wwa lte 11 2012

A white paper series by and for

professionals on the leading edge

of the fi nancial services industry –

to help you run, grow and protect

your business.

November 2012

Women and Wealth: Niche Market or Gold Rush?

For Broker-Dealer Use Only – Not to Be Distributed to the General Public

[ 2 ]

Women and Wealth: Niche Market or Gold Rush

We may be on the threshold of one of the biggest opportunities our industry has ever been presented.

[ 1 ]


Executive SummaryBy the end of this decade, American women will be in control of $22 trillion.1 To put that number in perspective, this is roughly

25% more than the national debt, and yet very few firms are well-positioned to capture the women’s wealth market.

The ever-increasing economic power of women is driven by a number of forces:

■■ Baby boomer women stand to inherit wealth twice in the coming years – first from their parents and in-laws and then from

the husbands they statistically outlive. Seven out of 10 currently married American women will become widows, at an average

age of 59.2

■■ At the same time, women’s earnings have increased. Over the past 30 years, the number of working women has doubled.

And women entering the workforce today have achieved economic parity with their brothers and husbands.3

■■ Additionally, women have become increasingly confident about managing their finances and, in the years ahead, will be far less likely

than their mothers and grandmothers to take a backseat when it comes to making financial decisions for their families.

In summary, women have more money now and are more actively managing it than ever before, and this trend is moving only one way.

And yet…

Men are 1.7 times more likely than women to be approached by a financial advisor.4

Chances are good that this isn’t the first time you’ve read about the women’s wealth market. Like many financial services professionals,

you may have attended conferences where this was a topic of discussion or seen magazine and newspaper articles chronicling women’s

dissatisfaction with the financial services industry overall. But this merely serves to outline the enormity of the opportunity for those

advisors who “crack the code” and learn to successfully serve women with substantial financial assets.

In this white paper, Linda Eaton, Senior Vice President and Performance Improvement Specialist for Cannon Financial Institute, and

First Clearing will reveal what investment firms and professionals need to know and do right now to make the most of the women’s

wealth market.

We’ll address:

■■ The Invisible Opportunity

Current and future circumstances that can help a firm be a leader in accommodating the women’s financial services market.

■■ Why Don’t They Like Us?

Information on the differences in perceptions and behaviors between men and women that can improve understanding and

communication.

■■ What Can We Do? Action steps for both firm principals and financial advisors that are designed to help foster stronger women-client relationships.

[ 2 ]


The Invisible OpportunityWhile many individual advisors and teams have built robust

practices serving women well, as an industry, no fi rm has

emerged as a clear market leader. For most of us, although

the women’s market may be interesting and appealing, it has

yet to become urgent. We’re doing well without giving this

constituency much special focus.

This casual climate is not unlike the story about two fi sh that

developed the ability to understand the English language.

Swimming together in a stream, they heard one fi sherman say to

another, “Nice water today.”

One fi sh turned to the other and said, “What’s water?”

When Benjamin Jay, John Sutton and 22 other entrepreneurs

formed the Stock Exchange Offi ce in 1792, no one even

considered the possibility of women’s involvement. Indeed,

only society’s most powerful and wealthy men had access to

the market at all. A mere 175 years were to pass before Muriel

Seibert was permitted to purchase a seat on the Exchange in

1967. Even today, women advisors compose only 31.2% of the

national advisor population.5

In a world where most clients are still men, most advisors are

still men and most investment fi rm principals are still men,

it’s easy not to notice either the brewing storm or the coming

opportunity. But that world is changing … rapidly.

Perhaps the most alarming statistic of all is that within three years of a husband’s death, 70% of widows choose a different advisor.7

The PresentRight now women control about 33% of the wealth in

North America. According to a 2010 study of affl uent women

conducted by Prudential, 95% of respondents indicated that

they are directly involved in their households’ fi nancial decision

making, and 25% said that they are the primary decision

makers. Eighty-four percent of married women say they are

involved in fi nancial and retirement planning, and of these, 15%

have sole responsibility. Presently, women represent 37%

of high-net-worth investors, a number that is growing every

day. Small and midsized businesses run by women employ

more workers than the entire Fortune 500 – combined.

