HOLLYWOOD, Fla. – They’re earning more income than ever before, outlive their husbands by an average of four years and are significantly more inclined to seek out financial advice, but the advisory community still hasn’t done enough to cash in on this enormous wealth management opportunity.

That was the takeaway from the “Women Investors: Capturing a Significant Business Opportunity” session here at Pershing’s 2012 Insite Financial Solutions Conference where a panel of advisors weighed in with some stats and tactics that should motivate advisors of either sex to rethink how they’re targeting women investors.

Perhaps the most important consideration when it comes to attracting and retaining women investors is to understand and appreciate the unique life experiences and challenges they face in order to tailor investment advice and products that make the most sense for their often very specific circumstances.  

“More than 70% of married women fire their financial professionals within one year of their husbands’ death,” said Kim Dellarocca, a Pershing director who served as the moderator for the panel. “Why? Because advisors are failing in the way they service them,” adding that she believes advisors, generally, do not communicate well with women and often fail to pick up on some of the verbal and non-verbal signals they send when they’re discussing their financial goals.

The irony is that women today make 80% of all consumer purchases. There are more women than men (51% vs. 49%) in the potential client pool and women start businesses almost twice as frequently as men. They often head single-parent homes, take on the responsibility of caring for their aging parents or find themselves starting over from scratch following a divorce.

In other words, this is a huge group of existing and potential clients who need sound financial advice tailored to their specific situations and they’re not looking for the kind of advice – or lack thereof – that their mothers and grandmothers received.

According to a Spectrum Group study of wealthy investors, 46% of women actively seek out financial advice compared to just 34% of men.

Dellarocca said advisors would be well served to not think of women as one large, generic niche market. Instead, they should specialize in financial plans, products and strategies for specific subgroups within the larger women investor universe such as single professionals, same-sex partners or women raising children with special needs.

Also, and perhaps more important, when servicing women clients, she recommends advisors avoid making assumptions, tune in and listen better, prepare to educate them and to be transparent about the reasons for selecting individual investments and long-term investment plans.

And don’t assume that a more aggressive strategy or investment idea is going to scare a woman off any faster than a male client.

“Women will take risks if they understand them,” Dellarocca said.

When it comes to saving for retirement, most women face different and often much more challenging obstacles than most men to ensure they set aside enough assets to live out their golden years in comfort. Whether it’s the byproduct of a nasty divorce or the fact they spent the bulk of their income-earning years out of the work force raising children, many women are left unprepared for retirement – a serious problem considering that 85% of women over the age of 65 will be living alone by 2020.

Panelist Michelle Smith, president of Alexandra & James Advisory Services, LLC , said above all else, women want to work with someone they trust. In her experience, the vast majority or women coming out of a divorce immediately change advisors and accountants because they just don’t trust the old affiliations that were established by their former spouses.

“They can’t trust that life,” she said.

Barbara Hudock, managing principal at Hudock Moyer Wealth Resources, LLC, said advisors can lay the foundation for a future relationship with women by involving them in the process earlier while they’re still married or as the daughters or granddaughters of your existing clients.

“Bring women in,” she said. “Make them come to the meetings. Talk to the women. They become animated.” 

Dellarocca pointed out that four out of 10 working women earn more than their husbands and they’re often more likely than men to be the key to finding your next client.

“Women like to share and make recommendations,” she said. “They seek public sources.”



Mike Byrnes is the founder of Byrnes Consulting in Boston. Read more at www.byrnesconsulting.com.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access