should be trained and supported to deliver the best service possible.

The second step is creating a consistent message, so that everyone in your firm can describe the firm’s services for couples exactly the same way, time after time. A firm’s message should be short enough that employees can remember it, but detailed enough to resonate with the firm’s target clients. Some advisors resist making their message “niche specific” for fear of losing other types of clients. In our experience, not only does this undermine the foundation of a target clientele, but a properly described niche will actually increase prospect interest by focusing on a group that many people are a part of. “Couples” is a perfect example — it’s a group that many people belong to, yet it’s specific enough that prospective clients will feel that your firm works with people exactly like them.

We’ve found that including couples as one of an advisory firm’s target markets (or even its only target market) can be a very successful strategy. But to reap those benefits, firm owners have to do more than just talk the talk; they have to walk the walk. That is, they have to create a firm or at least part of a firm that truly addresses the needs of both client partners. Equally important, they have to build a staff that can make solid connections with both client partners.

— Read “Financial Advisors Get ‘Horrible’ Grade From Working Women” on ThinkAdvisor.


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