Female clients have gone from niche to the new normal

The numbers tell a compelling but contradictory story. Women are 51% of the population and are outpacing men in both workforce participation and college graduation rates, according to U.S. Census data.

Moreover, they are at the precipice of a massive wealth transfer, poised to control two thirds of all wealth by 2030. Women are set to manage two-thirds of the nation’s wealth by 2030 and will inherit 70% of wealth transfer over the next two generations, for a total of $25 trillion.

At the same time, women are still in the nascent stages of proactively maximizing their financial potential. Northwestern Mutual’s 2017 Planning & Progress Study found that fewer than a third of women have a financial adviser compared to 4 in 10 men. Furthermore, women are less likely than their male counterparts to feel confident about their knowledge of investing and the steps required to build financial security.

SHIFTING DYNAMICS

Closing this gender gap is a significant opportunity for advisers who can help women make the most of the complex and often intersecting dynamics that have been reshaping their financial reality over the past few decades. Notably:

• Primary Breadwinner status — As of 2013, nearly 4 in 10 women are now out-earning their husbands which may create new pressures and considerations such as coordinating retirement and planning for time off to raise children. If a woman who temporarily leaves the workforce between the ages of 35 and 45 is estimated to need to save 25% of her income to cover lost income, this increases exponentially if she’s the primary breadwinner.

• Single head of household — Whether by choice or by circumstance, more women are doing it on their own — more than 57 million as of 2015, to be exact. Since women have longer life expectancies, the challenge of living in the present while preparing for the future is intensified on a single income, particularly for those who are divorced or widowed and transitioning from a dual-income household or a primary/sole breadwinner spouse.

• Caregiver — As longevity and health-care costs continue to grow, women are increasingly finding themselves in the caregiver role for an elderly family member. According to the National Alliance for Caregiving and AARP, as of 2013 approximately 66% of caregivers are women. On average, these female caregivers also work outside the home while providing 20 hours a week of unpaid care.

MORE THAN MONEY

Given the size of the demographic and its economic leverage, women can no longer be viewed as a “niche” target. On the contrary, prioritizing active outreach to engage women clients is instrumental to practice growth and long-term success. Numerous studies have shown that women clients who are happy with services they receive are significantly likely to refer to others.

What does it take to attract and retain women as clients? Northwestern Mutual’s annual Planning & Progress Study has found that women are more likely to prioritize deep knowledge of personal circumstances, bespoke strategy and attentive, high-touch service as attributes of a strong adviser relationship. We’ve found the following approaches to be effective for nurturing and sustaining a connection that yields dividends for both client and adviser:

• Equal parts empathy and empowerment. Money is complicated, emotional and often an uncomfortable topic. For someone who may have grown up in a household where financial decisions were made by men, it could be especially daunting to embrace the Chief Financial Officer role for the family.

An effective adviser will be simultaneously empathetic about the fears/insecurities while motivating the client to overcome them. An essential component of empowerment is education. Deliver information free from jargon and draw a direct line between strategies/products and her specific priorities. Finally, be patient. Women often take longer to feel confident pulling the trigger.

• Trust begins with transparency. Be straightforward about fees, investing processes and what’s realistic or practical.

• Details make the difference. Active listening is how you learn about the details. For example, if she mentions issues at work, don’t gloss over them to get to the portfolio discussion. Engage her to determine if there’s a way to relieve her anxiety by adjusting her financial plan, creating flexibility to perhaps explore other opportunities or mitigate the risk of a potential job loss.

• Gender sensitive not stereotypical.​ Decades of research have determined that structural differences in the brains impact how men and women communicate, process information and express emotion. One well-documented observation is that women tend to physically and mentally multi-task.

That means she’s probably thinking of one or more of her various roles — mom, professional, partner, daughter, caregiver — during her adviser meeting. That’s why it’s beneficial for advisers to be equally comfortable conversing about aging parents, rebellious teens and annuity options with ease.

That said, it’s also important to balance these nuances by seeing each client as an individual and avoiding negative gender stereotype traps.

Rebekah Barsch is vice president of planning and sales at Northwestern Mutual.

Related Topics: Northwestern Mutual Life Insurance Co.