Take her advice

A large percentage of women clients deliberately seek out women advisors when they’re looking for financial services.

Results from our first-ever survey focusing on this demographic reveal 60% of the polled female advisors’ client base is made up of couples, while female clients, whether single, divorced or widowed, make up a full 25%.

Considering female advisors are significantly underrepresented in the industry (current estimates put female advisors at less than 20% of the workforce), that 25% is a large number.

There are numerous factors driving this choice.

Rightly or wrongly, women are viewed as the more empathetic and nurturing sex. And because men and women often have different life experiences, there’s also the connection a female client may feel when dealing with an advisor who has been through similar situations — who gets them.

So did the gender breakdowns play out similarly among our panellists? Yes, for the most part. But some, like Sheila Munch and Glenda Baker from Assante Financial, feel the 25% is actually on the low side compared to their own practice.

“We have slightly more women,” Munch says.

She and Baker have been in the industry for nearly three decades, first as branch managers within the bank channel, and then as comprehensive financial planners through the independent channel. They recently formalized a partnership, and are discovering more and more that women have special challenges they’d like to address.

So they’ve made the decision to focus the majority of their efforts on advising these women. Bev Moir, an investment advisor with Scotia McLeod, felt the results did accurately reflect her business, but added another dimension. When she works with couples, she says, “often it’s the female who’s leading. It’s almost as if there’s a delegation of duties in the household; [it’s the wife’s] job to take the lead and manage [the] finances.”

So perhaps even within the client base segment that’s comprised of couples, women are choosing female advisors purposely. An interesting statistic from the survey that supports this view is that if women had a female advisor, 60% made the choice themselves; whereas if they had a male advisor, 50% said it was done jointly.

Also, Moir says some of her male clients have even chosen her specifically because she’s female.

“They said they’re the one who’s going to be looking after the investments for the household, but they were concerned about setting up their wife with a relationship of trust and comfort, so that when they were no longer here, the wife was looked after,” she says.

Munch corroborates this. “I’ve heard that as well. Husbands always think they’re going to die first, and if you can connect with the woman and have that relationship, then you may have a client for life. Because a husband wants to make sure that the woman is secure, and if you’re making her feel secure, then you’ve got a very solid relationship.”

Even in couples, female advisors are chosen for their ability to connect with other women — and there can be a downside when this relationship is not fostered.

Fran Maiolo, an investment advisor with Richardson GMP, recounts a situation where the wife didn’t have a role in the relationship her husband had with a different advisor.

“I had a situation where an advisor left the wife out [and] the husband passed away. The husband had had a 15- to 18-year relationship with the previous advisor, [and] my relationship with [the wife] had only been about six months. And it was a $6 million portfolio, so it was significant.

“[But] she consolidated with me. I asked her why she wasn’t doing it with the previous advisor, and she said he never spoke to [her], never included [her] in the conversation; he was [her] husband’s advisor.” Consequently, Maiolo is very careful to ensure she never lets that happen to her clients. Gender matters

The survey found almost one-third of the female clients who preferred to work with female advisors said it was because they understand their needs better than male advisors. Many others voiced the opinion that a female was less intimidating, easier to talk to, and shared more common ground with them.

“I do think [women] work with us because they feel we understand their needs,” comments Baker. “I have a lot of women [clients] who have been widowed. I’ve been widowed as well, and as soon as they hear that, they know I understand, that I get them. So they gravitate to someone who has common ground with them.”

Moir agrees. “I relate to a female client differently than to a male client,” she says.

For just this reason, Lisa Polonoski, an investment advisor with Macquarie Private Wealth, sees this as a meaningful opportunity for female advisors “to hone in on what it is that women want — whether it’s fulfilling that special particular niche, or when you’re profiling your client — really pinpointing what it is they want in the relationship from you.”

So advisors take note: a female advisor on the team may be a great selling point for clients. Advisor vs. advisor

In addition to the affinity for women advisors, the research makes it clear female clients most often gravitate towards financial planners and financial advisors.

