Financial Advisors Offend Women, Survey Finds

August 22, 2012

How many women have had the experience of a financial adviser calling at home only to ask if he or she might speak with her husband? According to a Boston Consulting Group survey, 73 percent of women say that they are dissatisfied with the financial services industry. Women claim they are overlooked, excluded, receive contradictory or poor advice and get worse deal terms than men.

In "Anatomy of a Business," author Sasha Galbraith writes that communication is and has been at the heart of every business transaction - whether it's trading saber tooth tiger furs or negotiating a complex international corporate merger. Women are experts at communication, especially when it comes to transmitting subtle and complex ideas such as the importance of understanding one's values and goals before making investment decisions. The Federal Reserve reports that women control 51.3 percent of all wealth in the United States. In financial services, however, they still have relatively little voice - on both sides of the transaction.

Only 11 percent of American women prefer to work with a female financial adviser, the Boston Consulting Group found in its survey. The majority, 85 percent, say they are neutral to the gender of their banker or investment adviser. This lack of preference is unexpected, given that studies show women take more prudent risks and achieve more consistent returns with the money they manage.

The female economy is one of the largest on earth. Women worldwide earn $13 trillion and control $20 trillion of consumer spending, three times the Gross Domestic Product of China. Boston Consulting Group surveys also show that 20 percent of women's wealth is tucked away in checking and savings accounts. A savvy value-added banker, male or female, could generate additional fees just by paying attention to what women want.

Regardless of gender, there are a few things that every financial adviser should provide. First and foremost is a discovery meeting. To meet your needs properly, a wealth manager should spend a lot of time getting to know you. He or she might ask a number of questions such as, "What's important to you about money?"

An adviser should also provide regularly structured meetings. It is the job of the financial adviser/wealth manager to take into account the full range of financial needs, hopes and dreams. Managing money for retirement, choosing insurance options and integrating tax and estate advice is a major task.

Women as clients in particular need a variety of financial tools. For one, they need to feel their children are well taken care of. Mike Sanders, president of Clark Dodge Asset Management, states, "College planning must occur in conjunction with achieving multiple life goals... utilizing current and future resources in a tax-efficient manner is part of an integrated approach." Sanders adds that "529 plans where appropriate, offer the potential of tax-deferred growth in addition to reducing federal and state income tax at the individual and estate levels."

The real problem is that there are too many advisers who view themselves simply as investment generalists or product specialists. They don't utilize an integrated approach arising from an understanding of the client's deepest needs, values and goals. These advisers do not utilize a consultative approach to create integrated solutions for the purpose of solving client challenges. In other words, they do not work closely with their clients.

While most financial service companies still focus on style over substance, there are a few that actually "get it." Given that over the millennia women have developed these specialized skills, their contribution to an in-depth approach, whether as client or as investment manager, should be essential.

Germany has the first bank created by women for women - Frauenbank. The company's philosophy is to provide quality, flexibility and transparency. Given that by 2020, women will control 67 percent of all U.S. wealth, perhaps we should look at the example of other countries.