Generation W

By Terri Goveia | May 1, 2010 | Last updated on May 1, 2010
7 min read

When Penny Deming opened her own financial management practice in 2006, she wanted to create a supportive place for female advisors. In doing so, her Vancouver-based firm also created an equally accommodating port for a niche market: female clients.

“Women have a tendency to not know where to go,” she says.

And they are looking for somewhere to turn with their finances, as demographic and employment shifts put more wealth under their control. In the U.S., women control over half of all investment assets, reports Oppenheimer Funds. And though Canadian women haven’t yet reached that level, they’re on their way.

It’s clear this segment needs financial planners—a 2008 TD Waterhouse survey found only 25% of women consulted financial advisors for direction.

But advisors are less clear about the approach required to reach women and truly address their needs, according to Deming and other advisors. Here’s how to understand, address and grow your base of female clients:

Older, wealthier…and unsure The number of women earning more than their spouses has tripled since 2005, with women out-earning men in 28% of Canadian families, according to TD Economics research. Both earning power and control over family net worth is set to grow even more, notes RBC/Mezzanine. Consulting research points to a rising number of female entrepreneurs and a greater life expectancy for women as reasons current gender-based gaps in net worth will eventually close.

At present, advisors see most women gaining control of their wealth through significant life changes. In many cases, women suddenly emerge from a marriage—or from losing a spouse or parent—with sizable assets and little experience in handling their own finances.

“People think that having a high net worth means you have your stuff together. It doesn’t,” says Shari Molchan, a financial planner and owner of Molchan Financial in Nanaimo, B.C. Her practice, which also serves men, sees a range of female clients, from average workers to business owners to newly divorced women. “Even if they have a lot of money, they’re wondering about their futures.”

Molchan pinpoints three ways women need help with their money:

  • They don’t talk about it;
  • They don’t have a money map; and
  • They don’t invest in themselves.

Add those issues up, and financial advisors are facing a specific market whose needs aren’t always addressed. “I have high-net-worth clients who don’t pay themselves first,” she says. “I’ve had successful women who just felt stuck and wanted to take it to a different level.”

The missing piece But this emerging client base doesn’t mean business as usual for advisors. For one thing, they must set aside the hard sell. Single female clients seek a sound foundation with an advisor before they make decisions, says Scott Plaskett, senior financial planner and CEO of Ironshield Financial Planning in Toronto.

“They are much less impulsive from a financial planning standpoint, and that [may be] the result of not as much knowledge or interest in the topic,” he says. “But when they have wealth, or accumulated wealth, they also understand the importance of money management and financial planning.”

Advisors should also be prepared to invest more time in female clients. “They aren’t going to ‘click, click, click’ through decisions,” says Teresa Black Hughes, a former chair of Advocis and a financial planner in Vancouver. “Time and decision-making are very important.”

Financial planners also need to establish what Molchan calls a “pre-product” relationship—getting to know who the client is, and what they want, before even bringing up their investment options. Taking a more personal approach allows advisors to really define their goals and figure out what barriers might be in their way, she says. Molchan conducts workshops with her female clients, advising them to set 90-day goals that make their long-term wishes more concrete and immediate.

Most advisors don’t look beyond an investment discussion, she says, noting they might say to a client—regardless of gender—” ‘Here’s a tool’ without finding out who they are; what’s going on. That’s the whole missing piece in financial planning.”

That approach can yield some surprising results. Some goals that on the surface don’t seem to be tied to money actually might be, she points out.

Beyond the foundation With that foundation in place, female clients tend to be open to putting a plan into action, says Plaskett.

“Once they understand what they need to do on a daily basis, they say, ‘How do we implement that?’ That’s where the investments or insurance come in.”

When discussing investments, advisors might want to tweak their presentations by putting them into a broader context, and supplying what Black Hughes calls “proof.” A male client, perhaps more familiar with the markets or investments of the moment (or simply believing he is), will say, ” ‘Just give me the highlights,’ ” she notes. “Women ask deeper questions. They want more proof.”

That proof can take several forms.

Many women respect transparency, especially around fees. “It’s the men who are way more sensitive about the perceived value of the fees. Maybe women see the value in what I’m doing; maybe it’s just the way the decisions are made,” says Black Hughes. “The message to me is disclosure.”

For many female clients, such evidence is what will get them to the next stage of their financial strategies. “They say, ‘I need some assistance, and I’m not going to move forward with anything until I know everything,’ ” notes Plaskett. “They need to have comfort in knowing that everything’s been looked after . . . so they know what the ramifications are of moving forward with one option versus another.

That comes back to presenting a comprehensive financial plan in a simple way.”

For clients who are newly on their own financially, the first stage is always to look at the basics and ensure they can pay for a home, keep cash flow coming in and manage their accounts. “Then we do the planning,” says Plaskett, “to determine whether or not they’re able to stay in a certain lifestyle.”

Women also tend to want to see their money make a difference, notes Deming.

“We have children and we want to see the world be a better place. And I’m not saying men don’t see the world that way, we just approach it quite differently.”

Recognizing and addressing the differences can pay off. “Our business grew during the downturn,” she says. “Where advisors were losing clients, we were actually growing because of our relationship model.”

A financial education Although female clients share common ground on several fronts, their educational needs vary.

Black Hughes points to one client who doesn’t want to talk about market specifics. “I spend time talking to her about things that affect her financial planning for her children or translating what her accountants are saying. It tends to [centre] around issues that affect her money and her family,” she says.

Those are common to many high-net- worth female clients, according to a 2007 Asset Management Advisors survey, which found that 70% of respondents singled out education as a key financial priority.

Another one of her clients wants the latest on U.S. equities or movement on the dollar. “They expect organization in advance,” she says. “The topics may vary, but they all want me to take the time to go through it with them.” As for how, she notes, the conversations are “always face-to-face.”

Working with female clients also gives advisors the opportunity to broaden their educational approaches.

Molchan plans to package her “pre-investing” workshop program for other advisors. The industry often focuses on sales and winning campaigns, and when it comes to the more “touchy-feely” pre-investing dialogue, “nobody wants to do it,” she says.

Some may be wary of a more emotional approach, but addressing it is part of the educational process. “There’s definitely more emotion involved,” points out Plaskett. “But the emotion that is brought to the table is fear, and [you] get over that fear through knowledge.”

At SHE Financial, Deming holds joint “She Knows” educational workshops with wholesalers modelled on buying parties. “Women have been buying makeup and jewelry around the table for years,” she notes. “It brings them together.”

Opening the door How can other advisors offer the services that women clients need? Female advisors may have a bit of an edge on this front. “Women want to deal with women,” points out Molchan, noting some of her clients felt talked down to by male advisors, or overlooked by those who didn’t have time for their questions.

Black Hughes recommends that advisors who work with a lot of female clients network with like-minded financial professionals who understand the approach female clients require. “It makes it easier for them to refer people to me, and for me to refer people to them.”

Plaskett stops short of targeting specific gender groups, choosing to highlight the services and expertise his firm offers.

“Attracting that kind of clientele, from a financial planner’s standpoint, really comes back to service offering and product offering,” he says, pointing out many female clients want a one-stop shop to handle their finances. “I’m going after people who are looking to accomplish what our services provide, which is peace of mind through financial planning.”

In Nanaimo, Molchan agrees making the garnering of women clients the end goal—rather than providing a sound financial plan—may not be the answer.

“I don’t go after gender,” she says. But she adds that if women choose your practice, “they need to be treated differently.”

  • Terri Goveia. is a Toronto-based writer.

Terri Goveia