What you (still) don’t know about selling to women
Posted by DAI Life Brokerage Services on October 16, 2012 · Comments Off on What you (still) don’t know about selling to women
A woman, who just came into “a sizeable amount of money,” received a phone call from her and her husband’s financial planner.
“He took my husband to the golf course to play 18 and then said, ‘Call your wife and tell her to meet us in the clubhouse and we’ll tell her how we’re going to invest her money,’ ” she recalls. “That financial advisor lost our entire asset portfolio over the fact that I was not a fully engaged partner and the focus was not on me and my desires. It was not on my terms or turf to have those conversations.”
What makes the story especially surprising is that the woman who tells it is Cathy Weatherford, president and CEO of the Insured Retirement Institute (IRI), and a former president of the National Association of Insurance Commissioners. Someone the advisor should have known would have deep knowledge of financial matters.
Soon after, Weatherford started interviewing new advisors, both male and female.
“The advisor I chose was the one who started the conversation with me around… ‘What are your goals in retirement? Do you have family members that you will need to support in retirement?’ They asked me the right questions,” she says.
A different view
Such queries zone in on the most fundamental difference between how men and women view retirement planning. For women, it’s not about accumulating a set dollar amount, but rather how that money can finance what they see themselves doing during retirement — spending more time with family or volunteering, for example.
“It’s not strictly a financial decision. Money is only our means to get to much more human goals,” Weatherford says.
Understanding how women perceive their golden years can aid an advisor in reaching the women’s market, says Suzanne Schmitt, assistant vice president, consumer insights, at Lincoln Financial Group, in Radnor, Pa.
“For women, the act of accruing wealth isn’t about growing wealth for wealth’s sake. It’s about the security that additional wealth provides for them,” she explains. “We also know most women think not so much in terms of ‘me,’ but in terms of ‘we.’ They are more apt than the typical man to consider their families’ ecosystem and all the folks they have to provide for in terms of the solutions…that are going to work for them, not just individually but their entire family.”
Further, according to an IRI study, only 35 percent of boomer women have saved at least $200,000 for retirement compared to half of boomer men.
Having to leave her job due to caregiving responsibilities could partially explain those shortfalls: A woman loses $324,044 in wages and Social Security benefits when she exits the workforce early to care for the needs of loved ones, reports MetLife Mature Market Institute.
But when it comes time for her needs to be taken care of, women generally need more funds. Lifetime health-care costs are about $100,000 higher for a woman than for a man: $361,200 for women versus $268,700 for men, reports a 2004 article in the Health Services Research Journal.
Yet even as more women classify themselves as the breadwinner in the family and are taking the reins of their family’s finances, they say they lack confidence in financial matters and planning for their retirement.
“What we found, which was surprising to us, is that while women are earning more, they have become even less confident in achieving their key financial goals, particularly retirement security,” says Joan H. Cleveland, senior vice president, business development, individual life insurance, Prudential Financial, Inc. in Newark, N.J.
Seeing the trees, not the forest
In the recent Prudential study, “Financial Experience & Behaviors Among Women,” women listed their top three financial concerns as covering household expenses, paying down household debt and then saving for retirement. For men the top three were the overall economy, then household expenses and saving for retirement.
So while they are heavily focused on the day-to-day household ledgers, women may lose sight of the long-term goal of planning for retirement.
“While they are the primary financial decision maker in the household—they understand the cost of groceries, how much PTA dues are and they can probably tell you down to nickels and dimes what comes into their cash flows every month and out—I don’t know that women have spent a great deal of time becoming savvy when it comes to the strategy of saving for retirement, or when it comes to building out that nest egg,” Weatherford says.
Perhaps that’s because while women know the dollars and cents of household finances, their overall knowledge of financial products may fall short, Cleveland says.
“One of the key things advisors need to do is take the time to educate women in a non-threatening manner, which means educating women for the pure sake of educating them, not just for the sake of making a sale.” Cleveland says.
Women do want to be educated and are receptive to taking an advisor’s recommendation. But that advice has to be presented differently to a woman than a man.