Right now more women than men are graduating from

American colleges and graduate schools. As of 2009, 60.4% of

master’s degrees and 52% of doctorates were conferred upon

women. In 1982-1983, 26.8% of M.D. degrees were awarded

to women. In 2010-2011, women received 8,396 (48.4%) of

the 17,364 M.D. degrees awarded.6 (see “Percent of All College

Degrees Conferred” on page 3.)

And…

Right now women are exceedingly disappointed with the

fi nancial services industry. In a well-known study conducted

in 2009 by the Boston Consulting Group, 500 women with

investable assets of at least $250,000 expressed a dramatic level

of dissatisfaction with their private banking and investment

experiences. Among the most unhappy were women in the

$1 million to $5 million segment, a sweet spot for many

advisory fi rms.

Perhaps the most alarming statistic of all is that within three

years of a husband’s death, 70% of widows choose a

different advisor.7

[ 3 ]


Percent of All College Degrees Conferred Female vs. Male, 1971-2017

Source: Department of Eduction

The Future

Baby Boomers, Retirement, and Intergenerational Wealth TransferAs we look at the future of our businesses, we also need to

take into account the change from accumulation to distribution

that the baby boomer generation is beginning to experience and

ask ourselves: “Where will new assets under management

come from?”

Without question, holding onto assets already under

management is a prime consideration. As we’ve already noted,

recent widows are among the most vulnerable of clients.

The fl ip side of that coin, of course, is that they are also a prime

source of new money. Advisors who develop strong relationships

with both spouses are not only more likely to retain accounts

when one spouse passes, they are also better positioned to seek

referrals from high-net-worth women who have been

well-served by their practices.

There is yet another major advantage to cultivating the women’s

wealth market. As wealth passes from one generation to another,

assets often pass from one fi rm to another.

In most families, although it may be Dad who traditionally

deals with the fi nancial advisor, it is usually Mom who holds the

family together.

Sons and daughters inheriting wealth in the 21st century

are less likely to live in the communities where their parents –

and their parents’ fi nancial advisors – resided. In a world where

Skype and FaceTime can let grandparents follow the fi rst steps

of their distant grandchildren, there is no reason why advisors

can’t cultivate face-to-face relationships with their clients’ heirs.

More often than not, the most direct pathway to developing a

relationship with inheritors will be through their mothers.

The women’s wealth market, far from being a niche, is the very

stuff of economic survival.

More often than not, the most direct pathway to developing a relationship with inheritors will be through their mothers.

Male

PercentProjected

Female

64 -

60 -

56 -

52 -

48 -

44 -

40 -

36 -75 80 85 90 05 10 15 2095 00

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Why Don’t They Like Us?Client satisfaction surveys throughout the industry indicate

a marked difference in the way male and female clients feel.

Women often report being ignored in a variety of ways.

Anecdotes abound in which couples meet with advisors (both

male and female advisors) who offer business cards and collateral

to only the husband, address most – or sometimes all – of their

questions to the man in the room and fail to answer the woman’s

questions or address her concerns in more than a cursory way.

Many women report being treated with condescension –

an experience related by not only widows who have not

handled fi nancial decisions in the past but also by female

executives and entrepreneurs.

Because of differences (see sidebar on page 5) in the biology of

male and female brains, more women than men report desiring

an ongoing relationship with an advisor who takes the time to

get to know and truly understand their needs. Many (not all)

women are willing to sacrifi ce some points on the performance

side of their portfolios if they can work with an advisor they know

and trust. What they report receiving, instead, frequently is a

“sales pitch.”

Several studies express that women report a lower level of self-

assessed fi nancial acumen than do men.8 Some experts interpret the

gap as indicative of not only the actual level of knowledge but also

an increased willingness on the part of women to admit what they

don’t know. In any case, as a group, women investors dislike the

overuse of fi nancial jargon and seek comprehensive understanding

of their fi nancial position and the options available to them.

