Enhancing the professionalism of financial advisors in the best interests of the consumer




The Untapped Market

Women have come a long way — but apparently not long enough. Countless studies, the most recent from Boston Consulting Group, continue to find that women feel vastly underserved by the financial services industry. Really? asks Deanne Gage. Why is this still a problem in 2011?

After all, smart advisors recognize women as an untapped high-net-worth market. As we all know, women tend to live longer, and as a result are expected to inherit as much as 70 per cent of estates and, accordingly, be in charge of much of the $41 trillion wealth transfer.

Powerful stuff. And consider the growth in women's personal annual income. The income gap between men and women is rapidly closing, and in some cases, there's not even a crack. A 2010 study from Catalyst found that 42 per cent of Canadian women now earn the same income or more than their husbands. The economic crisis mainly affected male-dominated industries like manufacturing. The fact that growth in future job opportunities will be more knowledge-based gives women the upper hand. (Women now outnumber men not only in the workforce but also in universities.)

So, how do you make deeper inroads with female clients? First, you must recognize that women's needs are inherently different. "We have unique emotions and values attached to money, but not many advisors are addressing the issues affecting women," says Rhonda Sherwood, a wealth advisor with ScotiaMcLeod Inc. in Vancouver. The "issues" Sherwood is referring to include workplace interruptions due to raising kids, or caring for an aging parent, which affects pensions and savings abilities. She adds: "Women still tend to bear much of the familial responsibilities."

Modest Matters
Difference, however, does not necessarily mean women are lackadaisical when it comes to their financial affairs. According to a recent study entitled The Financial Lives of Girls and Women, 63 per cent of 1,000 random women surveyed across Canada are, contrary to conventional opinion, financially confident. Just one thing: they are self-deprecating in their approach. "Women can be overly modest when they're answering questions [about money]," says Barbara Stewart, a portfolio manager at Cumberland Private Wealth Management in Toronto. "It depends on the wording of the questions."

Stewart commissioned Angus Reid to conduct this survey because she had a hunch, based on her own clientele, that women knew more about finances than they were letting on. Stewart tells the story of a professional woman who mused she wasn't that good with money, yet successfully negotiated the multi-million dollar sale of a company.

A woman's financial confidence may be tied to her level of preparedness. While 75 per cent of women see the merit in a written financial plan, fewer than 30 per cent actually have one, according to the Angus Reid study. The numbers for men are likely similar. The Financial Planning Standards Council, for instance, found that 80 per cent of Canadians lack a proper financial plan, which can be chalked up to procrastination at getting all the pieces (estate planning, investments, retirement planning, etc.) in order.

As for financial knowledge, many advisors believe that women and men have the same capability — the difference lies in how they approach things. Let's say a man and woman both have weak financial knowledge. The man may hide his lack of knowledge by skimming presented information and signing on the dotted line immediately. The woman, on the other hand, will read and question everything. She often cares more about planning for the long term instead of straight investment selections. In some circles, that makes the woman an ideal client.

As you might expect, female advisors are seizing the moment. Sherwood, for one, noticed that when some women book meetings with her, they are looking specifically for a female advisor. "The common complaint from these women was they felt talked down to by their past [male] advisor," she says. "I've never heard a woman who had a female advisor make the same claim."

Terry Turner, a financial planner with Turner Financial Consultants in Kettleby, Ont., concurs. "Some women have sought me out because I'm a woman," she says. "I suppose it's the same thing as going to a female doctor. I can't tell you how many women I've had say to me, 'I'm so happy that I can talk to you.'"

Turner believes she has an edge with female clients because she asks many open-ended questions. "When I start with a client, I spend a lot of time up front listening," she says. "It's not just about the investment, it's about them, their life, their goals and the holistic financial planning approach."

Meanwhile their former advisors are what Turner calls "stock jockeys," the ones who say, "Okay, little woman, this is what you should do. They're all about telling instead of listening, they're not about fulfilling a need."

That isn't to say women necessarily base their decision on gender. According to the Boston Consulting study released last August, 85 per cent of women said they were indifferent to an advisor's gender.

Brian Ward's practice comprises 50 per cent women and he believes they simply want someone to listen to their concerns and help them with solutions. "Fact is, a lot of male advisors just want to get down to business," says Ward, a financial planner with By Design Financial Services Inc. in Markham, Ont. "And that's where they lose a lot of women. Women want to be heard first. It's not always about the money."

It also helps that Ward embraces their questions instead of ignoring them. "Being a minority, I know what it's like to be overlooked," he says. "Some women came to me because no one else wanted to give them the time of day. For me, it was a matter of saying, 'I know what it's like to be in that position.' My belief in finance is no different than that of a medical practitioner. When someone is in need, you should be helping them."

Ten years later, those of Ward's clients who were shoved aside by other advisors have paid off debt and are now sitting atop six-digit portfolios. The women ratio of his practice has exploded over the last five years due to unsolicited referrals.

In the case of married clients, many male advisors still make the mistake of ignoring the wife, notes John Saikaley, a financial advisor with Ottawa-based Dolphin Financial. "You need to include the spouse in everything because ultimately that woman is going to be your client," he says. "If you don't include and interact with the wife from the beginning, you're going to be in trouble."

