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Jan 28

Understanding the Female Market

By Dr. Jack Singer | Advising the Advisors

A recent study by Fidelity Investments found that 70% of widows fire their financial advisor within one year of their spouse’s death.

Why would so many women dismiss the advisor who worked so diligently for their family, in many cases for years? Because they thought the advisor as condescending toward them. The advisor only held meetings with the spouse. In joint meetings, the advisor only addressed the husband, or made no eye contact with the wife, as if she had no say or interest in the financial security of the family. In short, these widows felt overlooked and undervalued, and they had no trust in the advisor.

Besides the host of ethical reasons, there are some very important business reasons why you should never allow any woman client to think of you in this way. Some commonly quoted statistics tell a compelling story:
Women will inherit close to 30 trillion dollars in intergenerational wealth transfers in the coming decades.

  • Because women are likely to outlive their husbands, women will control most of this wealth, plus, they will inherit their parents’ wealth.
  • 57% of college graduates are currently women. Female college graduates are currently in control of more than 60% of the personal wealth in the U.S.
  • 22% of women currently earn more money than their spouse.
  • Women make approximately 80% of their family’s buying decisions.
  • 89% of bank accounts are controlled by women.
  • 28% of homeowners are single women.
  • 45% of the millionaires in the U.S. are women.

In short, women are earning more, inheriting more, and controlling more wealth than ever before. This is a huge market awaiting every financial advisor, if he/she understands some key points about working with female clients.

I recently interviewed a female financial advisor, who has enjoyed a very successful career for more than 20 years. She runs a firm with several other advisors, all of whom are women. This is not a coincidence; it is by design. She only hires females, primarily because she works exclusively with female clients. She decided many years ago that focusing on female clients would be a very smart way to build her career.

When she was in her teens, she observed her mother making virtually none of the financial decisions in the family, almost as if it wasn’t her role. Furthermore, her father rarely shared financial investments, insurance plans or any form of estate planning with her mother. Consequently, when her father died, her mother was frozen with feelings of helplessness, did not understand the details or nuances of her financial situation and felt very depressed and anxious as a result.

As an aside, when I was a psychologist in the U.S. Air Force during the VietNam War, one of my duties was helping the wives and families of servicemen killed, captured or missing in the war. I was shocked at the high percentage of women who had absolutely no idea about any of the financial plans or arrangements that their spouses had prepared before departing for overseas. Most didn’t even know where to find the paperwork or the names of insurance companies or brokerage firms that their spouses worked with.

So, this advisor decided early on that she would find a career to help women, so that her clients would never find themselves in the position her mother was in.

Some male advisors have problems dealing with female clients because they have a general problem dealing with women. Sometimes males have stereotypical views of women and finances, such as “women prefer to leave financial decisions to men,” “women are too emotional and base financial decisions on their emotions at the time,” and “women are impulsive and may make financial decisions they later regret.”

To all the men reading this: If you maintain any of these ideas about women, perhaps working with female clients isnot something you should consider – unless you plan to engage in therapy or group sensitivity sessions about the differences – and similarities – in the sexes.

You’ve probably heard that money problems are one the most significant factors that lead to divorce. Dr. Sonya Britt, an Assistant Professor in the Institute of Financial Planning at Kansas State University collected interview data from 4500 couples who had gone through divorce and the data showed definitively that the #1 factor in causing the divorce was money issues. Many couples exist with money issues as a taboo subject, with women leaving financial decisions to the males in their lives, in order to avoid controversy.

Jan 14

Capitalizing on the Female Market

By Dr. Jack Singer | Financial Advisors

It’s clear that the underserved female market represents a remarkable opportunity. But how can advisors reach out to this market and speak more effectively to female clients and prospects?

Financial professionals need to understand that women need to feel genuinely cared about and valued in any relationship. They want their advisor to listen to their needs and fears. Married women want to build a genuine relationship with their advisor, feel like they are treated as an equal partner to their spouse, attend all meetings that their spouse attends, and focus on investments that address her needs, as well as her partner’s.

Women in general, married or not, must be genuinely listened to, if you plan to solicit them as clients or retain them. I teach all of my advisor clients the skill of “Active Listening” to effectively communicate your genuine concerns to women (and also men, for that matter).

Prior to the meeting, tell your secretary to be sure to hold all calls, etc. and turn off your cell phone. Come out from behind your desk. Make sure you make and maintain good eye contact with her throughout the visit.

The key to active listening is not concerning yourself with what you will say next or how to respond to the speaker’s point or question. Instead, you pay particular attention to what she says and her nonverbal communication (facial gestures, body language, eye contact, etc.) so you can understand the essence of her concerns. You then paraphrase what she said, by mirroring it back to her and empathizing with her concerns (even if you think they are irrational), because you must be on the same page with her to truly understand her concerns. You never give your opinion or your thoughts about what she is saying until you are certain that you understand where she is coming from, she confirms that you have it right, and is asking for an opinion. Often the first visit is just you listening and understanding…not giving advice.

There are many “Active Listening” models out there, but I particularly like the ideas below that Kathleen Burns Kingsbury describes in her wonderful book, “How to Give Financial Advice to Women.”

Step 1: Lead with an open-ended question to begin the dialogue. For example, you might ask your widowed client, “What is your biggest concern right now?” Even if her response has nothing to do with finances, go there with her. Your job is to understand the emotional space she is in now, not necessarily to direct her into the financial arena.

Step 2: Ask clarifying questions to get an in depth understanding of her concerns and needs. For example, “What are your greatest fears about will happen over the next five years or so?”

Step 3: This is the key to active listening. Reflect back (paraphrase) what you just heard in your own words. For example, if she said, “I don’t know how to raise my children without their father in the picture and I’m feeling overwhelmed,” you could paraphrase, “What I’m hearing you say is that you’re worried that without your husband, you may have difficulties raising your children and it will be very stressful. Is that how you feel?”

Step 4: Ask for more clarification. For example, “What are you afraid that you won’t be able to handle with the children?”

Step 5: Summarize both the content and emotion of the client’s conversation. For example, “It sounds like you are feeling overwhelmed at the moment, not knowing how you are going to handle the children and all of the responsibility by yourself and you are afraid of failing in that regard.”

Notice that the conversation may not go anywhere. Your job is to listen and understand your client’s concerns. The conversation this time may never come to financial issues. It doesn’t matter. Your client needs to know you are concerned, you understand her and you will help her. Once she understands that you care about her and are a support system for her, helping her to make sound financial decisions will be much easier in future conversations. It all starts with trust and communicating genuine concern for her welfare and that of her family and their future. This is the process of developing trust in you as an advisor…it’s never about the outcome (what products she agrees to purchase from you).