This doesn’t at all shock Jennifer Ball, head of the marketing group at Franklin Templeton.

“It didn’t surprise me that the words financial planner resonate better with [female investors],” she says “That’s definitely something I hear: women take a holistic view to their financial plans, and seek somebody who can help them out with that, as opposed to somebody who’s going to buy or sell stocks for them.”

Considering women advisors tend to fall primarily into the financial planner/advisor category, it would seem both sides have found the common ground. But does this mean there’s an opportunity in the other advisor channels? Polonoski sees it that way.

“I think there have traditionally been more [women] available on the financial planning and the MFDA side,” she says. “This really tells me there’s an opportunity for more females to become full-service, licensed investment advisors. Because as a full-service advisor, you can use a flexible approach and offer a wide variety of investments. And it traditionally has been a male-dominated role.”

But Ball wonders whether investors really understand the difference between the different types of advisors. “I think maybe there are full-service advisors who are certified financial planners as well, so this can potentially be something that’s confusing for an investor,” she says.

From the sounds of it, though, it’s not just investors who are confused. Moir has first-hand experience with this — and in one case, from a colleague, no less.

“I’m doing a seminar for women [on] the financial planning process, and one of my friends is very interested in attending,” she reports. “[She’s] been very helpful in promoting the word amongst her colleagues.

“She would be a fairly senior person in the bank. And she asked me, ‘What are you, a broker?’ And I said, ‘Well, that’s the old-fashioned word for what I am; I’m a financial advisor and wealth manager.’ “But I found out that she actually works with somebody who is my equivalent in the firm. And so it was very interesting. She saw him as a broker and couldn’t figure out what I was, even though I was in the same firm and had the same title.”

Baker also believes there are some pretty widespread misunderstandings.

“When I first started in the office I’m in now, I had my securities licence, [while] some of the people in the office were MFDA,” she recounts. “They thought I was a stock broker. They didn’t realize I was a financial planner the same as they were. They thought [investments were] all I did.”

Adding to the confusion, she says, are the definitions of advisors in the different sectors of the investments industry. In the bank world, branches call their representatives financial advisors, but in reality, it’s a very different job than it is in the independent channel.

“They offer a lot of credit products and some investment products; they’re very limited as to what they can do and what they can advise,” Baker says. So while 36% of the women surveyed think they have a financial advisor who works in the bank, she doesn’t think it fits the bill.

All the same, Maiolo points out “that those who did appear to understand chose the planner/advisor role as opposed to the broker/transactional role. So whatever their understanding was, it does give us an indication that they’re looking for advice.”

And this is why she has an elevator speech ready: “When people ask me what I do, I say, ‘If you’re not rich I’ll help you get there, and if you are rich, I’ll help you stay there.’ It’s all about how we establish ourselves.” What’s important?

For the most part, the female investors polled believe their investment- and retirement-related plans are being met. However, more than half feel not only that they don’t receive cash-flow or debt analysis; life, health or disability insurance advice; or advice on employee benefits, but also that they don’t need or aren’t interested in these services.

Even more surprising were the percentages of investors who are uninterested in charitable and philanthropic giving (79%) and in children’s education planning (81% — with 73% of respondents between the ages of 35 and 54 declaring they have no use for it, as well as 40% of those with children 18 or under in the household).

Moir admits she was a bit surprised by the lack of interest in education planning for children. “I work with a lot of clients who are getting close to retirement, and their kids are in university,” she says. Baker concurs. “If we have a couple in our office, we can go through the entire portfolio review and the woman will speak up for sure when it comes to the children’s education fund.”

So what’s with the drastic difference in advisor perceptions and investor attitudes?

Polonoski says it might be because female clients already feel it’s being dealt with.

“There are a lot of items near the bottom [of the table], after cash-flow analysis, where the women are basically saying ‘I don’t need it; I’m not interested,’” she asserts.

“I think the reason is they feel like they’re doing that anyway. They know they have a plan for their kids with their advisor. That’s taken care of. So it’s not something [they] need advice on. And charitable giving, again, can just be done on your own.”