Above all, today’s target female client is a member of the

“sandwich” generation. Famously juggling career, children, and

aging parents, many high-net-worth women regard time as a

precious and limited asset. On the other hand, they vehemently

dislike feeling pushed into making decisions. The advisor who

can strike the balance when it comes to meeting a client’s needs

and not wasting her time should have fewer problems retaining

women in his or her practice.

Source: Cannon Financial Institute

Because women and men have different neural pathways – literally traveling down different roads – the genders actually do think differently.

Men and Women Are Di� erent It’s not theory – it’s science

Many of us are products of the politically correct ‘60s, ‘70s, and ‘80s – decades during which differences in gender were denied in the name of fairness and equal opportunity. The positive impact of this “gender blindness” is indisputable – doors were opened to women that will change the world forever. But the fact is that men and women are as different neurologically as they are reproductively.

The 1990s saw a veritable revolution in the neurobiology fi eld. For the fi rst time in human history, nanotechnology enabled scientists to study the human brain in action. Prior to these technological advances, hands-on study of the brain could only be conducted surgically, on either cadavers or sedated patients. The invention of tools like FMRI (functional magnetic resonance imaging) has enabled researchers to observe fi rst-hand what happens when subjects weigh alternatives, how emotions affect fi nancial decision making, how our thinking changes when we’re under stress, and the incontrovertible fact that men and women aren’t using the same equipment to process information.

One signifi cant difference in the brains of men and women is the corpus callosum, a sort of tunnel of tissue that connects the left and right lobes of the brain. The left lobe is the seat of sequential, mathematical, linear thinking. The right lobe is where emotion and creativity make their homes. While both genders are graced with both lobes, the corpus callosum (the connecting tunnel) is typically wider in women than in men. For this reason, women can connect, for example, logic and emotion or words and feelings with a speed and facility that have famously baffl ed men since the beginning of time. Conversely, this tunnel is to blame for why women through the ages have bemoaned men’s inability (often misconstrued as unwillingness) to “share their feelings.”

Because women and men have different neural pathways – literally traveling down different roads – the genders actually do think differently.

[ 5 ]


[ 6 ]


What Does This Mean to Us? Because they recognize today’s burgeoning women’s market,

most of the major banks and wirehouses have established an

advertising presence that courts the affl uent and high-net-worth

woman with elegantly designed magazine spreads, web pages,

and brochures. When a woman responds to the advertising,

however, she typically fi nds the same service problems that

caused her to look elsewhere to begin with.

Attracting and maintaining women clients means more than just

changing advertising campaigns — and those changes

must come from the top.

At its heart, the failure of most fi rms to capitalize on the

women’s wealth market is a leadership issue.

For all of the conversations about advisors being entrepreneurial,

the fact is that they are, and have chosen to be, employees. As

such, they look to the leaders of their fi rms for guidance, both

consciously and subliminally. If principals are not focused on

the women’s wealth market, it is unlikely that most of the fi rm’s

advisors will be.

At its heart, the failure of most fi rms to capitalize on the women’s wealth market is a leadership issue.

Opportunities in DifferencesToday, both neurobiological and marketing research can provide

insights into fi rms’ success in the crucial areas of:

■■ Attracting Clients

■■ Engaging in Discovery

■■ Presenting Solutions

■■ Closing Business

■■ Caring for Clients

Attracting ClientsThe single most important factor in attracting and retaining

women as clients is the relationship with the advisor or

advisory team. This means that advisors must be alert to

the opportunities and risks, prepared to serve the market

effectively, and committed to making the changes that will

make their practices appealing to profi table clients of both

genders. While individual advisors or teams may take the

necessary steps on their own, most will need and benefi t from

the guidance and support of the leaders of their fi rms.

To tap the women’s wealth market effectively, it is imperative

to provide excellent service. Women are referral machines.

A woman speaks 30% more words per day than a man.9

When she is pleased with a product or service, the likelihood

that she will tell people is greater than that of a similarly pleased

man. It is well-known in the industry that the most successful

practices are fueled by referrals.

[ 7 ]


Engaging in DiscoveryWomen seek relationships. They want and expect an advisor

to be interested in their lives as well as their fi nancial goals.