Patience, Please


Are women client complaints an industry problem? Some say the lack of female advisors is why women may feel underserved in financial services. Less than 20 per cent of Canadian financial advisors are women, according to recent LIMRA research.

"Very few financial advisors survive the rookie system in Canada," notes Tracy Theemes, a financial advisor with Sophia Financial (Raymond James) in Vancouver. "I get three calls a week from women all over Canada who are trying to survive the bank-owned brokerage system. They just can't get a book up and going. If there were more of us, it would be a natural movement because we understand people like us."

Rhonda Sherwood, wealth advisor with Vancouver-based ScotiaMcLeod Inc., couldn't agree more. Starting out as an advisor often means an aggressive, commission-based environment and very few survive the rookie system. "There's not much flexibility," she explains. "If women are going on maternity leave, for instance, it's not conducive when you're trying to build a book. Your focus has to be on bringing in assets."

Some women relate better to other women since they speak the same language, Sherwood adds. "We're not less analytical or logical than men, we just talk differently and respond differently. So it's important to have females involved in the industry, which I don't think will happen until the nature of our business changes a bit more." – D.G.

According to data from the Boston Consulting Group, an advisor's qualifications rank high among crucial considerations to female clients. That doesn't surprise Tracy Theemes, a financial advisor and co-founder of Vancouver-based Sophia Financial Group (Raymond James). "When someone sits in front of us, they want to know that we know our business," she says. "A lot of questions may look like relationship questions but they are really competency questions. They aren't going to come in and be our client just because they like us."

And don't expect her to make the decision to hire you just like that. "Women will interview us over three appointments to get peace of mind," Theemes notes. "It's not just about filling out a form but making sure we're actually paying attention to what is important in her life."

Turner also believes patience is an important quality when dealing with women, especially older widows who are often handling financial affairs for the first time. She questions whether many advisors — notably those employed at firms that expect a sale after the first meeting — are up to the challenge. "If you're going to rush it and you're not going to meet them four times in the first six to nine months, then you're not going to build trust and that's what you have to do," she says.

Turner took on a widow early last year and put a financial plan in place for her — six months later. Advisors need to remember that just because these women are older doesn't mean they're stupid, she adds. "They have just as much intelligence as anybody else. It just takes longer. So talking down to them or treating them like children will not work."

Slow and steady tends not to be a strong suit for many male advisors, admits Saikaley. He had one female client who asked many questions and Saikaley was getting frustrated that she didn't know the answers. "But then I thought, who was the person who could answer it for her? It had to be me because I'm the advisor," he says.

This is something client Jane Bradley finds frustrating about many advisors. Bradley, publisher for Parents Canada, a national consumer magazine, manages all the financial planning and budgeting for her family, along with her advisor Marie Marchildon of Burlington, Ont.-based Rae & Lipskie Investment Counsel. "Advisors really need to get a feel for [a client's] knowledge base so they're not constantly saying, 'you probably know this already.' Well, find out what they know," she says. "Don't talk to me about things I should know when this is your full-time job. If I don't know something, it's your job to relay that information clearly and succinctly without twisting it to your advantage."

Bradley also notes that investment performance is a top concern. She has "a connection" with Marchildon, but at the same time, if her portfolio is in the toilet, she wants answers pronto. "I don't just rely on the fact that she's a nice person, she knows what she's doing. She's a nice person but I want to make money, too."

Education plays a big role in Terry Turner's practice. Whatever she suggests to a client is fully explained to the point that clients are able to repeat it back to her. She emphasizes this approach is amenable to any client regardless of gender. "If you're going to do something, how can you make a decision on something if you don't know what it is?"

When dealing with professional women, Theemes tries to spearhead financial tasks all in the matter of efficiency. She'll manage the transfer of accounts, liaise with centres of influence — anything that takes the pressure off the client. Why? "She's tired. She's smart, she's capable and she's tired with a capital T."

Going for the Gut
Ultimately, what it comes down to for women — and men, for that matter — is the right fit, the "gut feel." "You can tell when someone walks in and they're not making eye contact, it's all about their agenda," Bradley notes. "You just feel that you're one more client that they need to see out of the five today and there's an immediate distrust."

The Boston Consulting study also found personality as a top consideration when women pick an advisor. Martha Bailey (not her real name), a division manager at a specialized recruiting firm in Mississauga, Ont., notes she and Marchildon are like-minded in business and personal life. "Another plus is that her kids are the same age as mine so we can relate to each other on that front. Do we talk a lot about it? No, but if we're in a meeting and the kids interrupt, she gets that."

So, examine whether there's a natural connection. Are your approaches to financial planning similar? Do you look forward to meeting this person or do you hide behind emails and voicemail? Turner recommends a vetting-out process (she calls it a blind date), where you and the client – male or female – spend 30 minutes over coffee determining whether you can work together and enjoy the experience.

As she puts it, "There's no secret to dealing with people. All people want to be treated with respect. I don't treat women differently than men — it's just that I spend more time [with them] — but interactions back and forth are no different."

Deanne Gage can be reached at deannegage@gmail.com.