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Women and Financial Planning: The Client/Advisor Connection
• Genevieve Thayer • April 25, 2022
For years, 2030 has loomed as an upcoming milestone in the U.S. for retirement and estate planning. That’s the year, according to the Census Bureau, by which all Baby Boomers will have reached the traditional retirement age of 65.1
The 25 or so years surrounding this milestone are often referred to as the “great wealth transfer” because of the volume of assets that are expected to change hands during that time. An estimated $68 trillion is expected to transfer—much of it ending up with women. One of the reasons for this is that women live an average of five years longer than their male spouses. It’s also thought that 70 percent of these female heirs will change advisors within a year of their partner dying.2
These statistics are causing many financial planning firms to place additional focus on the unique challenges women face when it comes to investing and managing wealth, as well as the needs of female advisors.
The Importance of Sincerity
There isn’t one straightforward answer for how to make a practice more appealing to female clients—it’s a very multi-faceted challenge. At a minimum, do some soul searching to understand why you want to work with these clients. The wealth transfer opportunity makes female clients a lucrative option, but they will want to see sincerity in their advisor’s desire to work with them.
Women indicate that they are still feeling alienated by the financial services industry which is often perceived as being oriented more toward serving men.3 So, I believe one place to start when appealing to the female client is by looking within and making sure your practice reflects those you are trying to attract. In other words, when women are researching financial planning firms to work with, do they see themselves as part of the practice?
It’s also been my experience that women orient themselves differently when it comes to their finances. Money can be very emotional for everyone, but where men may be motivated by the investment returns, women are often more focused on life events and the role money will play in them. These life events cause ripple effects on women’s financial plans, so be mindful about asking questions that uncover what is going on in your female clients’ lives and speak to them in terms of helping them weather the life events they will encounter.
Retaining Internally Transferred Funds
Along those same lines, husband and wife couples often come to the financial planning relationship with different points of view. In this case, what’s most important is for the financial advisor to understand the perspective of each partner.
What do each of the individuals value and what do they need from you as their financial planner? One client may be focused on preparing for those major life events and need to know that you have their best interests at heart. They want a financial professional who is prepared to be one of the first people called when a major life event occurs—not just someone they meet with once a year to tell them how their investments are doing.
For the financial professional to understand both individuals’ perspectives, they must ask each what they are looking for. Learn about the type of working relationship they want. Ask them how accessible they want you to be. Read the body language. If it seems like one partner isn’t following along, make sure they understand what you’re saying. People may feel uncomfortable or vulnerable admitting they don’t understand. Be patient and willing to explain things until they do, and try to create a safe space for them to speak up in the first place.
There are so many different dynamics between partners. Financial professionals aren’t psychologists, but they can pick up on a lot of non-verbal cues. If somebody has checked out, it’s in the financial professional’s best interest to try and bring them back into the conversation. It could mean the difference in retaining a wife’s assets when her husband dies.
Like Attracts Like
To truly engage with female clients in an authentic way, we need to find more seats at the table for female financial professionals. For practices that have been struggling to make this happen, understand that there are a lot of biases and behaviors that exist in the industry that make it less conducive to females. There are steps firms can take to make sure they aren’t just surviving and bringing business in, but that they are really thriving.
Much like female clients have a unique way of looking at the world, the lens used by female planners to measure success is unique. It tends to be less about asset gathering and more about cultivating deep client relationships that take time. I don’t believe anyone wants to exclude women from the process. It happens naturally because of the demographics of the financial planning industry where just over 23 percent of advisors identify as female.4
In my business, providing leadership consulting services to financial planning and wealth management firms, I find that there often isn’t enough attention paid to ensuring a firm is a good fit for women from a values and culture perspective. Understanding these dynamics could mean the difference in determining whether women advisors who come onboard stay or not.
I also encourage leaders not to base success solely on numerical achievements. Metrics are important when it comes to measuring an advisor’s success—as a way of quantifying that something is working—but the business isn’t as much of a numbers game as it once was. It’s about how the advisor adds value to the firm. Today’s consumers are looking for a relationship over transactions. They want you to understand them and what their values are.
If you are running a business there are many important factors to consider, but when you are trying to attract women to the field there needs to be an emphasis on work-life balance. It can be off-putting for some, but the fact is women need access to that flexibility even as financial professionals, and I recommend keeping an open mind to this.
Tremendous Need Creates Opportunities
Women are a key talent pool that will be crucial in supporting the future of financial planning firms that want to attract and retain female clients—over half of whom prefer working with a female advisor.2
Many of the female advisors I have worked with find the career rewarding because they get to build long-lasting relationships and help clients achieve their financial goals. Once female advisors are established in their practice, they can create flexible work schedules that adapt to their lifestyle needs—whether it’s creating work-life balance or making time for caregiving responsibilities.
Honing your firm’s financial planning skills to meet the needs of female clients can be a great differentiator. And I believe one of the best ways to meet the needs of female clients is to engage more women as professionals in the financial planning industry.
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1 America Counts Staff. “2020 Census Will Help Policymakers Prepare for the Incoming Wave of Aging Boomers.” The United States Census Bureau, 2019. December 10. https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-or-older.html#:~:text=Born%20after%20World%20War%20II,be%20at%20least%20age%2065.
2 Baghai, Pooneh, Olivia Howard, Lakshmi Prakash, and Jill Zucker. “Women as the Next Wave of Growth in US Wealth Management.” McKinsey & Company, 2020. July 29. https://www.mckinsey.com/industries/financial-services/our-insights/women-as-the-next-wave-of-growth-in-us-wealth-management
3 “Women, Money, and Power Study: Empowered and Underserved.” Allianz Life Insurance Company of North America, 2019 (Update). April 1. https://www.allianzlife.com/-/media/files/allianz/documents/ent_1462_n.pdf.
4 Certified Financial Planner Board of Standards, Inc. Includes 92,055 CFPs; https://www.cfp.net/knowledge/reports-and-statistics/professional-demographics
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