Enhancing The Confidence Level Of Your Female Clients
Service, Strategy And Support…
Allianz Life’s study, Women, Money and Power, also found that nearly half of the women surveyed found the financial information available to them to be overwhelming, uninteresting and hard to understand. As a result, more than 20 percent said they didn’t know where to begin when it comes to financial planning—including working with a financial professional. The study indicated that only 29 percent were currently working with a financial professional, which means that nearly three of four women lack some type of outside assistance with their financial strategies.
For both Kay Confer of Confer Financial Services in St. Joseph, Michigan, and Barbara Stetzko of the Financial Sense People in Crystal River, Florida, this was not surprising news. They understood early on that in order to connect with the women’s market, it would take a new approach based on education, building relationships, and a true commitment to 24/7 client service.
“Service is key and ‘every client, every detail’ is the motto,” said Confer. “Because of the relationships I have built with them over time, clients feel that I am on top of their situations and trust me to do the right things for their financial futures. That attention to detail is a major client retention driver.”
The Women, Money and Power study echoed the wisdom of this approach in dealing with female clients, as a majority of the women surveyed stated that they preferred to be educated in person by a financial professional rather than reading about financial topics. They also identified their preference to work with someone they trust and have a relationship with.
Stetzko added, “Providing that personal touch is even more important with female clients because their need for guidance is greater. Due to disparity in earnings and longer life expectancy, women need to be more proactive and more knowledgeable than men about their finances.”
For many independent financial professionals, however, establishing a 24/7 client service culture is easier said than done. Between juggling client appointments, staying up on market trends and managing portfolios, it can be challenging to develop the type of close relationships that female clients prefer. When adding the challenge of embracing a niche market and staying current on relevant research and best practices, success in the women’s market is no sure thing.
“To be truly effective in assisting women, you need to address both the emotional and financial parts of their financial plans,” noted Confer.
Women in Transition
Widowhood or divorce can plunge a woman into a financial crisis. Financial professionals can help women clients manage expectations and keep them focused on goals. In particular, women in transition appreciate knowing their rep has assisted others in a similar situation and have strategies for helping them achieve their goals with consideration to life insurance, Social Security and retirement.
Life Insurance Considerations. A widowed client should be reminded that the life insurance benefit from her husband’s policy is not income taxable, so she can plan how to use the benefit for both immediate and long term needs. Now that she is on her own, she may want to consider long term care insurance or may need to revise her health care coverage depending on her age and situation.
Divorcees should consider buying life insurance to cover child support and/or spousal maintenance with the death benefit proceeds in case of death of the payer.
Some divorced women count on their ex-husband’s benefits. Make sure your female clients are aware of the coverage window from COBRA and that owning an individual policy may be of benefit.
Social Security Considerations. It is crucial that a widowed client understands Social Security pays the greater of her deceased spouse’s or her benefits, but not both. Explain that if she has children, they can also receive Social Security benefits if they are under 18, or up to age 19 if they are attending school full time.
A divorced client who is 62 or older and who has not remarried should be reminded that she may be entitled to Social Security benefits on her ex-husband’s account even if he isn’t currently collecting Social Security. He needs to be 62 or older and entitled to receive Social Security benefits and they must have been married for 10 or more years.
Retirement Considerations. Note that a widow can continue to make contributions to her qualified plan, as long as she has earned income.
Divorced clients must be made aware that a qualified domestic relations order (QDRO) is often required if qualified plan retirement assets must be divided during a divorce. Make sure she understands that it is recommended that a QDRO be “pre-approved” by the retirement or 401(k) plan administrator.
Remind her that she can start her own individual retirement account (IRA). Funds from his IRA can be transferred into a new IRA for her, based on the divorce decree—QDROs are not needed for IRA assets. The transfer will not be taxable and will not be reported for tax purposes.
Women Experiencing Job Changes
Today, people are changing jobs many times throughout their careers and need the assistance of a financial professional to help them navigate the numerous financial decisions they face when making these transitions.
For women making job changes, it’s important that they re-evaluate every aspect of their financial portfolio including insurance, retirement accounts and emergency funds.
Insurance Considerations. Evaluate current insurance to ensure that she is appropriately covered. Her income may have changed; therefore, her insurance needs may have changed. She may have different benefits with a new employer. Take a look at all of her group and individual policies to ascertain whether or not her current insurance needs are met.
Retirement Considerations. Women making job changes have a number of options with retirement accounts such as 401(k)s, 403(b)s and pensions. It’s crucial to discuss the pros and cons of doing rollovers with each.
Cashing out a 401(k) is another option, but one that can deplete original 401(k) savings by nearly half. If your female client really needs the money for short term cash flow while in job transition, discuss the option of borrowing from the account. Depending on the plan’s terms, they may be able to borrow at a lower rate than they could from a bank or other lender.
Emergency Fund Considerations. Help your female client understand the value of cash reserves for covering unexpected expenditures. A good rule of thumb is to set aside enough money to pay for three to six months of living expenses in case of job loss.
Cash reserves can also help to protect from the long term negative effects of going into debt. For those who are self-employed or face uncertainty with their job change, consider a cash cushion that would cover a longer time frame, such as 12 months.
As women’s roles continue to change, financial professionals truly need to be flexible and adapt their approach.
Women in the United States Control More Wealth than Ever Before
Consider These Statistics:
• Since 1979, earnings for women with college degrees have increased 31 percent (on an inflation-adjusted basis) compared to an 18 percent increase for male college graduates (2009 U.S. Bureau of Labor and Statistics (BLS) report).
• Nearly one-third of women serve as the sole or main breadwinner of their household (2009 BLS report on women in the labor force).
• Sixty-six percent of affluent women designate themselves as the chief financial officer (CFO) of their family (Women and Affluence 2010: The Era of Financial Responsibility by Women and Co.).
• Sixty-four percent of women in America feel financially independent. They defined “financial independence” as not being dependent on their husband or partner for money, living debt-free or being able to afford the things they want without worrying about the cost (2008 survey by Synovate).
For financial professional use only—not for use with the public. This article is designed to provide general information on the subjects covered. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Allianz Life Insurance Company of North America, its affiliated companies, and their representatives and employees do not give legal or tax advice. Encourage your clients to consult their tax advisor or attorney.
By Alex Barned for September 2012 issue of Broker World Magazine. Author’s Bio Alex Barned national sales manager for Questar Capital.
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