Practice Management

Female clients more likely than men to make referrals

Study shows women much more amenable to recommending their advisers to friends and family

Women are more valuable clients then men.

When a female client is happy with your services — whether you design home interiors, cut hair or provide financial advice — she is much more likely to recommend you to her friends and family, according to Kathleen Burns Kingsbury, a wealth psychology expert who helps advisers serve clients better.

In fact, over a lifetime, women will make 26 referrals to their financial adviser on average, compared with 11 by the typical male client, she told an audience at the annual conference of the Investment Management Consultants Association. The figures come from a marketing study by author Delia Passi.

“If you do the right things, and in a way that fosters trust in female clients, they will connect you with their friends,” Ms. Kingsbury said. “They are huge referrers.”

The trick for male advisers — who make up about three-quarters of the financial advisers in the country — is figuring out the appropriate way to deal with female clients. And getting that relationship right will only become more important in the future. Women are creating and controlling more wealth, and as the baby boomers age, they will control still more. Why? Because husbands on average die seven years before their spouse.

“We know the statistics,” said Eleanor Blayney, a former registered investment adviser who now runs consulting firm Directions for Women. “Even if women didn’t create the wealth, they end up with it. Every financial service provider is scrambling for position on this issue.”

The key to winning over female clients is T-R-U-S-T, Ms. Kingsbury said, putting it in the form of an acronym. “Women are wired for connections. We are all about relationships.”

Five key elements to build that trust are:
” Transparency. Be upfront about fees, biases and investment processes.
” Reliability. Follow through on what you promise.
” Understandability. Women and men hate investment jargon, so speak in plain English.
” Sensitivity. It is essential to demonstrate sensitivity to a woman’s needs and emotions.
” Thoughtfulness. Details are important for women. Following up on conversations and sending quick notes on matters discussed can mean a lot.

Janet Alchaetel, a financial adviser with RIA HoyleCohen LLC who now focuses on female clients, suggests that advisers keep one crucial component in mind. “The approach has to start with understanding [women’s] concerns,” she said. “What she says is more important than what we have to tell her.”

Ms. Alchaetal also provided some helpful suggestions of practical dos and don’ts: Don’t have a messy desk at meetings. Put the family pictures out if you have any. Clean the bathroom. Have tissues and hand lotion on hand. Greet female clients by name. When meeting with married couples, position yourself for good eye contact with the woman, as it’s more important to them. Don’t talk down to women. For example, if they call in upset when the market is down, don’t just say, “Don’t worry.” Focus less on investment returns and more on how they affect what’s important to the client.

Women may naturally be more adept at demonstrating empathy and sensitivity than men. But you don’t have to be female to be a good financial adviser to women.

“There may be some natural advantages for women advising other women, but if you understand and learn what women need, you can have success,” Ms. Kingsbury said. “In my experience, women often want male financial advisers.”