The financial services industry is doing a poor job of catering to the needs of female clients, and advisors have an opportunity to tap into this increasingly wealthy segment of the market, experts at the Bank of Montreal (TSX:BMO) said on Tuesday.
“In my opinion, the financial services industry is not consistently doing a good job. We absolutely need to find better ways to engage, educate and listen to women investors,” said Charyl Galpin, vice president and co-head of BMO Nesbitt Burns, speaking during a panel discussion in Toronto on Tuesday.
“Generally speaking, we have overlooked their unique perspective in terms of their financial matters.”
Galpin said that women represent an increasingly lucrative segment of the market for financial advisors. More women than men are graduating from MBA programs, she pointed out, and more women than men are starting their own businesses.
Furthermore, many women are responsible for managing their family finances, acting as household “CFO,” according to Galpin.
“Women are controlling more wealth,” she said. “Clearly, they’re looking for opportunities to take control of their investing and we need to help them with that.”
To cater to female clients, the panelists said it’s important for advisors to recognize the differences between the financial needs and priorities of men and women. For instance, women – and especially single women – are less likely than men to have a financial plan in place; and women have generally built up smaller nest eggs than men – partly because women earn just $0.83 to every dollar that a man earns.
Also, women tend to view money as a means to financial security and freedom, in contrast to men, who typically view money as a status symbol, according to Caroline Dabu, vice president and head of retirement and financial planning at BMO Financial Group.
“There’s a difference in the attitudes towards money between men and women,” Dabu said, and advisors need to acknowledge this in their conversations with clients.
Rather than talking to female clients about exclusively the financial aspects of retirement, she said it’s important to address such topics as care giving, longevity and healthcare.
“Women actually look at retirement as a life event – not a financial event – and that’s the big difference,” said Dabu.
When working with female clients, advisors should also place a greater emphasis on relationship-building, according to Galpin. She suggests speaking to women in a conversational style, and being consistently honest, open and transparent about products and services.
“They want to build a rapport, and they need to feel that they trust whoever that advisor is that’s providing that information, so they want to spend more time getting to know the individuals that are providing their advice,” said Galpin.
Too many advisors, when working with a couple, tend to focus more on the man and largely ignore the woman, according to Galpin. She said these advisors are missing out on a huge opportunity.
“Clearly there’s an opportunity for us to do things a bit differently when we’re working with women,” she said. “The fact is that female investing is growing in our market and the industry actually needs to keep up.”
IE