Connecting with Women Investors

Welcome to the AdvisorMax Expert Forum on how to connect with women investors. I look forward to a lively discussion.

Every year, a slew of studies present the exact same findings. Women are not protecting themselves financially, even though they know they should. Why, when women know better, aren’t they acting in their best interests? Here, I believe, is where the financial industry has missed the boat. Advisors are talking to women just like they do men. Big mistake.

True, money knows no gender. Women, however, are very different from men. Yet the financial world is based on the male model of communication.

Men are transaction oriented. Women are ‘other’ oriented. Men communicate to obtain information, establish status, and show independence. Women communicate to create relationships and make connections. Men want to focus on the facts. Women want to build rapport. He wants to be right. She wants to feel understood.

Add to that, women’s frightening level of financial insecurity, fear and inertia. Research shows it often takes a crisis—the loss of a job, the death of a spouse—for women to finally take action. As a result, female clients often show up on an advisors doorstep in an emotional state.

But in the financial world, conversations about emotions are considered taboo, too touch-feely, not part of the financial planning process. Really big mistake.

I am convinced that women’s financial lethargy has less to do with economic facts and everything to do with emotional blocks.

How can a financial advisor connect with women investors?

Financial advisors don’t need a degree in psychology. They just need to take a different tact with women. Focus on building a friendship, not selling a product. Invite her to discuss her fears, her beliefs and her family’s attitudes toward money. Ask a lot of questions. Listen more than talk. Address her qualms while explaining her options. And above all, focus on inspiring her rather than scaring her.

This last point is paramount. The financial media, and the industry itself, seem to believe that scary statistics, alarming statements, and worse case scenarios will actually motivate women. But clearly fear tactics haven’t worked. What inspires women is helping others. Talk about how financial planning allows her to help her kids, her parents, people she loves. Talk about the joys of philanthropy, the thrill of leaving a legacy. Explain how prudent investing will give her the resources to support causes she’s passionate about.

To women (and I suspect some men), making a difference is what financial empowerment is all about.

Let's start the discussion.

Hi Barbara,

I take to heart your point about women not protecting themselves financially. You ask why, when women know better, they do not act in their best interests.

This is a key point that the largely male dominated industry of planners/advisors needs to pay greater attention to. Often, it’s the wife’s "spending habits” that gets seen as an area to be addressed. But where is this discretionary money really going?

Studies have shown that when women – real ones, not the TV kind – are "out shopping” they’re buying items for their family, for their homes, for the car, for their husband. Say what you want about the price of getting a haircut each month, but the vast amount of a woman’s paycheck is spent on her family, not herself. The same cannot be said for men. Do advisors recognize this?

There is a terrific recent op-ed piece by Maureen Dowd addressing studies that show men are not attracted to smart women, meanwhile intelligence ratings were a prime consideration for women looking at men. Also, career ambitions -- men would consider asking a career-orientated woman out on date as long as her ambitions were not higher than his. And let's not forget studies that show hostility over income.

What does all this teach women about finances?

Barbara, don’t you think male advisors need to better educate themselves about these cultural issues in order to better serve this client base?

Great comments, Colleen. I definitely think male advisors need to be educated about these issues. But this may surprise…I also think many female advisors need to also. There are quite a few women in the field who simply don’t understand the challenges women face. Last month, I had a financial planner in one of my workshops, who told me that for the very first time, she understood the psychological and emotional blocks that keep women stuck. She never got it before, she said, because the subject of money was so easy for her to master.

Personally, I’d like to see a lot more training on these issues to financial advisors across the board.

Hi Barbara,

How does your research translate into actions that advisors can take?

For a male advisor, there will always be a difference in communication style. I don't think "focusing on building a friendship" is the tone I want to set for my practice.

Could you offer practical advice for reaching this audience? -- if it is true that supporting causes is a motivating factor, would concentrating on SRI portfolio options be a way to satisfy female clients/ win business?

Great question, Mark. I’m not sure what tone you worry about setting for your practice. But, if you want to win women clients for life, you really need to understand this fact: Women are ‘other’ oriented; men are transaction oriented. Women communicate to create relationships and make connections. Men communicate to obtain information, establish status, and show independence. Based on this critical fact, here are 4 practical steps you can take.