That may be a valid argument, but the numbers (see “What financial issues appear to be causing your female clients the most stress/concern?,” page 26) also show a striking difference in perception between the number of advisors who felt saving for children’s education was a major concern (45%) versus how many clients felt it was a major source of stress (4% — although this jumped to 27% for those with children 18 or under in the household).

Polonoksi believes the disconnect in perceptions is “because, as an advisor, when you’re working with the client and you learn they have children and they’re going to start an RESP, that’s very important to you, because that’s a very set goal you want to help your client meet.

“I think the investor ranked it so much lower because once it gets set up, they know it’s there, they know it’s a longer-term horizon. Most clients maximize their contributions and take advantage of the 20% government grant. They feel comforted that it’s on its path; whereas the advisor is still going to place a lot of importance on it.”

Ball adds advisors are putting more emphasis on goals like saving for retirement or children’s education, whereas the investor is more concerned about the rate of return on investment.

She suggests “perhaps [investors] are losing sight of how that connects in with their goal, whereas the financial planning advisor is more concerned about whether that investor is on track for meeting their goals and therefore thinks the investor will be more concerned with that as well.”

Maiolo has a somewhat different spin, though. “As advisors,” she suggests, maybe “sometimes we’re not listening to what our clients’ concerns are. So we think they have a set of concerns, where in fact they have another set.” An eye to the future

From the responses to the survey (see “Thinking ahead, during the next ten years, from which of the following segments and gender groups will you be concentrating your business development efforts on?,” this page), it appears advisors are continuing to concentrate on the baby boomers — not surprising, considering they represent the largest proportion of the population in Canada today.

But while she thinks these results are likely accurate, Maiolo feels that going forward, all advisors should look not just to concentrating on where the demographics lead them, but should think about a particular niche in their practice.

“I think as we go forward it’s about educating,” she says. “Male and female, around what’s required, and helping them transition to the better way of doing business. As opposed to being a hodgepodge of whatever happens.”

Baker corroborates this. “It looks like people are just following demographics; they’re not focusing on anything. I know in our practice we’ve made a decision to focus on women and women’s needs. “Women’s needs are a little bit different [from men’s]. We live longer, we have career interruptions, we have families; we tend to take on the responsibilty for the kids more than husbands do. That’s just the reality of it.”

In reference to this, she refers to some statistics she came across recently, reporting that women’s pensions are different, “probably because we’ve had interrupted work careers, so we haven’t got enough money. One statistic I read lately was 80% of men died before women, and 25% of their wives will end up in poverty. That’s pretty alarming.”

“Financial illiteracy is a little more prevalent in women,” agrees Munch, “and so they need some educating and some advice, and that’s why we see a huge opportunity [in this space].”

But Polonoski has a slightly different take on the situation. “What it tells me about the trends in my peers’ practices is that more and more female advisors are gearing their business towards niche business. And I would say that’s in the widowed and divorced segment.

“A very small percentage of people in total, male and female [in the data], are divorced. Yet you see that [advisors] are focusing quite a bit of time and energy into that area of specialization. So I think what we’ve seen in the industry is that more and more advisors are going for the divorce specialist certificates, and it’s just a matter of differentiating yourself and honing in on a niche.”

But while Maiolo concedes advisors might be starting to look at targeting, she questions whether it’s actually being done effectively. And she also suggests there should be more apprenticeships when it comes to overall investment advice.

In her opinion, “there are too many people out there calling themselves advisors, writing an exam, licensing, and having no idea what investment or financial advice is. There should be an apprenticeship period in which you have to work with a seasoned advisor.”

And Maiolo practises what she preaches. “One of my team members is younger,” she says. “She would like to be an advisor, and she’s chosen to become part of the team. Now she’s my assistant, but over time, she’ll take over part of our book, and from there she’ll go on to be a full financial advisor. And, perhaps on my retirement, I can transition the book to her and the other team members.”