Single woman seeks wealth management: How to advise independent female clients

Women who are newly single, whether because of divorce, losing a spouse or another reason, are often fresh to the world of investing. But as many financial advisors have warned, that's no reason to talk down to them.

"The only thing that I have consistently heard from women as I have brought new female clients is advisors can make them feel stupid," said Tana Gildea, a principal at the RIA Homrich Berg in Atlanta, Georgia, who has worked with many affluent widows. "And that's just not OK."

Gildea emphasized that it's not just men who "mansplain" — and not all single women are inexperienced investors. But in a situation where a client is taking the financial reins for the first time, both male and female advisors should be careful not to speak in a condescending tone — and certainly not to shame her for asking a question. Instead, planners should embrace the role of a "willing teacher."

"We all have to take a step back and realize that not everyone knows all this stuff," Gildea said. "It should be okay for people to not know and have very 'beginner' questions."

Waddell echoed this advice.

"It is critical to create a safe space," she said. "No shame or guilt. Meet the client where they are and help educate without judgment. I hear from so many women that their advisor talks down to them — don't do this!"

Many advisors — though not all — have found their single female clients more risk-averse than male ones. And there is some research to support this: A Harvard experiment found that, in a gambling game involving dice, women were 17% more likely than men to prefer safe choices. (Other studies, including one by Tufts University, have argued the difference is much more complicated.)

In any case, this cautiousness can be both a strength and a weakness for clients, and creates both challenges and opportunities for their advisors. 

"In general, women tend to be more risk-averse, less emotional, less ego-driven and more humble about their financial choices, which often produces a smoother and more successful investing experience," said Yulia Petrovsky, a CFP at Modern Financial Planning in San Francisco. "They are less likely to make unsafe bets and are more open to financial education."

Excessive risk aversion, however, can mean missed opportunities in the market.

"There is a danger of being too conservative, which can result in an underperforming portfolio," Petrovsky said. "Because there is no financial partner to step in, single women prepare to rely only on themselves, and at times end up with too large of uninvested cash emergency funds."

To guard against this, Petrovsky asks her clients a question: What's the worst that could happen?

"We find it helpful to talk about worst-case scenarios to illustrate how things are going to be OK in case of a job loss or a disability or another unexpected event," she said. "Once that sense of security is established, more appropriate investment choices can be made."

Many wealth managers find that for the single women they advise, cautiousness is often paired with another trait: patience.

"Our single women clients are typically more patient and willing to let time in the market do its job," said Noah Damsky, a principal at Marina Wealth Advisors in Los Angeles. "This level of patience and willingness to stay the course is a distinct advantage."

The challenge — and opportunity — that this creates for advisors, he said, is it requires them to be patient as well.

"I think it's important to allow our clients the space they need to come to a conclusion at their own speed," Damsky said. "I find that my single women clients are … deliberate and careful, so decisions can take time — which makes sense. Allow them that time to deliberate."

Another thing that can help clients make decisions — in addition to time — is trust.

"In my experience, single women typically are less likely to let hubris get in the way and are more likely to accept and implement advice," said Brad Brescia, a CFP at Moisand Fitzgerald Tamayo in Orlando, Florida. "That is, with two major caveats — first, there must be an established level of trust where they know you have their best interest in mind, and second, oftentimes, they desire to be thoroughly educated on a topic before accepting advice. If you can establish trust and educate around why something makes sense in their situation, they are more likely to accept the advice."

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How can advisors build this trust? A lot of it, Brescia said, comes down to active listening.

"I've done that by really trying to listen to their needs and challenges," he said. "I will then repeat back what I understood them to say, and more often than not, what I heard is not what they actually meant. We repeat this process a few times until we are both on the same page."

Many wealth managers emphasized the importance of this kind of listening — not only for single women, but for all clients.

"My biggest tip for advisors working with singles is not to assume everyone wants the hetero, coupled life, and not everyone wants children," said Michelle Fait, founder of Satori Financial in Seattle. "But everyone wants to be seen and heard, respected for who they are and to have a full and purposeful life."