When you’re dealing with women, it’s absolutely critical to think in terms of ‘connecting with’ them rather than ‘selling to’ them.’ Everything you do and say must be sifted through this filter. If you want to inspire and motivate a woman to take action, talk about the difference she can make in the world… through SRI, philanthropy, or gifting to people she loves. And let her know that you can help her do exactly that.
Give her choices. Rather than telling her what she should do, offer her options. When I first met with my advisor, she said to me, after asking a lot of questions: “I see myself in partnership with you. Here are your choices. Let’s discuss each of them and figure out what’s best for you.” Women do NOT want to be sold to. They want to feel you’ve listened to what they want, understand what they need, and they have a choice in the final decision. Women are leery of advisors who have ‘the answer’. They want choices.
Address her emotions. You know what typically motivates a woman to finally take action? A crisis. Studies show that women don’t get serious about managing money until they lose a job, lose a spouse, or are on the brink of retirement. That’s when you’re most likely to see her for the first time. Obviously, she’s going to be in an emotional state, not the best conditions for making any kind of decision, let alone financial ones. By addressing her emotions, you not only build a stronger relationship with her, but you actually help her get past her emotional blocks.

You don’t need to be a shrink to help, though many advisors do partner with therapists, coaches as referral sources. Ask questions about her fears and concerns, listen more than talk, acknowledge her feelings, slowly educate her, and focus on inspiring her rather than scaring her.
Finally, there’s what I call the ‘magic message,’ the one thing every woman wants to hear. The more effective you are at communicating this message, and—this is critical—backing it up with action, the more loyal and satisfied your client will be. The message is this: “I’m here to make your life easier. I’m here to support you & your dreams.”

Women are so busy taking care of others, juggling so many roles, they are overwhelmed, stressed, and extremely time pressed. Hearing someone say, “I’m here for you,” is music to their ears. My advisor reminds me all the time she’s my partner, she’s part of my team, and she genuinely wants to support me. And she does. When my daughter took out her first mortgage, I had her call Eileen for advice. When my father was sick, she urged me to make sure my mother understood the estate plans. I never would’ve thought of that…it made such a difference. She even counseled my mom (who isn’t a client) right after my father died. She guided me through my divorce, talked to my attorneys. She gives me leads for my business, advises me in areas that have nothing to do with my portfolio. She sends me articles that interest me, even birthday cards. She goes out of her way to create a genuine relationship with me. When she says she’s going to do something, she always follows through.

I know what you’re thinking. “This seems like a hell of a lot of work.” It’s true. We women can be very time consuming, especially at the beginning. Women expect more service, ask more questions. And unlike men, women rate service and advice way ahead of performance. But believe me, with a little extra effort in building a relationship, the results for you can be remarkable. Women are exceedingly loyal, long term clients who are quick to refer you to friends. They have more money than ever before and (unlike many men) they know they need help managing it.

Hope this helped.

Barbara,

We meet with all clients as a team ( two male planners). Any issues (fear, intimidation, etc) we should be aware of? Need to adjust our process? We've spent a lot of time discussing how to set up the room, where they sit, etc. I guess my question is: does all that stuff even matter? We tend to get divorcees and widows from time to time and enjoy working with them so want to make sure the initial process is as smooth as possible for them.

Thanks!

Thanks for the post, Caleb. Yes, it all matters…everything you’re doing like putting your client at ease by setting up the room a certain way, that you enjoy working with women in difficult situations, like widows and divorcees, and that you’re sensitive to any fear or intimidation that may arise absolutely matters. It communicates to the client that you care. And believe me, women can recognize caring (or lack of it) a mile away. In my experience, any initial process in which you:

genuinely communicate your interest in her circumstances, goals, and concerns,
convey that you clearly understand her needs
explain how your expertise and experience will enhance her sense of financial well being, safety, and security
Avoid high pressure sales tactics but go over her options.
Understand that if she says, “I have to think about it,” know she means just that…

…and if you can have this conversation in plain English, not "brokerese," chances are excellent that you’ll win her trust…and her business.

Barbara,

What would you say to critics who object to your generalization of women? As with all generalizations, this risks evolving into stereotypical and discriminatory thinking in an already male-dominated industry. While statistically American women may be more inert when dealing with their finances than men, there are still countless women who are financially savvy and who would take offense to 'special treatment' (such as being quizzed about their feelings rather than their rational financial aspirations). Have you encountered this kind of questioning, and how would you answer it?

I am only speaking for the large number of women (check out the latest surveys) who are not taking financial responsibility. Sure there are a lot of smart women, just as there are quite a few clueless men. This is not about stereotyping. This is about addressing a serious problem: what can the financial industry do differently to motivate the whopping majority of women who aren’t protecting themselves financially like they should? Believe me, I talk about this wherever I go…and I have yet to have one woman take offense…because even if she is personally savvy, she usually knows quite a few other women who are struggling.

I really appreciate having this opportunity to talk about an issue that is so near and dear to my heart. I was one of those women who just couldn’t get a grip on my finances, no matter how hard I tried, until I found an advisor who patiently supported my efforts while wisely addressing my fear…what a difference it made. I hope I gave advisors at least something to think about.