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How to make women investors your clients for life

Canadian women often switch financial advisors after a partner’s death or divorce. But advisors can retain female clients by addressing their unique retirement needs


Date: December 08, 2016

Women investors face unique and different challenges when saving for retirement than men. They live longer in retirement – Statistics Canada says the average 65-year-old Canadian woman has a life expectancy of 87, versus 84 for men. They typically earn less at work – 73.5 cents for every dollar earned by men, says Statistics Canada – which means they often have to make do with less and for a longer period of time.

In the advisor-client relationship, women also tend to feel less included in the discussions related to the planning of the couple, when a partner is involved.

The proof for that last assertion? A staggering 80 per cent of Canadian women change advisors within a year of their husband’s death, according to a recent study by Toronto-based financial consultancy Strategy Marketing.

When working with a couple, it is natural that one of the two takes charge of the financial planning for the couple, which is fine, as it is essential to have someone really engaged in that important aspect of the couples life. It is quite common for the husband to be the key point of contact in an advisor-client relationship, says Carine Monge, director, Private Client, with Sun Life Global Investments. That doesn’t, however, mean the female client should be excluded from the financial planning process.

A former financial planner, Ms. Monge says she usually worked with the half of the couple most interested in financial planning during the year, but she always insisted on both spouses being present for the annual review.

Neglecting to involve the other partner in the planning process is the main reason that so many advisor-client relationships soon end after the male client dies or the marriage ends, she says.

“Sometimes the reason is that they don’t know enough about the advisor, and in situations like divorce or death, there needs to be a trust worthy connection with the advisor for the relationship to continue,” says Ms. Monge.

Advisors should be supportive of their female clients who are suddenly on their own, she adds. “Once death (or divorce) happens, advisors need to be present and empathetic.”

Ms. Monge, who regularly gives presentations to advisors, says there are five key points they should consider when working with female clients:

  1. Take advantage of compound interest. It’s key for every investor, but especially women, given their longevity and lower average earnings. Help them create a savings and investment plan early in their lives.
  2. Women are often more comfortable discussing short-term planning than long-term retirement planning, so start slow and work with what is available in their budget.
  3. Learn to listen to your female clients so you can better understand how they need you to support them in their planning. It’s important to stay in regular contact with them.
  4. Help them create a plan that is uniquely suited to their needs, don’t just do it for them. This will make them feel engaged in the planning process and will allow you to show any progress.
  5. Don’t presume women are risk averse, but remember that they are often more risk averse than men.

That risk aversion is noted in Sun Life Global Investments’ 2016 Market Sentiment Report. Of the 20 per cent of respondents who sold some of their investments to raise cash, most men said they did so to invest elsewhere, while women said it was because of a fear of losing money.

For advisors, shifting from maximizing returns (the alpha) to a more holistic, value-added planning approach (gamma) is of particular value to women clients, says Ms. Monge.

“That [strategy] is essential for women. Advisors have to show the value of their work, not in the rate of return, but in the habits female investors need to [adopt] in order to save for retirement.”

Diane McCurdy of McCurdy Financial Planning Inc. of Vancouver says that working with female clients, especially after a divorce, can present unique challenges.

“It can be very difficult,” says Ms. McCurdy. “You have to say [to your client], ‘You can’t spend more than you are making.’”

Working with female clients who have constrained financial resources often puts the advisor into the role of money coach. “I think that is what some advisors don’t like doing – all the work that it takes to have [clients] understand [their new] reality,” she adds.

Risk aversion is also an issue that Ms. McCurdy faces with some of her female clients.

“Women are not risk-averse when they are making money, like everybody,” she says. “They are risk-averse when the markets go down.”

That does not mean that advisors should move female clients well beyond their comfort zone, she notes. “You really have to evaluate your clients and how much can they really withstand.”

Like with any client, advisors need to pay close attention to their female clients’ particular wants and needs in order to retain them as clients for the long term, says Ms. McCurdy.

“Some advisors say, ‘I’m just here to help you make money,’ and lots of people are fine with that. Other people want to be educated,” she says. “It’s not a one-size-fits-all approach.”

Advisor SunLife


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