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Industry Spotlight > Women in Wealth

How Can Advisors Empower Female Clients?

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What You Need to Know

  • Women, especially minority women, continue to be underrepresented in the financial services industry.
  • Even women with advanced degrees tend to be less financially confident than their male counterparts.
  • Advisors need to listen more to their female clients (and the wives of their male clients).

Despite the strides that women and minorities have made, they continue to be underrepresented in the financial services sector and all too many women are still not involved in making important financial decisions, female advisors from several U.S. firms said Thursday.

They were speaking during the JConnelly Virtual Media Roundtable “Spotlight on Women in Financial Services — Accelerating the Industry Forward & Empowering the Female Investor.”

“The COVID environment has shed a light on the challenges all investors face,” according to Natalia Tchetchoulina, partner and client advisor at Cerity Partners, who was the event moderator.

“But it’s been particularly tough for women, who are more likely than men to leave their jobs during this period and are only earning 82 cents on the dollar earned by men,” she said, citing U.S. Census Bureau data. Black women, meanwhile, are only earning 62 cents, she noted.

“Even more glaring than the gender pay gap is the gender wealth gap,” she said, pointing to data showing women only have 32 cents for every dollar of wealth owned by men. And the wealth owned by Black and Latina women is “just a single penny,” she said, citing a separate 2015 study, and adding: “Let’s hope that the numbers have somewhat improved since then.”

Meanwhile, “the wealth industry is not immune to the gender underrepresentation,” she pointed out. Although more than 50% of the U.S. population is female and women control one-third of household assets (more than $10 trillion), “only 18.1% of financial advisors are women” she said, citing Cerulli data.

She pointed out that female clients have indicated they prefer working with female advisors.

The numbers for African American, Latino and Asian advisors are in the 2%-4% range, she noted, adding: “There’s a major gap there, which needs to be solved … in addition to gender representation.”

Women also retire with $70,000 less in assets than men do, she said, citing the findings of a 2019 Bank of America study.

The Confidence Problem

Surveys have also shown that women tend to be less confident when it comes to investing than men are, including many women with advanced degrees, Tchetchoulina added.

Agreeing, Jennifer Belmont Jennings, wealth advisor at Hightower Wealth Advisors | St. Louis, said: “What’s interesting to me is that accomplished, intelligent women are afraid to handle their finances” too. In addition, “for some reason, I think women, in particular, are getting this message that we feel like we need to know everything …. For some reason, women don’t have that confidence.”

However, “as professionals in this industry, [we] can reassure” those accomplished women who are clients that “it’s OK not to know something.” Belmont Jennings always tells her clients  — men and women — that “you can only have one day job,” she noted, adding: “I’m not sure where we got the message that we are supposed to be a master of everything.”

What would help: “mandatory education in high school and core college classes that explain compounding interest, that show women why we should care — especially when the statistics show that eight out of 10 of us are going to be alone at some point because we’ll outlive our spouses, or you could be divorced,” Belmont Jennings said.

Noting that she dedicates a lot of her time teaching financial literacy in high schools, particularly all-girl schools, Meghan Railey, co-founder and CFO of Optas Capital, said: “It’s important for the young women to see women in power, women in leadership, women in roles that aren’t traditionally for women, and women who look different than they do, than their mothers do, than their fathers do …. It is so important that we show young women that they can do anything.”

The Advisory Conversation

Women should be “inserting themselves into the process early on” when it comes to meeting with an advisor, according to Gail E. Cohen, chair and general trust counsel at Fiduciary Trust International. “It’s incumbent upon women to be interested, to ask, to be involved in meetings with the advisors, to understand what the assets are, to ask questions.”

At the same time, however, “it’s also really incumbent upon the advisors to insist, if their clients are the men, that they bring their spouses in” as well, Cohen said. “Both partners should be equally involved and educated about what is going on,” she explained.

“And it’s more than just the assets themselves, but also the structures, what the options are, and how they can steward assets for their future beneficiaries, often their children or charities or whatever their goals are.”

What Should Advisors Do?

Cohen urged female advisors to listen to their clients. “Maybe because we tend to be a little more passive growing up, we tend to be very good listeners,” she said. “I think when you are a financial advisor, that is the number one trait that you need to have: You need to be able to listen to what your client’s financial goals are.”

Offering another suggestion for advisors, Julia Carlson, founder and CEO of Financial Freedom Wealth Management Group, said they should not be afraid to take time and slow down when helping clients.

“Some of my clients just delegate and say, ‘OK, hey, yes, you take care of it all,’ but some really want to be empowered with the information and want to be a partner, and I love those relationships because they make me a better advisor — where we can actually partner together and they’re invested in their financial future and I am too,” Carlson said.

On the importance of diversity in the industry, Carlson said: “I think that the business case for diversity and inclusion is that diversity attracts diversity. When you have a strong, inclusive culture and a diverse team … that is the ultimate competitive advantage.”

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