To be sure, it is important to male clients that we understand

their needs and issues, but as a group, men tend to see the

advisor-client relationship as business-based and not necessarily

personal. A male client, for example, is much more likely to

work with multiple advisors than a female client. Women tend

to gravitate to advisors who see their fi nances as part of a bigger

life picture. Part of this is driven by neurobiology.

Presenting SolutionsThe male brain shows a marked tendency to think in a sequential,

linear fashion (see Comparison Chart below). Women think

synthetically, processing input from a variety of areas simultaneously.

While the majority of men — using the linear left lobe — focus

on the relative performance of an investment vehicle, for example,

women — using the whole brain synthetically — are generally

more motivated by long-term results.

Comparison Chart

Source: Cannon Financial Institute

Closing BusinessWe’ve all had sales training. A feature of the customary

“objections clinics” that fi nancial professionals have

experienced or conducted have historically concluded that

the phrase, “I need to think about this,” indicates that we,

as salespeople, have failed to uncover some roadblock

that the client has to taking action. “Time to think”

means “this sale is going nowhere.”

However, women, using multiple areas of the brain

simultaneously and being focused as much on synthesis as

investment performance, frequently require more time to

think. So when a female client says, “I need time to think,”

it isn’t a dodge, it’s a reality.

Caring for Clients

Mental Accounting

In addition to providing us with greater insight into the brain

differences between men and women, modern science and

technology has offered fascinating and useful information about

how human beings of both genders make fi nancial decisions.

The entire fi eld of neuroeconomics has blossomed.

One common tendency is what the behavioral fi nance experts

call “mental accounting.”

In general, people seem to have a propensity to intellectually

separate fi nances into retirement money, education money,

“play the market” money, and so on, when, in fact, it’s all

coming out of the same pot. Any advisor who has tried to

counsel a client about the advantages of consolidating his or her

assets has learned how stubborn this tendency can be. Because

women think with both sides of the brain at the same time, they

can often conceptualize the interrelationships between their

assets more easily than men. On the surface, this would seem to

make it easier to deal with most female clients.

continued on page 8

Men WomenLinear Holistic

Fast Thorough

Seek Action Seek Completion

Immediate Gain Benefi t Over Time

Achievement Protection

Domination Collaboration

Fight or Flight Tend and Befriend

Direct Indirect

Goal-Oriented Relationship-Oriented

Information Connections

Credentials Values

[ 8 ]


What happens, in many situations, however, is that advisors

(again, both male and female advisors) can become frustrated

when their high-net-worth women clients want to delve deeply

into how any change affects the whole portfolio. What can

look or feel like stalling — or worse yet, can be perceived as

questioning the advisor’s expertise — is often simply thinking

something through from more angles.

So when a female client says, “I need time to think,” it isn’t a dodge, it’s a reality.

Stress Response

We’ve all heard about the “fi ght or fl ight” stress response.

First noted by Dr. Hans Selye in the 1930s, the stress response

explains how and why we might respond to a dip in the equities

market exactly the same way we might react to an attack by a

wild animal – fi ght or fl ight – fueled by a surge of adrenaline.

Recent research has indicated that adrenaline reacts with

testosterone in a different way than estrogen. The newly

discovered female stress response, unlike fi ght or fl ight, is often

labeled “tend and befriend.”

When women are confronted by a threat, they are more likely

than men to want to pause and marshal resources than they

are driven to take speedy action. For advisors, the message can

be useful – talk your male clients off the ledge, for sure, but

make certain that you’re touching base with the women in your

practice. Just picking up the phone can mean the difference

between cementing a relationship and putting it at risk.

What Can Leaders Do? 1. Educate your advisors.

The neurological differences between men and women

are, at this point, very well-known, as are the differences

in client care and prospecting that appeal to the high-

net-worth women investor. Most advisors don’t need a

complete overhaul – but most do need guidance. Providing

training for your advisors to equip them to question more

broadly, to read buying signals more accurately (different

in women), and to provide the kind of service that paves

the way to long-term, intergenerational asset retention will

have an added bonus for your fi rm. The very skills that will

solidify your advisors’ relationships with their female clients

will also help them work more effectively with the men in

their practices. We believe it is truly a win-win.

