Men and women share plenty of financial objectives, but there are also marquee differences between these two groups. It behooves advisors to acknowledge those differences because differences mean opportunity and that’s true of establishing relationships with female clients.
Likewise, smart advisors know that female clients usually have different demands, desires and risk-tolerance levels than their male counterparts.
Numerous reasons explains why the mainstream financial media and the financial services industry itself are placing added emphasis on advisors better engaging female clients. There's the obvious of women overlooked for far too long in the advisory business, but there's more to the story.
While there's still plenty of progress to be made on the equal pay front, women are making more money today. Additionally, women, on average, live longer than men, so there's obvious void to fill for financial advisors with female clients.
Focus on the Issues Important to Women
There are plenty of instances in which advisors can paint with broad strokes. It’s reasonable to assume all clients want robust portfolio management and large numbers desire advice and guidance on retirement planning. Plenty want help when it comes to estate planning, life insurance and tax planning, among other issues.
However, there are “micro” issues that splinter along gender and demographic lines. In this case, “micro” does not imply diminished importance. Actually, quite the contrary. A recent Bank of America survey indicates there are at least three issues that are high atop the list of priorities for female clients and advisors should be aware of all three. One includes being debt-free, which is a top priority for nearly half the women polled by Bank of America.
As advisors know, not all debt is bad, but mountains of debt is difficult for clients to manage and can have negative effects on their physical health and their personal lives.
“While some forms of debt — such as a mortgage or student loan — can buy you the flexibility to be able to afford an opportunity or acquire an asset, for many, the idea of actually owing money is enough to create a feeling of dread. A great deal of people are emotionally uncomfortable with debt, and those feelings of discomfort are reason enough to prioritize making their balances disappear,” notes Jasmin Suknanan for CNBC.
Another priority for women is preparedness for unexpected expenses – whatever those may be. It’s reasonable to assume this is of particular importance to female millennial and Gen Z clients because data indicate that those demographics, regardless of gender, are struggling to save for surprise events. Fortunately, advisors have a treasure trove of tactics to deploy on this front, particularly at a time when yields on cash instruments are high.
“Experts typically recommend that you have an emergency fund with about three to six months worth of living expenses, though the amount you should save is dependent on your individual situation and how much your monthly expenses usually end up being,” according to CNBC.
Self-Sufficiency Matters
The last of three issues highlighted in the Bank of America study is women’s desire to be self-sufficient. As in they don’t want to be positions of financial dependence, be it by way of support from parents or spouses.
Prosaic advice on this front includes cutting discretionary spending – eliminate those Starbucks visits! – or taking on side hustles. However, advisors should assume most if not all female clients know about those strategies and won’t be impressed by them.
The point: Be better when it comes to helping female clients support themselves financially and the chances increase that the advisor will gain a client for life.