If your wealth management firm automatically steers all female investors who come in the door to a woman advisor in the hopes of capturing a larger portion of women’s $72 trillion wealth—you’re doing it wrong.
We understand your motivation. Women hold 32% of wealth globally, outlive male investors and have been vastly underserved by the advisory industry. In fact, the wealth industry is estimated to miss about $700 billion in women’s investments a year precisely because it fails to address the needs of women investors, according to the global consulting firm Oliver Wyman.
Another quick way to lose a wealthy woman’s business is by assuming she wants to work with another woman without asking her. “Women are often insulted when they feel they are being pushed to a female advisor,” says a new study from the Spectrem Group entitled, “Preferred Sales Approach: Capturing the Wealthy Investor.”
“It’s never been a fact that women investors want women advisors,” says George H. Walper Jr., Spectrem’s president. “The industry is perpetuating the myth that women come in the door asking for women advisors, and all the research in the past 20 years demonstrates it’s not true.
“Women want the advisor who is an expert and prefer advisors who use a financial planning model and appear to be ethical,” he says. “But they don’t walk in the door asking for a woman. To say otherwise is like saying millennials only want to work with millennial advisors, and we know that’s not true.”
Spectrem’s latest research found that 89% of women and 88% of men don’t care about the gender of their financial advisor. “In fact, investors are more likely to care about the political affiliation of their advisor (31%) than their gender,” the firm said in a research summary.
As a female investor told Spectrem researchers: “I walked into a firm and they told me to make myself comfortable in the waiting room. Stephanie is the person who would be best for me and she was still at lunch. I couldn’t figure out how they would know Stephanie was the best for me. They only knew that I was a female and nothing else. They were all twentysomething males.”
When it comes to clients being matched to advisors, Spectrem advises: “Just let the investor decide. Regardless of whether the investor is male or female, investors really just want the smartest person in the room to be responsible for their investments.”
The findings don’t shock Carol Fabbri, who founded Fair Advisors in Conifer, Colo., after working as a Merrill Lynch rep for several years. “I absolutely understand why a woman being pushed toward a female advisor would be insulted. Each client and prospect should be directed toward an advisor that specializes in their needs, experiences and/or industry so they can offer specialized value,” says Fabbri, who received her M.B.A. from the Massachusetts Institute of Technology.
“Ovaries are not a relevant commonality,” she adds. “The 166 million women in the U.S. do not all think in one way or have the same needs and cannot be considered a niche or a specialization. If I were directed toward a female advisor for no reason other than our gender, I would walk out of the advisory practice immediately.”
Fabbri says she has seen many practices make this mistake. “There are many generalizations about female clients that are demeaning and insulting and which assume that the 166 million women in the U.S. all think the same way.”
Haleh Moddasser, who manages $220 million for a 95% female client base at the $1.2 billion Stearns Financial Group in Chapel Hill, N.C., says she can understand why the wealthy women investors in the Spectrem study felt insulted.
“They took choice away from them, which is the same issue women investors have battled all along. Women investors complain about not being heard, about being talked over, about being told they have to invest in an aggressive portfolio. The last thing you want is to be told which advisor to choose,” says Moddasser, a partner and senior vice president with Stearns.
“At my firm, women investors don’t get steered to me because I’m a woman,” she says. “They come to me because of my expertise.”
Moddasser is also a CPA and author of two books: Gray Divorce, Silver Linings: A Woman’s Guide to Divorce After 50, and the just-published Women on Top: Women, Wealth and Social Change, an in-depth look at women’s desire for ESG investing.
“I think that women might misrepresent themselves in a study and say an advisor’s gender doesn’t matter to them, but in my experience women are overwhelmingly dissatisfied with the financial services industry, which was born and bred by men. If you look at many studies, 70% of women investors fire their husband’s advisor within 12 months of his death and 90% hire women advisors,” she says.
Two of the five partners at Stearns are women, including Moddasser, and the firm has more female advisors than male.
In sharp contrast, none of the advisors at Capital Intelligence Associates in Santa Monica, Calif., are female, “and my father and I have many more female clients than male clients,” says Mitchell Kraus, a partner in the firm.
“I think a lot of our success has to do with our comprehensive financial planning nature and that we address many of the issues that are more important to women than men in surveys,” Kraus says. “We specialize in legacy planning and I think ask more questions than most advisors.”
Melanie J. Housden, who manages $100 million at Melanie J. Financial LLC in Hamilton, Texas, and has been an advisor for two decades, says she can understand why a woman could feel insulted if a firm automatically matched her with a female advisor.
“I do think some firms have women advisors there to help them build their women clientele,” says Housden, who adds that a large percentage of her clients are women executives who tend to refer younger female executives. She also works with many widows whose husbands hired her originally.
“I’d like to think that a woman investor would at least give the woman advisor a shot,” Housden says. “Even if she ultimately decided against her. I look at this statistic and say we absolutely need more women advisors so that it’s as normal to hire a woman as a man. As women investors outlive men, there will be such a large need for women advisors, who sometimes can be more compassionate.”
Avoiding preconceived notions about what any client wants before interviewing her or him is a mistake that can easily be seen as condescending, says Erika Safran, the founder of Safran Wealth Advisors in New York City.
“Women don’t want women advisors. Women don’t want men advisors. Women want competent advisors who invest the time to understand them as clients and work in a collaborative way without ‘mansplaining’ or ‘teaching’ or condescending their way to power,” Safran says.
“It is natural to assume that women understand each other better, but it is narrow to assume that just because there are two women that you are a good fit for a professional relationship,” she says.
Rob Greenman is a partner and lead advisor at Vista Capital Partners in Portland, Ore., which manages $1.6 billion for clients. He says working with women in an engaging way will become ever more important during an ongoing generational shift in which women are generating an increasing amount of wealth—and making the decisions about it.
“We’ve found that it’s important to go into the prospective client process without any preconceived ideas about what the individual or couple may or may not desire,” he says. “We are at our best when we ask thoughtful questions and actively listen to prospective clients.
“Perhaps an all-woman team is preferred, or maybe credentials are more important. Or similar age. Who are we to say what is important to each person?” Greenman says.
“This is why it’s a huge advantage to operate as an ensemble practice where the business development team can ask the right questions during initial contact with the prospect to place them with the right advisors.” Half of the advisors at Vista are women because they were the most qualified advisors to hire, he adds.
At the end of the day, according to Cait M. Howerton, a financial coach at SmartPath in Atlanta and the Financial Planning Association’s 2019 FPA Diversity Scholar: “No two women are alike, no two men are alike, and no two nonbinary individuals are alike. I think it’s incredibly important that instead of perpetuating gender norms and societal expectations of gendered behavior, gender expression and client gender fit—we should take a step back and instead see people as individuals with unique personalities, skill sets, needs and desires.”