2. Ask the right questions.

Asking the right questions can help you position your

advisors to take advantage of the tremendous opportunity

afforded by the women’s wealth market. It is well-known

that whatever can be measured has a tendency to fl ourish.

■■ What is your average client age? Most practices are weighted toward the baby boomer

generation. The larger the portion of your client

population that falls into this category, the higher the

likelihood that you will have “silent spouses” – wives

whose husbands have taken the lead in dealing with

fi nancial decisions and are at the highest risk for

moving their assets if widowed.

■■ Who are your advisors meeting with and speaking to? Help your advisors analyze their practices with an eye

toward possibly underserved spouses. Help them craft

plans to get to know the clients in their books of

business who may be invisible to them at present.

[ 9 ]


■■ Who has walked out the door? Although it is somewhat painful to track lost

relationships, clients who have left your fi rm can be an

excellent source of useful information. Contact clients

who have taken their assets elsewhere. Look for

patterns within advisory practices.

■■ Who has walked in? Knowing where referrals come from can also be highly

instructive. As noted previously, women clients who

have been recipients of excellent service tend to be rich

referral sources.

■■ What makes your fi rm appealing to women? Examine your promotional materials. Are they

weighted toward courting the male investor? How are

women treated when they visit your offi ces? What

kind of client appreciation and educational events do

your advisors host? (Hint: There’s a big world beyond

golf and duck hunting.) Help your advisors attract

high-net-worth women with educational events

that appeal to their needs and are friendly to

their schedules.

3. Above all, focus.

Keep the spotlight on the initiative to forge and maintain

relationships with the affl uent women in your community.

Focus

[ 10 ]


What Can Advisors Do? Advisors can take a fi ve-step approach to tapping into the

opportunity presented by the women’s market:

1. Commit

2. Contact

3. Connect

4. Care

5. Cultivate

1. CommitSimply by making the very conscious decision to serve

affl uent and high-net-worth women as a valued client base,

you will begin to discover additional opportunities. As

Christopher Chabris and Daniel Simon of Harvard have

cited in their excellent book, The Invisible Gorilla, people

don’t notice what’s right in front of them – they see what

they’re looking for. The best place to begin the search is

within your current practice. How many relationships are

there in which a husband is the primary contact? Those

wives could be poised for fl ight to a new advisor. What

opportunities might there be to do business with the

mothers, daughters, and sisters of existing clients?

2. ContactIf you have conducted a relationship primarily, or

exclusively, with one spouse (frequently the husband), how

can you gracefully reach out to the wife? It requires care,

planning, and skill. Women who have not had a great deal

of experience managing fi nancial matters can benefi t from a

simple meeting to review “Top 10 Questions Every Woman

Needs to Answer” (see page 11).

3. ConnectAs noted above, women tend to value relationships, think

holistically, and appreciate advisors who see their needs as

part of a whole, rather than as discreet fi nancial decisions.

In addition to taking plenty of time for discovery, it’s

important you keep good records. Being able to recall

details of a client relationship and to reference previous

discussions creates a strong connection to the female client.

4. CareYou can establish good relationships with women clients by

asking pertinent questions, avoiding jargon, and focusing

on holistic advice. But you also need to take steps to make

sure you can retain those clients long-term. Design client

appreciation events that don’t necessarily center around golf

or duck hunting. While many women enjoy both pastimes,

the advisor who also hosts educational and cultural events

can broaden the appeal to high-net-worth women.

5. CultivateIn addition to hosting events that attract women, advisors

may want to think about strategic campaigns to seek

referrals and introductions from women who have expressed

satisfaction with the service they receive. Additionally,

creating an area of expertise – the needs of entrepreneurs,

for example (remember, women-owned businesses employ

35% more people than the Fortune 500 combined), or

fi nancial issues related to divorce – can help propel a

practice to the next level.

