Susan Hirshman GOT the motivation to write her new book--Does This Make My Assets Look Fat?: A Woman's Guide to Finding Financial Empowerment and Success (St. Martin's Press; September 2010)--from advisors she met while doing presentations during her stints at JP Morgan, where she was in turn a VP, planning strategist, MD and wealth advisor.
Hirshman is a long-time contributor to Investment Advisor and WealthManagerWeb.com (and is speaking at our Retirement Income Symposium November 8-9 in Chicago). When other advisors would buttonhole her after her talks to write a book, during the presentations she couldn't help but notice that "when I was in a room there would be eight men to every two women" advisors. Following up, she learned that women have achieved parity in higher education--women account for nearly 50% of law school and medical school attendees in the U.S., though business schools lag in student gender balance--but also discovered that "in a few years women will start holding a majority of the wealth in this country."
However, she also knew from personal experience that even highly educated, accomplished female professionals "didn't know anything about their financial security." She writes starkly in the introduction to the book that "the level of financial literacy in women is not increasing."
Knowing, too, that she would often hear other advisors talk about "my client and his wife," she believed there was a need to clarify for advisors how they should communicate with women and couples, and for women to take charge of their own financial lives before they were thrown into the planning fire, which happens for many women by choice or chance through separation, divorce, or widowhood.
What Hirshman's provocatively titled new book does is to give women the tools to assume more control over their financial lives by setting out a course to follow that in its language and process resembles a diet plan.
"I knew I wanted to write a book for women," Hirshman recalls, and since "I'm always trying to think of better ways to talk to clients," certain words kept coming up in relation to good financial planning: "focus" and "discipline," "balance" and "moderation," which she recognized as "the exact same language of dieting."
Advisors, Hirshman says, tend to speak a language "unto ourselves. We talk about alpha, beta, returns. We think that because we're in it every day" that clients should understand the terms as well. Instead, Hirshman wondered "What is a common experience that women have?" and realized, 'Oh, we've all been on a diet!'"
Group Editor-in-Chief Jamie Green interviewed Hirshman on several occasions in late July and early August.
Why the 'personal financial planning as dieting' approach?
As I started thinking about the behaviors that make a successful investor, or not to succeed, it occurred to me that the view was so similar to what makes a dieter successful. If you weigh yourself every day it causes you to have a tendency to feel really happy if you lose weight and to feel really sad if you gain weight. So getting on a scale every day leads to erratic behavior, because then you feel 'Oh, I lost weight! I can eat whatever I want!'If you're checking your portfolio daily you feel great when the market is up and bad if the market is down; similar types of behavior patterns can cause a lack of success in dieting.
So the positives are very similar to dieting and the negatives, the behavior patterns, are so similar to dieting.
Then I was thinking that in every stage, understanding where you're starting from, understanding about balance and moderation, that's what diets are all about.
Okay, but don't most diets fail?
That's because of people's bad behavior. Investing takes focus and discipline. It's also not just about using an advisor. It's about you: What do you want? What is the lifestyle that you need to make you happy? One thing that we cover in the book is to understand your priorities and goals and tradeoffs. My first chapter is about setting goals, and about separating them into three buckets--must have; nice to have; and dream to have--because only then, can you understand what you're trading off.
So just like in a diet, if you have that second glass of wine, that's fine, but you should know what you're gaining and what you're losing...
Our job, as advisors, is not to tell people how to live, and it's not to judge how people want to live, it's to help them try to make better decisions.
Why do women in particular not trust themselves to be financially literate?
First, women are a little more honest with themselves, and it's more socially and culturally acceptable for women not to be in the know about money. Second, when I talk to certain women they say, 'It's math. I hate math!' So they have this misconception that it's very complicated, that they have to be using all this math, that they'll never be able to get the concepts. Third is the transition of the gender roles over time. In traditional family life, the husband was the breadwinner and in charge of the money, and the woman was the one to take care of the house. So I think it's learned behavior as well, from your own upbringing.
And even women who are good at math or really smart or very accomplished still got those messages when they were young?
I use this quote from a bumper sticker I saw: 'A man is not a financial plan.' That sums up the way people used to think--A man is a financial plan--but that's not the way it is today. With women working full time, and having kids, it comes down to time: people don't have tremendous amounts of time. If you think something's going to take you hours to do, you won't do it.
So if you're thinking this is a difficult task that will take a lot of time and effort, and I don't have the skills, then you're going to stay away from it. But don't most women in a family balance the checkbook and pay the bills?
Yes and no. If the husband is the only one making the money, as a corporate executive or business owner, the finances are often entwined, and the husband ends up taking care of everything. It depends on the couple.
Not all women are in couples...
More households are single-parent households than ever, there are more single women who made a choice [not to be married], or who divorced, than ever before. Wealth used to be much more defined, i.e., 'Here's your pension plan; this is what you are going to get.' But in the last 30 years, it's become a world of self responsibility. This is the first generation that needs to be heavily involved with saving for the future.
What suggestions do you have for advisors on how to treat clients, both as women and as couples?
The first--and these are phrases that many men already hear from their significant others--is 'Listen! Listen to me!' and 'You're not paying attention.' I think part of it is just being very observant, of body language and behavior and spoken language, because a lot of times I hear from women that they'll go to a meeting and the advisor ends up talking to the husband, and the woman just sits there.
The key is listening, being observant, and checking in, asking if they understand what you're saying, and have them reflect back to make sure that they understand you.
Also, in the beginning of the relationship tell them what your job is as an advisor. As advisors we should educate and manage expectations, so if our clients leave [a meeting] without really understanding what we're doing or why, if there's confusion, it's our job to find a way to convey the information in a way that makes sense to a prospective or current client. It's not their [the clients'] job to become an expert, but to talk about what they expect out of their wealth, and then talk about how to get there together.
Is it necessary, or even preferable, for a woman to have a woman advisor?
No, not at all. I geared this book toward women using [an appropriate] analogy. I could do one for men using baseball as an analogy because men know baseball. My goal was to try to find a language that people are familiar with. So in terms of 'Should you go to a woman? Should you not?' it depends on you and the advisor.
Any parting words about the book?
It's really all about language. It's all about familiarity. It's all about making your client confident and removing the intimidation factor that often accompanies words like 'investing.'
Group Editor-in-Chief Jamie Green can be reached at jgreen@investmentadvisor.