Imagine two ponds. One is a saltwater pond, the other a freshwater pond. Each pond is populated by a vast number of fish. Fish living in the saltwater pond have no interaction with the fish in the freshwater pond. Although there is a large area of brackish water between the two ponds, an area where any of the fish could survive should they swim to it, all of the fish choose not to. Consequently, from birth until death, the two groups of fish never mingle.
Over time, a combination of chemical pollution, global warming and radioactive waste changes the characteristics of the water in both the freshwater and saltwater ponds. The salinity level of the freshwater pond increases dramatically, while in the saltwater pond, the salinity level decreases to near zero. The fish in each pond quickly discover that their safe and familiar living environments are becoming progressively more toxic. With each passing day, their survival becomes less certain. Weakened by the noxious water, the weakest among the fish populations begin to die. Although they labor to do so, the strongest among them do continue to swim. But for how long?
Tragically, the fish living in both ponds failed to recognize that their capacity to survive hinged upon their willingness to swim to the unaffected brackish water. Although it would have bridged their survival, neither fish population was willing to change its habits.
Human beings are a lot like fish. We like our ponds. We live in one nation, but we are segmented into 50 states. Within those 50 states, we are segmented more finely into more than 19,000 cities and towns. They, in turn, are further segmented into hundreds of thousands of wards, precincts and neighborhoods. One country. Many ponds.
On numerous issues, the inhabitants of our many ponds may disagree, oftentimes vehemently. Occasionally an event, generally a tragic event, serves to unite us. 9/11. The Challenger Space shuttle tragedy. The near death of a young football player broadcast live across the nation.
When these rare galvanizing moments occur, the boundaries of the many ponds melt away. For a time. But at least we prove it can happen.
In wealth management, an analogous melting needs to happen. It needs to happen soon. In recognition of women’s differentiated financial needs and objectives, we need to build a bridge that is the equivalent of the brackish water that could have assured the survival of the fish from both ponds. If we don’t do it, shame will cling to us for a long time to come.
Wealth management has let women down. 401(k) has let women down. Insurance has let women down. Our ponds let women down because each presumptuously believes that it is the woman’s “answer.” This is just hubris in the extreme.
There is much talk about women being the future of wealth management. But where’s the action? It reminds me of DEI. Lots of talk at the home offices level, but what filters down to the street level where advisors and clients do business? Where advisors hunt for new clients. I’ll tell you. Just about nothing.
What do you say about a profession that loses 70% of its customers? Broken? In need of reinvention? In need of replacement? That is that reality of wealth management and the fate of 70% of male advisors upon the passing of “boomer” husbands. “I didn’t realize there was a problem in the relationship,” he says after his services have been terminated. He has it wrong of course. Utterly oblivious to the fact that there was no relationship—with her.
The good news for the industry is that a fired male advisor can be replaced by another male advisor. It is not about gender. It’s about listening to her voice. Understanding her values. Acting on her priorities.
Males need to be coached because they need to learn how to develop genuine, authentic and durable relationships with women. If you are a male and you are unwilling or unable to do this, you might as well just leave the business now. Because you have no future.
Women will soon control virtually all of the available wealth assets. Mister, what makes you think you will be in line to manage some of it? Now is when someone should invent an “unjustified confidence meter.” If they were scanned, I think a lot of men would be quite surprised to see the meter reading “max.”
Women advisors cannot save us. At 15% of the advisor population, their numbers are too small to meet the need. It must be men who change, join with women, and solve this problem. As trillions in investment assets are set in motion, the rewards will be substantial for those who move past old habits.
Here is the hard reality we must confront. Risk assets are not the answer to women’s retirement security. You “fiduciaries” out there who believe that your markets-based solutions are what women want and need are kidding yourselves. You will pay the price for your hubris in terms of lost clients and assets. Watch those “earn outs.” When you reflexively reject annuities, even though all of your tiresome, hackneyed and sanctimonious criticism have been rendered false, you only damage the women you purport to want to help. I’m calling “BS” on you. Grab a handful of no commission, no surrender charge annuities and start doing good for women. If you, don’t, you are just jumping off the bridge that could save you.
And to all those defensive annuity agents out there who believe that “safety” is the 100% solution, well, you’re just kidding yourself. You are hurting most women clients. There is this thing called inflation. And it can’t be ignored—if you care. Your annuities will provide a valuable baseline of guaranteed lifetime income, but they won’t keep pace with inflation. Virtually all women retirees need risk assets in their strategies. You’re not licensed to recommend securities? So what? Develop a trusting relationship with an investment advisor, and have the advisor take charge of that part of the overall strategy. It is safe to say that most investment advisors will be exceedingly happy to be introduced to new clients with assets to manage.
Let’s start working together rather than tearing each other apart. Let’s stop arguing about how people are compensated. All advisors deserve to be compensated for the work they do—AUM-based, commission-based, fee-based, I don’t care. It’s all “inside baseball,” and it’s all beside the point when the patient is on the operating table and her financial life needs to be saved.
Your pond is not the answer. Their pond is not the answer. Both ponds are the one true answer. It is the artful joining of risk assets and insured income that is the one true answer for the largest segment of female retirees. It is easy to prove that this is true: Just listen to what women say is important to them. Just listen.
Wealth2k Founder David Macchia is an entrepreneur, author, IP inventor and public speaker whose work involves improving the processes used in retirement income planning. Macchia is the developer of the widely used The Income for Life Model, and the recently introduced Women And Income. He is the author of two books, Constrained Investor, and Lucky Retiree: How to Create and Keep Your Retirement Income with The Income for Life Model.