Key takeaways for advisors
- Women’s wealth is poised to surge as baby boomer spouses transfer an estimated $30 trillion to their widows over the next decade.1
- Knowing how to attract and retain women clients is critical for the continued growth of an advisory practice.
- The BlackRock Business Consulting team’s expert on women’s financial well-being answers advisors’ most pressing questions about engaging women investors.
Women investors may be a bigger growth opportunity than you think
In 1923, the U.S. attorney general declared that women were permitted to wear pants. Today, women probably own more pants than men do. In 1974, the Equal Credit Opportunity Act gave women the right to open their own bank accounts. Since then, women have broadly taken responsibility for their finances and their growing demand for investment products and services is at the forefront of this trend today.
The pandemic accelerated women’s foray into investing as many used the extra downtime to research ways they could put their unspent cash to work. In just three years, the portion of affluent American women holding investments outside of their workplace retirement plan soared from 44% to 67%.1 At this pace, it won’t be long until investing is as commonplace for women as wearing pants.
Women are an appealing yet underserved client segment. Their affluence is growing as they expand their foothold in higher-paying careers and take their place atop many corporate ladders. Even more appealing, women investors tend to be more loyal to their advisors and generate more referrals than other clients.
Advisors have an unparalleled opportunity now as women’s increasing interest in investing coincides with an inflection point in women’s wealth. The roughly $12 trillion of U.S. household investible assets controlled by women today is expected to increase by an estimated $30 trillion over the next decade as baby boomer wealth transfers from spouses to their widows.2
Advisors want to know how to engage women investors
The BlackRock Business Consulting team has worked with thousands of advisors who want to attract and serve more women to drive future business growth. Many tell us that engaging women investors and earning their trust isn’t as straightforward as they’d expected. Advisors have a lot of questions. Jen Taboada, BlackRock Business Consulting’s specialist in women’s financial well-being, answers the three they ask most:
1. “How are women investors any different from my other clients?”
This is the most important question advisors ask me on the topic because the differences might not be obvious, but it’s critical to be aware of them. How well you understand and adapt your approach for women’s unique needs, preferences and attitudes about investing can make or break your relationships with them.
- Women need to fund longer retirements. Because women in the U.S. generally live more than five years longer than men, their financial goals need to account for more years in retirement. This challenge is compounded by women’s lower lifetime earnings due to gender pay differences and breaks from their careers for caregiving. To help a woman achieve her financial goals, you will need to consider these unique factors. Life cycle investing for women looks much different than it does for men.
- Women care about goals over returns. In comparison to men, women tend to be less concerned with the actual performance of their portfolio. They instead prefer to know what the performance means for their personal financial goals. Your portfolio discussions with women investors will be more effective if you focus on how the performance impacts their life plans versus how their returns compare to a benchmark. For example, “If the market falls by X%, you will need to forgo that second home.”
- Women feel less confident about making investment decisions. Women tend to have less confidence in their ability to make investment decisions compared to men, even when they have a similar level of formal education. This may be due to traditional social norms implying that investing was a job for the man of the house.
Women are less confident investors than men across educational levels
Individuals who feel comfortable investing in self-directed accounts
Source: Federal Reserve and Goldman Sachs Asset Management, as of 2/2/2023.
Many of the advisors I’ve spoken with never realized how intimidating it can be for a woman to walk into their office for a discussion about finances. But women want to invest their money and they value your advice. In fact, 77% of women believe they would feel more confident about their financial future if they had an advisor to help them invest.3
You can make financial conversations more approachable by educating women clients in a way that is easy to understand but not patronizing. Speak in plain language, not jargon. Above all, never make assumptions. The woman sitting across from you may know very little about the subject at hand, or she may know as much as you do.
Financial education and coaching firm Willow recommends that advisors open the dialogue with women investors by asking questions that promote an interactive conversation, which is more effective in establishing a rapport than the traditional approach to client meetings where advisors do most of the talking. Ask questions like…
“How much do you know about…?”
Asking this question shows her that you are not making assumptions about her financial knowledge and she can feel comfortable asking you questions without judgement.
“How much do you want to know about…?”
If she isn’t interested in a particular subject, there is no need to waste time on it. Where she is interested, start at a high level. As the conversation progresses, pause every few minutes and ask if she’d like to know more. If you go too deep into the details, you may lose her attention.
“What comes to mind as we talk about this?”
Women prefer a collaborative communication style and they want to feel heard. Asking for her thoughts shows that you will partner with her on financial planning and that you respect her ideas and opinions.
“What worries you about your finances?”
Inviting her to share her biggest fears can reveal valuable insights that might influence her financial plan. Listen attentively and give her space to elaborate. Make sure she is finished sharing before you explain how you can address her worries. These interactions can help you earn her trust, not only because you alleviated her fears but also because you took the time to listen to them.
“Can you tell more about…?”
Women are likely to share their thoughts or feelings at a deeper level if you ask them to. You can continue asking her to tell you more for as long as she continues to have answers. Repeating the same question might feel awkward but you will be uncovering valuable bits of truth that can help you connect with her authentically.
