Invisible women clients

If you are an advisor who has only a male client instructing you, you might want to consider how you are at risk of losing those assets should anything happen to him. Seventy-percent of women change their advisor within one year of their husband’s death. Further, if you ignore women and then expect them to remain with you after they divorce, or after their father passes away, think again. Ignoring women leaves a significant chunk of your assets under administration at risk.

Think of your average day, week or month and consider how many male clients you speak to, compared to females. If your ratio is more than 50/50 in favour of men, you could be vulnerable to losing significant assets as the average age of the population increases, and as a significant number of marriages end in divorce. You risk losing assets of inheriting women, or female spouses entitled to 50% of the family assets following a divorce.

Further, it is no secret that this is a referral-based business, and women make plenty of referrals (26 over a lifetime, on average) — more than twice those of men (11 by the typical male client) — according to a 2012 article from New York-based Investment News. By ignoring female clients, you lose opportunities.

What is most disconcerting, however, is how advisors shirk their professional obligation by ignoring women clients, leaving them ill-prepared if they’re suddenly left in a situation where they must manage their own wealth.

If Mr. Smith makes all the decisions for Ms. Smith and he becomes ill or they divorce, Ms. Smith, forced to step up, will suddenly have a steep learning curve to climb. She may think you’re partially responsible for her unpreparedness, and it’s no wonder she’d choose to move her money to another advisor.

It is the advisor’s duty to convince both Mr. and Ms. Smith that having only Mr. Smith involved in financial decisions is in neither party’s interest; it is detrimental to Ms. Smith if he passes away, and detrimental to Mr. Smith if he becomes incapacitated and relies on Ms. Smith to step in. It can be difficult to convince male clients to involve Ms. Smith, particularly when both Mr. Smith and Ms. Smith are content with Mr. Smith being the primary decision-maker.

The conversations with Mr. Smith about including Ms. Smith in the decision-making can be challenging when Mr. Smith has been the main instructing client for years. People do not like change, they do not like to discuss their own mortality and they can be very private about their money, which means Mr. Smith may not want to involve Ms. Smith. However, it is incumbent on the advisor to explain to Mr. and Ms. Smith how they are both vulnerable if only one is present at meetings; and by “present,” I mean both physically and mentally.

Sometimes, even when Ms. Smith attends the meetings, the advisor is inclined to speak only to Mr. Smith. Ms. Smith needs to be engaged and feel comfortable asking questions so she can begin climbing the learning curve before she is making financial decisions on her own.

While it is better not to wait until clients are elderly to have this conversation, you might be able to convince Mr. Smith that if he worked his entire life to take care of his family, then he should be equally concerned that after his demise, he might leave them vulnerable and poorly equipped and even subject to fraudsters or others seeking to take advantage of his wife or daughter. He will no longer be able to protect them, and the advisor only has so much influence when he has never developed a bond with Mr. Smith’s family during Mr. Smith’s lifetime.

The advisor can also explain to Mr. Smith that if he is inclined to rely only on his son, again leaving out his wife and/or daughters, there can be family resentment after Mr. Smith’s demise that could tie the assets up in litigation. It is much better to involve all family members who are likely to inherit the assets in decisions so that the cost and aggravation of litigation can be avoided. Believe me, as a litigation lawyer, I have seen many of these types of problems lead to lawsuits that could have been avoided with early and clear communication.

So, if you are an advisor who focuses mainly on male clients, you should consider the risk posed to you and your clients by treating females as invisible. Include women in your conversations, make sure they’re engaged and that they understand the decisions being made. You never know – they might turn out to be your best referral source.

*For more on this topic, see Ellen’s books, Advisor at Risk: A Roadmap to Protecting Your Business and Communication Risk: How to Bridge the Client-Advisor Gap to Protect and Grow Your Business.