85% of financial advisors are men. Of this 85%, the vast majority fail their female clientele. And this failure is largely two-pronged: first, it’s the result of knuckledragging men working in a testosterone laced environment that doesn’t try to learn, or is biologically incapable of learning, that women approach investing differently than men and; second, for both knuckledraggers and the more evolved males, subconscious negative gender perceptions come into play.
BCG Study Confirms Male Financial Advisors Are Bumblers
The Boston Consulting Group (BCG) is a management consulting firm with more than 60 offices worldwide. A few years back, BCG undertook a Comprehensive Study focused on women’s experience with financial advisors (FA).
The study’s results revealed that women expressed many of the same complaints about FAs as did men, such as: dissatisfaction with communication, quality of advice, lack of tailored solutions, and having to wade through an absurd pile of bureaucracy.
While all that could be fairly anticipated, what raised hairy eyebrows were these additional frustrations voiced by women: a sense of subordination, unequal access to information and deals, inadequate attention, and less favourable financial terms.
And we’re not talking about a few dissatisfied outliers. Nope. What we have here is a majority revolt as borne out by the following unfudged numbers:
- 73% of women say they’re not satisfied with financial advisory services.
- 80% of widowed women fire the FA within one year of their husband’s death, then hire a new FA.
- 87% of women said they could not find a FA with whom they ‘connect’.
It’s All About Relationships
Referring to the above bullet points, let’s deal with issues one and three first.
Annoying, Socially Inept FA
It’s no surprise why the majority of women are annoyed, or downright frustrated, by their FA.
The financial industry trains FAs to think in a detached, analytical manner, with the only item of any consequence being money. And as long as the FA earns money for clients, as long as portfolios perform according to plan, then clients will be happy. Granted, this approach works for most men.
But not so for women. Instead, women take investing proficiency for granted in a FA. After all, it’s their job and the expectation is for the FA to perform well at their job. What matters more is building a trusting relationship, connecting, with the person charged with responsibility for their money.
Unfortunately, too many male FAs have a knack for chipping away at trust, thereby alienating female clients. They do so in a number of ways including:
- Lack of Respect. Disrespecting women through time honoured patronization and condescension, speaking to female clients as if only a man could do the job and the female client should not bother to ask trivial questions because, surely, investing is beyond a woman’s capacity;
- Harmful Stereotypes. Stereotyping money management needs according to gender. As if one-size-fits-all women investors. As if all women should be shuttled into low risk securities. As if investment decisions are solely based on social issues, such as sustainable or green investments, rather than considering these issues together with portfolio strategies focused on performance. As if women are not interested in investing. As if women are not the decision-maker where a married couple is involved; and
- Dishonesty. Being evasive about fees and charging women higher fees than men.
On to the second issue, 4 out of 5 women fire the FA after hubby checks out of this planet. Kudos to them!
Look, imagine you and your spouse deal with a FA for an extended period of time during which the FA consistently, repeatedly, unfailingly speaks only to hubby regarding investment matters because hubby was marked as the go to guy on all joint accounts as soon as he gave FA a firm, manly handshake and mentioned last nights score in the football game.
And when you try to weigh in, you’re undermined, belittled, treated as if you are an unknowing child. What’s shocking and unfortunate is that the FA stayed in the picture for as long as he did.
So What if Male Financial Advisors Don’t Understand Women?
So … what does it matter that male FAs don’t understand female clients?
Well, in the financial advisory business, the more money you manage, the more money you earn. Because fees are most often generated as a percentage of assets held, the goal is to continually increase the amount of money you manage.
To be clear about this, if you’re a FA, and you manage assets for clients in the neighborhood of $50 million (a successful FA with 5-8 years in the business hits this target), and you charge a 1% fee on assets, that translates to gross earnings of $500,000. A tidy sum.
Still, regardless of how much they earn, a typical FA is always searching for more dough, either to grow their business or to replace clients who have chosen to leave. And if the FA fails to connect with women on the money management front, then he’s seriously denting his earning potential.
Why? Because women now account for 57% of university undergraduates and 59% of graduate school students in the USA, and higher education typically means higher earning power. Because 40% of women earn more money than their husbands. Because more and more women have joined the ranks of senior corporate executives, professionals, and go it alone entrepreneurs, earning larger and larger paychecks. Because the greatest wealth transfer ever is happening now, with trillions of dollars being inherited by Baby Boomers and Gen Xers, and owing to women living longer than men, the bulk of this money eventually ends up under a woman’s full control. Because, today, women control almost $40 Trillion (USD) or 30% of the world’s wealth, and their share of the global money pie is projected to continue growing.
So if you’re a male FA, um, yes, definitely, you want to learn to walk upright to ensure your clientele includes women.
What Women Want, Investment Wise
Here’s the thing: you don’t get to manage the money unless you invest in the client relationship on the clients terms.
This means listening, really listening to the client, trying to understand her concerns, and not thinking you know what is best for her. It means being honest about fees, empathizing with her fears around money, tamping down the standard male bluster, talking a whole lot less about your self, and creating a financial plan that connects the client to her whole life instead of obsessively focusing on making money as an end in itself.
Is Evolution Real?
The way I see it, about half the human population wants to turn the clock back to some illusory golden era, the other half wants to move forward.
If your FA belongs to the delusional pack, and is more comfortable pretending he’s master of the universe, then its time for a switch. Whether married, single, divorced or widowed, fire Mr. Knuckledragger and find your self an emotionally balanced, 21st century FA, whether male or female, someone you can trust, someone who truly cares about you and your financial future.
If a Robo-Advisor suits you, well then, all these issues I’ve been talking about, they go poof! And you have a pleasant investing experience.
In this regard, for Americans, take a look at ElleVest which is a Robo-Advisor directed to women. I haven’t used the service so I can’t vouch for them, but they’re worth checking out. For Canadians, so sorry, you Canucks are behind the curve on this one as there’s no comparable service offered in Canada just yet.