Customize her portfolio
2. “How can I engage women who aren’t interested in their finances?”
Advisors, I hear your frustration. It’s important for you to build relationships with both a husband and a wife as it betters your chances of retaining their assets should the couple divorce or the husband pass away. When a woman chooses not to be involved in her family’s finances, it can be difficult to engage her – but it is possible. An effective way is to meet with her individually, outside of your meetings with the couple.
Consider the case of Larry and Elizabeth. Their advisor, Richard, told me about his first meeting with the client couple six years ago. Larry did the talking while Elizabeth scrolled on her phone. Richard tried to engage her in the conversation, but after several attempts, he sensed she would rather not be bothered. After that, only Larry came to see Richard for client meetings.
When I suggested meeting with Elizabeth alone, Richard didn’t like the idea: “She would never agree to meeting with me. She just isn’t interested.”
But there’s more at stake than Elizabeth’s loyalty to Richard’s practice. What about her future? It’s quite possible that Elizabeth isn’t interested in talking with Richard because she doesn’t understand why it’s important for her.
Sharing real-life stories about women who suffered financial tragedies that could have been avoided can be very effective in convincing clients like Elizabeth to get involved in their finances.
Richard called Elizabeth to invite her to meet with him…
RICHARD: Elizabeth, I’d really like you to come in for a chat so I can better understand your perspective on your financial goals and discuss any concerns you might have.
ELIZABETH: Thanks, but I’m fine. Larry is handling everything and I trust him, so I really don’t have any concerns.
RICHARD: Listen, I’ve heard other women say that, and it worries me. If you don’t mind me sharing a little personal background… When I was a kid, my parents owned a business that my dad operated mostly by himself while my mother was home raising kids. My mother never wanted to get involved in the finances, so it wasn’t until my father passed away unexpectedly that she realized the business was highly leveraged and we had a lot of personal debt, too. Without my dad there to run the business, it quickly went under. Mom got a job to support the family and serve the debt, which took a long time to pay off and left her with very little retirement savings. She lives with me now and it’s not the life she wanted. Seeing her struggle is what made me want to be an advisor. I don’t want anything like that to happen to anyone else, including you, Elizabeth.
ELIZABETH: Gee, that must’ve been rough, but…. Hey, wait! Are you trying to tell me something about my situation?
RICHARD: No, but the fact that you’re asking says a lot, doesn’t it?
Richard later told me about his meeting with Elizabeth: “It went much better than I’d expected. She was an entirely different person without her husband in the room! She told me about her dreams for the future, and then she asked me questions like ‘What would happen if I got divorced? Would I be OK?’ and ‘If I outlive my husband, how long will the money last?’ She really opened up about her worries and I think she understands now that I can be valuable to her. She’s coming back next month so we can talk about her daughter’s plans for college.”
What worked for Richard can work for you, too. When you invite a woman to the table, she is likely to take the opportunity to talk about what’s on her mind. Give her your full attention – silence your phone and turn off your computer. At the end of the conversation, ask her how often she would like to meet. Keep the momentum going to deepen your relationship over time.
Periodic one-on-ones with both husbands and wives can help you earn loyalty with each of them while ensuring that the couple is truly aligned on their goals and vision for the future.
3. “If a client passes away, how should I approach his widow?”
If you’ve experienced the death of a client, you know why this is one of the most-asked questions. It’s an emotional time, and while you want to continue to serve your client’s widow, you also want to be sensitive to her loss. It will take patience, empathy and tactful judgement.
Your approach may differ depending on your relationship with the widow and the existence of any urgent financial matters that may impact her, but these actions are broadly appropriate:
- Send your condolences immediately. If you have a close relationship with the widow, go ahead and pick up the phone. If she doesn’t feel up to taking calls, leave a voicemail. Either way, the sincerity in your voice will be meaningful to her. If you don’t have a close relationship, it may be too soon to reach out by phone. Consider sending a card or email instead.
- Pay your respects in person. Refer to your client’s obituary for information about services and visitation arrangements so you can pay your respects in person. If you send flowers to her house or the funeral home, ask the florist to include a personal note (and not a business card).
- Send a gift. A couple weeks after the funeral, send a gift card she can use to have a nice meal delivered to her home. Attach a personal note letting her know you’re there to help her when she’s ready. Include your phone number for her convenience.
- Give her time. After sending the gift, wait for her to reach out on her own. If you don’t hear from her after a few weeks, call and ask her how she is doing. If she seems ready, ask her when she will be available to meet with you. If she needs more time, let her know that you will follow up again soon.
Engage women investors for the future of your practice
As women’s economic power burgeons over the coming decade, your ability to attract and retain them as clients will be critical for the future of your practice. To learn more about engaging women investors, consider participating in Willow’s training program for advisors and become a Certified Advisor for Women,TM * which can connect you with vetted women prospects. Contact your BlackRock Market Leader to learn more.
BlackRock can help you earn trust and build relationships with women investors. Learn more about the BlackRock Business Consulting team.
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