Too few men in the investment advice business know how to talk to female clients.
“Women have more and more money, and they’re looking for advisers that they connect with,” said Judy Paradi of the financial services consulting firm StrategyMarketing.ca. “And on the other hand, we talk to advisers all the time who simply do not know how to find female high-net-worth clients. They’re used to prospecting for men, they’re used to the golf course, they’re used to Sales 101.”
Ms. Paradi and her business partner, Paulette Filion, offer workshops and online courses that show advisers how to earn the trust of female clients. Ms. Paradi and Ms. Filion can help women as well by showing them what female-friendly financial advice looks like.
The perception of the investment industry that women have is shaped by two realities – 80 per cent of advisers are men, and the emphasis in many advice firms is at least as much on selling products and generating fees as providing advice. Adviser-client relationships are often about managing investments because that’s where the money is for the advice firm.
According to Ms. Paradi and Ms. Filion, 87 per cent of women who are looking for an adviser say they can’t find one. U.S. studies show that 70 per cent of women change advisers after the death of their husband. The focus placed by the advisory business on investing over people is a big part of this dissatisfaction.
Ms. Paradi told the story of a friend who had gone through some major life changes and sought the help of an financial adviser. This woman sought reassurance that her family was on solid ground, financially. What she got was a lot of talk about portfolios, investments and rates of return that offered her no comfort.
“Finally, at one point, the adviser said, ‘look, you know what – you will die with money in the bank,’ ” Ms. Paradi said. “And that’s what finally made her feel comfortable.”
The most important attribute for advisers who want to help women might just be the ability to translate money matters into what’s happening in the lives of their clients.
Women want financial planning and investment advice that is relevant to their life goals, Ms. Filion said. “For men, it’s about how much money will I make, how will my money grow? Women think of money in terms of, can I stay in my house or can I retire with enough income or can I take care of my ailing mother?”
To make this connection between money and goals, an adviser needs to put more effort into listening to clients than he or she might with a male client. Ms. Paradi says the adviser who understands how women think about money asks a lot of questions and responds to the client’s answers with more questions. An adviser’s skill can be seen in the way he or she connects the client’s personal situation with opportunities to provide advice.
Bad listening skills tend to lead to bad advice. Ms. Paradi recalls interviewing a couple of women with differing life situations but similar levels of wealth who went to an adviser around the same time. “They got exactly the same financial plan, except one has a very ill husband and the other one has a child who is handicapped and will need money. One has a huge mortgage on their house, the other one doesn’t. The plans these women received had no connection with their life at all.”
Surveys consistently show that women feel they don’t understand money and investing as well as men. But Ms. Paradi said that when the financial knowledge of women and men has been directly compared, it was found to be quite similar. That’s why she and Ms. Filion believe advisers who understand women will help reinforce their confidence about financial matters.
This ties in with another attribute of the adviser who is in sync with female clients – a willingness to dispense with jargon and keep conversations clear and comprehensible.
One more feature of a highly functional relationship between advisers and female clients is respect. Male advisers sometimes have trouble with this one, Ms. Paradi said. “Their understanding of respect is different: ‘I open doors, I offer a glass of water.’ Respect is much bigger than that. It’s respect her time, and respect her needs.”
The best way to demonstrate respect comes back to the idea of communicating about investing and money in a way that relates to real life. Ms. Filion said women have a particular fear of running out of money, which happens to be fully justified based on their longer lifespans than men on average.
The respectful adviser acknowledges this fear and addresses it – not in rates of return, but with numbers that speak to how people manage their money in day-to-day life.
“Telling a woman she’s got $2-million or a 6 or 7 per cent rate of return – she doesn’t know what to with that,” Ms. Filion said. “But if you say, ‘right now your portfolio can generate $5,000 a month and, if you upped your savings, we could probably get up to $6,000’ – that all of a sudden connects money to something that’s important to her.”