Today, women make most financial decisions affecting their households. The vast majority are gender-neutral about choosing an advisor. And they represent an exceptional sales opportunity for advisors—both men and women.
If you’re seeing dollar signs, then the source of these statements, Michael Ross, has potentially a new convert to an urgent message: that advisors, most especially men in the business, must better orient their practices to the burgeoning insurance and financial service needs of women. Ross, a 20-year industry veteran and an advisor or with Cornerstone Financial Group, conveyed his plea during an afternoon Focus Session, “Women: One of Your Wealthiest Market Segments,” of the Million Dollar Round Table’s 2015 annual meeting, being held in New Orleans through Wednesday.
Citing a 2012 white paper, Ross said financial services professionals have long viewed women as a “secondary” or “niche” market. Key reason: The traditionally domestic role that women held in the first half of 20th century America.
“Back then 57 percent of women said that they were raised to believe that a man would take care of them,” said Michael. “Only 3 percent believe that today. Old habits and cultural behaviors are very slow to change, and that has certainly been the case in our industry.”
He added that women have historically been underserved because many of them weren’t interested or felt uncomfortable in meetings with advisors. If they did participate, they oftentimes were ignored, the advisor assuming that the husband made all key financial decisions for the household.
Much has changed. Today, women represent a significant sales opportunity, in part because of the “exceptional benefits” of serving women.
Women, he noted, make nearly twice as many referrals as men — to friends, family members and others — because “they feel responsible to help those they care about.” Women are also “the gateway” to the next generation because they tend to survive their husbands.
“They inherit from their husbands and they rely on a trusted advisor, as well as family and friends, to get them through those first few rough years,” said Ross. “If you are that trusted advisor, you’ll likely interact with her adult children.
“If you do a great job for Mom, you’re in a good position to work with them too,” he added. “Many advisors forget this and wrongly look past the widow and right to the adult children.”
Ross noted also that women are financial decision makers for themselves and their families. Their growing financial power is reflected in numerous statistics. Among others, he notes that women:
open 89 percent of all new bank accounts and pay 85 percent of all bills.
make 80 to 90 percent of all financial decisions for their households.
buy more than half of new cars and influence 80 percent of automobile purchases; and
influence 91 percent of all home purchases.
All impressive statistics. But to effectively serve women, said Ross, advisors have to articulate financial information without jargon and without condescending to them.
Might men’s gender be a handicap in developing professional relationships with women? In the overwhelming majority of cases, the answer is no.
Ross noted that a large majority women (85 percent) are gender-neutral when choosing an advisor. Of the 15 percent who do have a preference, half prefer a male and the other half favor a female financial professional.
“Gender really isn’t part of the equation when it comes to selecting an advisor,” said Ross. “The three most important factors to women in selecting a financial professional are trust, rapport, and competency.”
To ignore women, even if they’re not a “target market,” can put an advisor’s existing book of business at risk. Women comprise 51 percent of the U.S. population and now also generate most household income. And because they live longer than men, they also tend to inherit invested assets under management at the death of a husband –AUM that advisors stand to lose absent a relationship with the surviving spouse.
Yet, women also tend to face greater financial challenges than men. Ross noted that women ill-informed about financial matters lack the confidence to make educated financial decisions.
Many also are handicapped in saving for retirement because, having to care for elders or children, they spend fewer years in the workforce (27 on average versus 40 years for men).
“The time they take off is usually unpaid, so they are not contributing to retirement savings during those years; and they are not contributing to Social Security, both of which may have a big impact on when and if they can retire,” said Ross. “Women also tend to put the needs of others before their own.
“A common example is their tendency to want to save for their children’s college education before saving for their own retirement,” he added.
To work effectively with women, he continued, advisors should adopt the following best practices:
Listen to and validate their concerns. Don’t ignore, talk down to, or speak over women when meeting with them alone or as a couple. Instead, encourage them to talk. Rephrase important points to convey that you understand the issues or concerns raised.
Establish a trusting relationship. Communicate that information shared during the client engagement will remain confidential. Take note of common values, interests, and acquaintances. Also, share information about you and your family, and about how you’ve helped others in similar situations.
Be a competent and patient educator. Studies show that affluent women like to learn in a one-on-one meeting with their financial professional. Many women also tend to prefer workshop and seminars more than men do. Be prepared to explain financial concepts, product benefits plainly, without resorting to industry jargon and acronyms.
Be prepared and encourage questions. Make sure the female client understands your answers. And make yourself available for additional questions that might occur to her later.
Deliver service that meets or exceeds expectations. To that end, ascertain the client’s expectations; then ensure that you or someone on staff follows through, assuming the service level makes business sense.
“Women’s impact on your sales doesn’t end with their purchase,” said Ross. “If they are happy with your service and the outcome, you’ll not only retain them as clients but receive referrals as well.