Household economics across North America are shifting, as the influence of women in financial decisions becomes more significant.
Not only do they feel more involved in household budgeting, but many are more involved than their male partners in retirement planning decisions.
But despite their greater role in household financial decisions, the male-dominated financial services sector has been struggling to deliver what women want.
This presents new opportunities for financial advisors to actively engage women and understand their unique needs for personal finance management, said Boston-based Kathleen Burns Kingsbury, principal, KBK Wealth Connection, speaking at the annual Investment Management Consultants Association (IMCA) 2012, in National Harbor, Maryland.
“Men and women think differently,” she said. Men are “victorious hunters” in that they go out and get what they like, while women are more into “grazing” which involves talking to friends, asking for advice and visiting multiple providers before making their purchase.
“Women are connected and wired for relationships; we are all about relationships and sometimes that becomes a problem, but that is how we’re hardwired,” said Kingsbury.
This difference is reflected in the way women interact with a financial advisor, and holds the secret of how best an advisor can communicate with a female client.
However, the financial services industry is significantly lacking in women-friendly approach to advice. But that’s nobody’s fault, said Kingsbury.
“Historically, we have been an industry that’s been run by men, that caters to men and all of the sales and marketing promotions have been developed by the male brain,” she said. “And that’s why we’re not doing a great job of servicing [women]; you need to know what the rules of the road are for women and relationships.”
A good rule of thumb for a financial advisor interacting with women, says Kingsbury, is to be a good listener. “Women want you to listen to them in a way that you’re validating their feelings.”
In other words, “that’s ok, you’ll be fine” is probably the worst response to a female client who’s upset or scared. The suggestion that seemed straight out of John Gray’s bestseller Men Are from Mars, Women Are From Venus had female members of the audience vehemently nodding their approval.
“Instead, you say, ‘I know this is really an upsetting time in your life; tell me about it’,” said Kingsbury who asserts women connect to their wealth very differently than men do.
“Women associate wealth with security, [but] for men it is about power and control.”
Advisors also need to convey trustworthiness when dealing with their female clientele. Kingsbury says trust is not just a word but a collection of personality attributes that women find desirable. Trust, therefore, stands for transparent, reliable, understandable, sensitive and thoughtful.
An advisor needs to establish trust with women by doing a variety of things. One of them is being easy to understand.
“Every field has jargon; you need to keep it simple, lose the [financial] jargon,” she said. “It turns women and men off.”
Another trait that’s really valued in the women’s world is sensitivity. Kingsbury says financial advisors need to be sensitive to their clients’ needs.
“In the women’s world, it is seen as a strength,” she said. “If you do these things and understand the way in which women need to be listened to, and connected with, and you do it in a way that helps foster trust in the female world, then this woman is going to connect you with a lot of her friends and family members. Women are huge referrers.”
By taking these small extra steps, advisors can make a big difference in their female client’s lives, she concluded.