What prompts women to take control of their financial affairs, especially later in life? Two common triggers are the death of a spouse and divorce.
The average American man will live to the age of 76, while the average woman in the U.S. will live to the age of 81, according to Time. Meanwhile, the breakup of a long-term marriage is part of a demographic trend Forbes examined in, “Grey Divorce: Its Reasons & Its Implications.” Though divorce rates overall have decreased for the last 20 years, the article points out, they have increased among people age 50 and up.
Still other reasons women find themselves assuming primary responsibility for household finances are:
- They are steadily closing the wage gap separating them from their male counterparts; and
- They are more likely than men to depart the workplace to raise children, care for aging parents, or both.
U.S. News & World Report says the financial services industry has a name for this phenomenon: Women in transition.
Whether they’re left to handle the family finances or choose to take control of their household assets, some will be challenged to meet day-to-day expenses, let alone save for the future. In either case, a financial advisor can help them make informed investment and retirement planning decisions and set them on the path to financial independence.
An overlooked group
As the number of women managing their own money continues to grow, so will the opportunities for advisory firms. Check out this startling fact:
When a married male client passes away, there is a 70% chance that within a year, the surviving spouse will move her money elsewhere, according to Financial Advisor. It happens because an advisor did not have a connection with the woman of the house prior to the husband’s death. In fact, many wives never even meet the person managing their portfolio!
Therefore, it should not be a surprise that they turn to outside assistance or seek other opinions related to investment decisions and retirement planning. Fortunately, this exodus is preventable.
It’s as simple as welcoming women as clients, building a relationship with all members of the household, and hiring female advisors that many of these prospects are searching for. In doing so, you will stand out from the firms that choose not to evolve with the times.
The future is female
Stop and take a few minutes to review your current client list. Does it include a significant number of single women? If not, you are neglecting a steadily-growing client base.
By 2020, women will control $72 trillion of our nation’s wealth – almost a third of the total. That’s up from $51 trillion in 2015, as Forbes explains in another article, “When Women Are Shopping For a Financial Planner, Here’s How to Ensure They Choose You.”
It identifies four proven ways to connect with female clients, that also apply to men:
- Listen more and talk less;
- Demonstrate your expertise in financial matters;
- Get to really know them; and
- Build trust by acting in their best interests.
If your current client base is strictly male, you’re probably used to interacting with them as the traditional head of the household and primary breadwinner.
So, get ready to adjust your mindset, because women have different needs than men. Financial Planning explores this topic in, “Women Are Not a Niche: Why Financial Advisors Must Look Beyond Gender.” For example, women are generally more relationship focused and less transaction-oriented than men.
Steering women to finance
Perhaps the best strategy to position your firm to serve women clients is to hire women financial professionals. You’ll see that a number of female clients will feel more comfortable working with another female. Finding women advisors is itself a challenge, due to a lack of women pursuing financial services.
Why? Colleges aren’t making students aware it’s a viable career field, Barron’s reports in an article titled, “Women Make Great Financial Advisors. So Why Aren’t There More?”
Furthermore, financial services companies aren’t promoting themselves as a place for women to build and sustain careers. This is despite the fact wealth management and asset management generally offer women more flexibility to achieve both professional success and work-life balance than, say, investment banking.
Should your practice take the initiative to recruit women, you should offer the same employee benefits to men and women. And if you run a firm, when you achieve more of a gender balance, it’s important to cultivate an atmosphere where all advisors are encouraged to use their benefits.
It pays to diversify
At this time, however, women only make up 15% to 20% of all advisors, according to Barron’s. So if you diversify your advisor mix, you can boost your bottom line.
A prominent member of an Atlanta-based advisory firm says in the article that financial services is still a “boy’s club” in some ways. “We haven’t done a good job of helping women, or any kind of diverse candidate, understand the opportunity,” observes Brittain Prigge, president and head of relationship management at Balentine.
“Women have a different skill set – empathy and intuitiveness, listening, and maybe being a bit more emotional to see into what people need,” she says. “That’s so hugely important to this business.”
Learn more about how we work with advisors to help them attract clients.