Female clients' unique approach to investing

From impact investing to retirement savings, female clients think about investing differently

Aug 17, 2014 @ 12:01 am

By Liz Skinner

As they do with most things, men and women think about investing differently. Heather Locus, principal at Balasa Dinverno Foltz, points to a meeting she had with a brother and sister to highlight those differences.

Both had inherited funds, and while the brother said, “Give me what's going to do the very best,” the sister sought out socially responsible investments for a good portion of the money.

“Women are more willing than men to give up performance for a cause that they believe in, or not invest in something that supports something they don't,” Ms. Locus said.

Female investors' interest in socially responsible investing is one example of the important tools advisers need in order to appeal to women — an increasingly wealthy part of the U.S. population.

According to the Center for Talent Innovation, women control $11.2 trillion, or 39%, of the investible assets in the U.S.

Advisers also need to help female clients overcome anxieties about their future and chart a long-term course for taking care of themselves and, often, other family members in retirement.


In comparison to male clients, many more of her firm's female clients are interested in socially responsible investing, or SRI, Ms. Locus said.

In fact, a U.S. Trust survey taken earlier this year found that about 47% of wealthy women said they see their investment decisions as a way to express their social, political or environmental values, versus 39% of wealthy men.

Women also are more likely than men to be proactive about finding impact investing, the study found. Such investing targets companies and projects that generate economic value, as well as measurable social and environmental benefits.

“Women see their investment portfolio as a large platform for social change,” said Claire Costello, national philanthropic practice executive at U.S. Trust.

About 70% of women believe that private capital from socially motivated investors can help make public companies and governments accountable for their actions and results, according to the survey, which included 680 adults with at least $3 million in investible assets.

Geri Pell, a private wealth adviser at Pell Wealth Partners who specializes in female clients, said she noticed the importance of impact investing a couple of years ago. Last year, she hired an expert to concentrate on SRI opportunities.

“It's important to my clients that their money, or a portion of their money, is being invested in alignment with their environmental, social and governance values,” Ms. Pell said.


Advisers serving women must guide them in focusing on certain factors to ensure their retirement needs are met no matter what situation they find themselves in.

Women live an average six years longer than men, so their retirement planning typically needs to be extended. In fact, 70% of female baby boomers are expected to outlive their husbands, and many will live as widows for 15 to 20 years, according to the Administration on Aging.

How long a particular woman can expect to live should be part of any retirement plan discussion, said Jaylene Howard, consulting director for Russell Investments.

When a woman is part of a couple, advisers should encourage both spouses to talk about their future realistically, and explain how decisions may affect the woman differently, Ms. Howard said.

Women's top three financial concerns are paying for health care expenses in retirement, covering the cost of home care or nursing care and maintaining their lifestyle in retirement, according to a Russell Investments survey of women released in January 2014.


Retirement discussions must include these financial worries, as well as a review of whether there are other people a woman may be supporting in the future.

The U.S. Trust survey found that 59% of wealthy women have provided financial support or a large loan to an adult family member, while 33% have provided ongoing financial support. About 17% expect their parents or in-laws to rely on them for financial support, and the percentage doubles for female executives, Ms. Costello said.

In addition to offering retirement planning, advisers must assist female clients in getting past their lack of investment confidence.

Only about 8% of women said they feel very knowledgeable about managing investments, according to the Russell Investments survey, which included 901 women who had at least $100,000 in investible assets and had worked with a financial adviser.

About the same number described themselves as “not at all knowledgeable” about investing.

Advisers can help boost women's confidence with women-only educational programs and events, according to Ms. Locus.

“Women want to meet other women and learn from them,” she said.

This story has been updated to indicate that Russell Investments released its survey of women in January 2014, not November 2013 as previously stated.


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