For all the talk of advisers recognizing the importance of female investors, it still seems there's a way to go.
Consider that an estimated 70% of married women fire their financial professional within a year of being widowed, according to research by Allianz Life Insurance Co.
If the recent market downturn is any indication, it's no wonder that so many advisers lose female clients.
A survey that my firm conducted in January of affluent and mass-affluent retirees and pre-retirees found that substantially more women (21%) than men (6%) re-ported not speaking with their advisers during the market downturn. Even more worrisome, a greater percentage of female respondents — 14% versus 4% of men — said that during the financial crisis, communication with their adviser became less frequent.
We may not realize it, but women pull the national purse strings. The Census Bureau expects women to exert some degree of authority or to control investment decisions in 60% of households by 2010 — which translates into decision-making on more than $14 trillion in investible wealth.
Moreover, according to the Women's Institute for a Secure Retirement, a Washington-based financial education organization for low- and moderate-income women, 80% to 90% of women will be solely responsible for their finances at some point in their lives.
In an environment in which many financial advisers are experiencing a dramatic decline in assets under management as well as a painful exodus of disenchanted clients, the existence of such a large and available source of potential investors should provide a dramatic call to action. So why are so many financial advisers missing the message?
It could be a simple lack of information. Even if you feel you know your client base well, do some analysis to determine how assets, influence and decision-making authority break down by gender. You may be surprised at the extent of female influence among your clients. Is the woman in each of your client couples the largest breadwinner? Did she receive an inheritance? Does she own a business? When was the last time you actually spoke with her directly?
Examine your financial plan profiles to determine if they reflect the retirement goals, savings and pensions of both husband and wife. Review your client conversation models to evaluate if the terms and topics should be updated to language that resonates with women. Consider creating collateral materials (brochures, white papers, fact sheets) that specifically target female investors and offer the types of resources and information they most often seek, including materials focused on legacy planning to those detailing various types of investment vehicles.
Sponsoring workshops, forums and seminars can be another effective tool for attracting the attention of female investors.
Women between 45 and 60 arguably constitute the first generation of women to have worked their entire lifetime. While they have their own assets, many still feel insecure, overwhelmed and confused about making financial decisions. Most welcome proactive contact and investment strategy suggestions. Many women also prefer to discuss plans with family and friends before making final decisions.
The savvy adviser communicates with female investors frequently and provides frequent market interpretations, information on proposed legislative changes, taxes, long-term plans, value updates, catch-up provisions and historical market context.
Advisers should allow adequate time to discuss and explain materials and always offer to meet with the investor's family, who are prospective clients.
Since female investors may be more concerned with risk than men, advisers should consider diversifying into a broad set of asset classes and emphasize vehicles that provide transparency, liquidity and customization.
While some advisers may feel that adapting their practice to serve women would require significant effort, the irony is that the rewards are disproportionately great.
Survey information reveals that more women than men were responsive to advisers' suggestions and more stayed the course through the market fluctuations. In addition, women in high-net-worth households who use a financial adviser tend to be more satisfied with results than men and typically say that using an adviser makes them more successful investors.
With so many client relationships in flux, I can't think of a better time to commit seriously to female investors.
Tracey Flaherty is senior vice president of retirement strategy at Natixis Global Associates in Boston.
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