What are some of the key findings of your research on affluent women?
By and large, women get their money in one of two ways. They either earn it or get it from someone else through marriage or inheritance. It is the source of their wealth that plays the most significant role in how women view their money.
Women who earn their money have a physical and mental attachment to it. They typically own a business, are part of a family business, are a corporate executive, or have a professional practice. They want to be involved in decision making, but they don't want to manage the portfolio themselves.
Women who inherit or marry their wealth tend to outsource their investment management by hiring a professional advisor. Interestingly, women who inherit or marry their wealth often have two to three times more assets than the women who earn it themselves.
Do affluent women have different personal goals and concerns than affluent men?
One thing that is consistent within the entire high-net-worth population is that they place a strong emphasis on their relationship with their advisor. They want someone who is caring and knowledgeable, who is interested in them personally.
For women, the advisor relationship is even more important. When we asked women why they fire advisors, an overwhelming majority cited deficiencies in the quality of the relationship. The advisor didn't understand them, didn't understand their goals, or didn't contact them in the right way.
The other major difference we found was that while men are more likely to have a sincere interest in the market, the economy, securities, or investment products, women are generally less interested in this arena, making women more likely to use an advisor than a man. Women assess their own skills and interests against what they need and then go and find the right match. They take a very pragmatic approach to selecting an advisor. Men are more likely to think they can do it themselves. When surveyed, men admitted making spontaneous decisions and acting on hot tips that they hadn't researched thoroughly. Conversely, women, because of lack of interest, lack of confidence, or their willingness to outsource, don't tend to do those things. They are more likely to have a plan and stick to it.
What about investment goals?
The one investment goal that stands out is that, more than in any other population, women who marry or inherit their wealth are far more interested in socially responsible investing. They are more philanthropically inclined, which is an important opportunity for advisors.
Most advisors are so focused on gathering and growing assets that helping clients give their money away is anathema. So there is a great opportunity for advisors willing to help clients identify the right philanthropic vehicle and direct the investments within those vehicles.
Another thing we found among this group was that at some point in the past they did not have control of their assets, so now that they have that control they are very risk adverse. They want to retain their wealth and retain that position of stature.
How can women advisors connect with this client group and identify good prospects?
The majority of women who have significant wealth ask someone they already trust to refer an advisor. Some women ask their divorce attorney or business attorney, but more than 80% ask their accountant for a referral. They turn to someone they already see as having authority and expertise beyond their own. So the best way to connect with this group is to network with other professionals who have them as clients.
What is the best way to approach these prospects?
Referrals are a beautiful thing. If an accountant is doing the taxes for a woman's business, the accountant knows the business, her annual earnings, and the other executives in the business. They can share that information along with the referral, so that when you get a referral that says Ms. X wants to meet with you, you can immediately create a warm and receptive environment.
In terms of prospecting, one way people evaluate potential advisors is on performance. That's pretty standard. When women are reviewing advisors, they want to ensure that the advisor has the right education, designations, and experience. They want to make sure that the people they are working with are legitimate professionals. Only after they are satisfied on that count, do they focus on the advisor as an individual. They aren't looking for someone to vacation with, but they want to know if you're sincere. Do you have integrity? Are you discreet? Are you interested in them as people or are you just trying to sell them something in the first meeting?
Do you see women advisors as having a competitive advantage in terms of working with affluent women?
Definitely. Women as a population care more about the quality of the interaction. If you know what the client is looking for, you are more likely to be able to deliver it. But that's not the answer you'll get when you ask if women prefer to work with women. The vast majority of women simply say they want to work with the best person available.
So how can women advisors make the best use of that advantage?
You need to be conscious that you do have the advantage, and that female prospects want what you can provide. All professionals have a routine they go through, so if you had to typify an interaction with a client, what would it look like? How much of that interaction would demonstrate that you care about who they are as people, what motivates them, or what their values are? If the market goes down 400 points and you decide to call the top 25 clients, do you reach out to each client the same way? Or do you think about the personalities within that group of 25 and treat each of them individually?
By tailoring your approach to meet the distinctive needs of affluent women, you can provide the personal connection and level of service that they are looking for from their financial advisors.