Socking away your first million used to mean you were really wealthy. Today, investors may need at least that much to create long-term financial security.
And the stakes are even higher for women, who face particular financial challenges, including a potential wage gap, the need to take breaks from work to provide caregiving and outliving their male counterparts, according to Carol Petrov, vice president and senior relationship manager at Kendall Capital, a fee-only fiduciary advisory firm in Rockville, Md.
Kendall has focused on middle-class millionaires for years “because they are clamoring for advice and they have a lot of things in common,” Petrov said.
Now the firm, which manages $450 million, is starting to get a lot more calls from women who need financial advice, added Petrov, who co-authored “Middle-Class Millionaire Women: Essential Strategies to Ensure Financial Longevity,” with Kendall Capital founder and CEO Clark A. Kendall. It’s the second book in the duo’s middle-class millionaire series.
The middle-class millionaire women the firm works with are “folks who don’t really think of themselves as wealthy. They’re just working and saving and wake up to find they have a million dollars or more in their retirement plans,” she said.
“There’s a real niche here and it allows us to serve a population that needs help, which we provide through a full-service financial planning and investment advice model using stocks and fund strategies that are usually only available to wealthier clients,” Petrov said.
To create profitable, long-term relationships with women early, “we can charge a fee for helping clients who have most of their money in their 401ks. So that allows a lot of folks in their 40s and 50s to hire us and get financial advice, even if their money is tied up in a retirement plan,” Petrov said.
The firm uses a declining fee schedule that starts at 1%, drops to .8% at $2 million in assets and then 65 basis points at $5 million in assets.
Working with clients’ retirement plans “is a complex proposition,” but Kendall has embraced it, using software and staff to ensure their compliant with SEC rules, so clients can get the advice they seek, even when their money is tied up in a 401(k), Petrov said.
“It’s very clean to say to women, ‘We can build this relationship now in your 50s and provide the financial advice you need and when you retire, we can give you the freedom and benefits of the ira world, including Roth conversion strategies,” she said.
To maintain cost efficiency, the firm offers six investment portfolio strategies, two of which invest in individual stocks, “which is pretty rare now, since most advisory firms offer only funds or robo advisors at this level. We can also work with legacy stock holdings and build around them,” Petrov said.
With women set to inherit some $32 trillion over the next decade, according to a 2020 McKinsey & Company study, “we are helping professional women and business owners and single moms and senior women and divorcees, including gray divorcees and women who are shocked to be divorced,” said Petrov, who recently hosted an event with an estate planning attorney and CPA for Washington, DC-area women clients and prospects at a lavender field and event venue.
‘It was a very light and fun social event, but designed to give women a safe place to ask whatever questions are on their minds and to talk to people who can help them,” she said.
The top three services the firm offers women is a financial plan, financial education and an investment plan, she said. “The financial plan is what they’re coming in for. If they’re not at their goal, how much longer do they have to work? What else is going on in their lives? We explore their goals, how they live, tax efficiency and consolidating accounts when it makes sense,” Petrov said.
On the investment front, “we keep it simple with a two-page investment policy that is easy to understand and show our track record. What we usually hear is, ‘I’ve been meaning to do this for years,’” added Petrov, who said she meets with at least four women prospects a month these days.
Petrov is also catering to married women with their own assets who want to work with an advisor but whose husbands don’t, or who don’t feel comfortable or “heard” working with their husbands’ advisors.
“While it’s not necessarily the ideal situation, it’s possible – even desirable – for a woman to work with her own advisor, one who can relate to her and whose style she’s comfortable with,” the veteran advisor added.