“What I discovered in my own practice is…surprise! Men and women are different. That whole Mars/Venus thing is true,” says Karen Roberts, CLU, ChFC, a wealth planning specialist with the Emerald Financial Group in Deerfield Beach, Fla., an affiliate of Lincoln Financial Network, and national president of Women in Insurance and Financial Services (WIFS).
Men, she has found, tend to follow the advice of the financial planner, whether they truly understand it or not. “Women, on the other hand, want to know exactly what they are investing in, how it works, the intricate details,” Roberts says. “They are not going to just say yes. For a lot of advisors, it’s a lot of work, it’s a lot of education, and so therefore, they go just to the man who says yes and the women doesn’t understand. And down the road you are going to have a lot of problems.”
That could be why a quarter of women say they would leave their financial advisor after her spouse dies, according to the Prudential survey.
“It suggests that these relationships with a couple are very superficial from the female perspective. It makes you realize an advisor does really need to build that trust in the relationship with the woman as well,” Cleveland says.
One way to do that is by ensuring that both the man and the women get a chance to voice their opinions and concerns during consultations with a couple. “When we talk about business continuation, life insurance or what does retirement look like, he’s always the first one to pipe in, not always, but he pipes in,” Roberts relates. “So I make him be quiet and her talk. It’s interesting, because she’s never been given that opportunity before.”
Schmitt suggests that advisors explain how a product can actually benefit her and her family, instead of simply talking about an obscure investment benchmark.
Also, women are more clued into non-verbal communication, Schmitt adds. “As a result they are much better at picking up on deception and perceived slights,” she says. Consequently, she recommends advisors make more eye contact and use vocal inflections to emphasize key points when meeting with women.
Saving vs. investing
As a group, women tend to be more conservative in their outlook toward finances. The Prudential study found that only about half of women said they were willing to take on risk in exchange for a reward compared to 70 percent of men. More than half — 59 percent — stated they were only interested in guaranteed/FDIC-insured products versus 50 percent of men.
Knowing that, advisors shouldn’t try to change her outlook, but instead guide her to the products she would be most comfortable purchasing, Cleveland says, “which means they are going to be in things that are much more bond-oriented and more safe investments.”
It also means modeling different investment outcomes with various rates of return. For example, what the difference would be long-term if she had a 5 percent return on her money instead of a 2 percent rate of return, Cleveland suggests.
Schmitt contends that many women may confuse saving with investing. (Seventy percent of women in the Prudential study classify themselves as more a saver than investor compared to 60 percent of men.)
In other words, they think by simply socking away money, but not investing it, they can fund their retirement. “If they are setting aside 8 percent, 10 percent or 12 percent of their salary in savings, and typically in really conservative vehicles, women psychologically think that is sufficient for them to be in an appropriate place at the point at which they want to retire,” Schmitt explains. “Yet maybe it’s getting in the way of building those bigger, longer-term plans. But I think it’s also a foothold that advisors have perhaps not taken full advantage of so far.”
Where the ladies are
Women want to build a deep relationship with their advisor, so networking with female-centric professional groups provides good access to the women’s marketplace. “Find something you enjoy and that women go to and network that way,” Roberts says. “They want to be friends with you, they want to know and trust you. Once you do that, that’s how you’re going to grow and get referrals because women talk with each other.”
Schmitt points out that women, especially wealthy women, use social media. “Interestingly enough, it’s Facebook,” she says. “So to the extent that an advisor who wants to cultivate his or her female practice would have a presence online we believe that could be hugely helpful.”
In her role as president of WIFS, Roberts ultimately wants to see more women in the financial services field because women prefer to go to other women for guidance and that, in turn, would increase the number of women receiving financial planning advice. “They get each other,” she says.
Cultivating that female clientele will become increasingly vital to an advisor’s practice as women control more wealth over the next 10 to 20 years, Roberts stresses. “We’ve arrived and we need help.”
Just maybe not on the golf course.
By Maria Wood for LifeHealthPro.com Maria Wood is a journalist and writer for over 20 years and is currently LifeHealthPro.com’s Annuities Channel Editor.