Why Women Investors Abandon Financial Advisors

Recently I read an article that said “women in the U.S. control $5 trillion of wealth…yet multiple studies and surveys have found that the financial-services industry has failed to engage its female clients, or even understand them.” And worse, “70% of widows leave their financial advisor within months of being widowed.” Seventy percent!

The reasons why this is true were obvious to me, but apparently not to the industry I worked in for over 25 years, so I will share with you my experiences in the hope it will help women receive more respect and financial institutions understand how to better work with women, empower them and truly meet their needs.

I’m going to share with you stories that are the ugly truth, up front and personal, even though it may feel very in your face. They’re real and they happen every day.

From my experience, there is widespread poor treatment of women that has here-to-fore gone undiscussed, let alone understood. The poor treatment many not be on purpose, but it is epidemic and devastating to women and to the financial services industry.

How some Financial Advisors treat women is beyond description. I’ve heard similar stories from dozens of women clients and it can be downright insulting. No one firm has the corner on bad behavior, I’ve heard it has happened at many different firms, large and small.

I’ve even experienced the lack of respect and belittling by financial advisors myself, such as two days after my husband died, when I met with a new advisor. Rather than the customary mention of condolences for my loss, he looked at me and said, “You’re young, you’ll remarry.” It’s like saying, “Your child died? Oh well, you’ll have another one someday.”

Working with women clients as a financial educator and mentor, I hear horror stories of how they have been treated even while in the advisor’s office with their husband.

Many women have shared with me that when they are in their Financial Advisor’s (FA) with their husband, the FA ignores them and only talks to the husband – even when SHE is the main breadwinner! Or that the FA doesn’t ask the wife what she does for a living. Or that the FA never asks her opinion. Or that he never even looks at her and that he just looks at and talks to her husband.

It can make women feel frustrated and belittled.

Some women want to be polite and not ruffle feathers, so they won’t say anything during the meeting, but they also don’t forget how disrespected they were.

Many women whose husband’s handle the money are not as involved in the day-to-day decisions, so they don’t do anything about the poor treatment…until one day they are widowed and faced with the FA who disrespected them.

It’s then that they seek out a new advisor–and the FA never saw it coming. Never even had a clue he offended her. That’s the reason why statistics show 70% of women leave their financial advisors after they are widowed: they weren’t treated well while their husbands were alive.

So she leaves the FA and finds someone who will listen and make her opinion and questions feel important. She doesn’t care if the new FA is male or female, it’s not about gender. It’s about respect and courtesy.

Beautiful woman with questioning expression and question marks a

So here’s what I would tell Financial Advisors, it’s time to change and to stop:

1. Showing a lack of respect – stop disrespecting women and talking only to the husband or talking down to the wife. She wants to be part of the conversation. Include her, even if she doesn’t instigate the conversation.

2. Being boring and using jargon – Speak in plain english, not by talking down to her, but by respecting that she’s a busy person who has delegated money management to you. She wants to know how the portfolio is doing, if she is going to reach her goals and if she’s going to be able to live comfortably. She doesn’t care about jargon, just let her know how things are going and what you suggest the next course of action is, and say it in plain english.

3. Focusing on performance metrics and not developing the relationship – if you take a few moments to get to know her and what’s important to her, she will stay with you even if you’re not outperforming the S & P 500 index. Studies have shown women are not as concerned about performance numbers as men are, so quit being so focused on the numbers and provide education she wants.

4. Assuming the “Pink Purse Syndrome” – those cutesy pink purses and other “girly”, childish approaches used to appeal to grown women is ridiculous and insulting. We don’t want things “dumbed down” for us, nor do we want hokey titles for seminars or pink graphics or images.

5. Lack of communication – women want to understand, but don’t always ask questions. Just because she doesn’t ask, doesn’t mean she understands. Don’t assume…ask her if she has questions, but don’t talk in jargon and then expect her to waste her time asking a question. She already knows you aren’t going to speak english so why should she waste her time asking?

6. Focusing on gender – stop thinking women only want to work with other women. The only reason some women prefer other women is because the women will speak english and treat them with respect. If male FA’s did this, they wouldn’t care if they worked with a man or woman.

7. Misunderstanding womens’ goals and fears – women tend to be more risk averse. It doesn’t mean they won’t take risk, it means they have to understand why investing for the long-term and taking more risk by investing in stocks can get them to their retirement goals, while staying in risk averse investments means they won’t reach their financial goals. Once they understand the tradeoffs they can be comfortable in stocks, but they want to know why.

8. Not understanding some elderly women are financial phobics and rely on “trust”. There’s a whole generation of elderly women whose husbands handled the finances and they have no experience. They are operating 100% on trust. I’ve met women in their 70’s who have never written a check. If they outlive their husband, they are going to have to rely on someone to help them at a very dependent level. Set up your firm to help women in these circumstances with private banking services that can give them a higher level of service.

In order to build positive relationships with women, FA’s should focus on:

1. Showing women how to be powerful – give them positive financial role models like Oprah and Sarah Blakely, who have become billionaires. Showcase female role models who have created wealth and let women know it’s possible for them.

2. Building a relationship – start asking questions and listening. Find out about them and what’s important to them. Are they a mom who works outside the home? A full-time mom? An empty nester? A single career woman?

3. Understand their goals – what are their goals and dreams? Home ownership, buying a car, starting a business, financial independence? What do they want to accomplish financially?

4. Think “mentoring”. Don’t tell her what to do, take her under your wing and teach her about investing. It’s all well and good to say that you need to own stocks, explain WHY owning stocks is so important to reaching her financial goals. Don’t just assume she knows why or ignore that she is uncomfortable with risk. Talk about it.

5. Giving women confidence – let them know they can do it. Give them education about investing, how to raise capital, franchise the business, etc. Show them that woman can do this.

6. Go to lunch and build trust. I learned a long time ago that eating together builds trust. Women need to trust you, so yes, go to lunch together. If you ask her to bring a few friends and you have followed what I’ve said above, you will gain some new clients.

It’s time to treat women investors right. We just want to be respected and listened to. The bottom line is if you do that, it will help your bottom line and both financial services firms and women will be well-served.

For more insights about improving relationships and managing wealth for women, email LindaPrivate@LindaPJones.com.

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