[ 11 ]


ConclusionAs time goes on, this so-called “invisible opportunity” continues

to gain ground. Firms and advisors who pay attention now to

the burgeoning women’s market – or even focus on it – should

be well-positioned for growth.

Footnotes1 “The Female Economy,” Harvard Business Review, Sept. 2009.

2 U. S. Department of Health and Human Services,

Administration on Aging.

3 U.S. Department of Labor.

4 “Leveling the Playing Field; Upgrading the Wealth

Management Experience for Women,” Boston Consulting

Group, July 2010.

5 U.S. Department of Labor Statistics, 2011.

6 U.S. Council of Graduate Schools, 2010.

7 “Financial Experience & Behaviors Among Women,”

Prudential, 2012.

8 “Financial Experience and Behaviors Among Women,”

Prudential Research Study, 2010-2011; “Women and Wealth,”

RBC Wealth Management, 2012; and “Many Americans Don’t

Fully Read Retirement Plan Disclosures” and “Few Know

What Retirement Plan Fees They Pay,” LIMRA, Aug. 27, 2012.

9 Tanner, Debora, You Just Don’t Understand: Women and

Men in Conversation, Ballantine Books, 1990.

Top 10 Questions Every Woman Needs to Answer1. Where is your money?

2. How can you access it?

3. Is it allocated in alignment with your needs and goals for the next fi ve years? 10 years? Beyond that?

4. Are you aware of and comfortable with the level of risk you are currently assuming?

5. What happens if one or both of you is incapacitated?

6. What is your debt structure?

7. What professional do you consider your primary fi nancial advisor?

8. How well do you know that person?

9. How well does that person know you?

10. What would have happened to your standard of living if your spouse had passed away yesterday?

BONUS QUESTION:

Knowing what you know right now, what is your next step?

[ 12 ]


About First Clearing Headquartered in St. Louis,

First Clearing Correspondent

Services (First Clearing)

provides a comprehensive

suite of solutions to help

full-service and independent

retail broker-dealers run

more effi ciently, grow more confi dently, and protect their fi rms

more effectively.

The fi rm offers a unique professional-development and growth-

consulting program, helping advisors take their businesses to the

next level; access through affi liates to a full range of investment,

advisory, and banking products and services, including industry

leading research, alternative investments, fi xed income, lending,

retirement, and trust; and risk-management and compliance

tools and support. Our relationship management is grounded in

a culture of caring, attention to service quality, and continuous

improvement.

Additional services include advisory workstation technology,

leading workfl ow tools, trade execution and clearance, securities

settlement, record-keeping, and client statements. Because

of First Clearing’s long heritage in the full-service brokerage

business, we provide industry insight coupled with the deep

resources and brand strength of Wells Fargo & Company,

one of the nation’s strongest fi nancial services companies.

First Clearing is a member of the New York Stock Exchange,

NASDAQ, and other major exchanges.

fi rstclearing.com

About Cannon Financial InstituteCannon is the premier provider of professional development

solutions for the world’s top fi nancial organizations. Our

instructors and consultants have earned a reputation for

delivering comprehensive solutions that are focused, relevant,

and strategically invaluable. Our clients consistently – and

immediately – see dramatic results and improved productivity

from students who have experienced our professional

development solutions. As a result, hundreds of fi nancial

services companies have chosen Cannon as their long-term

strategic partner for increasing market share, maximizing

profi tability, and reducing liability.

We work only in the fi nancial services industry, so we know the

industry. We come from the industry. We know the challenges

you face. We know what works.

Our strength and reputation rest in our ability to create

high-impact professional development solutions delivered

by individuals who have specifi c knowledge, experience, and

demonstrated success in their respective area of expertise.

Because our professionals are on the line and in the fi eld with

clients on a daily basis, we remain at the forefront of trends,

changes, and best practices shaping the fi nancial

services industry.

cannonfi nancial.com

[ 13 ]


Notes

[ 14 ]


Notes

[ 15 ]


Notes

[ 16 ]


Notes

89

97

8-v

1

1012-03315

For Broker-Dealer Use Only – Not to be Distributed to the General Public

This material was written by Cannon Financial Institute. It has been prepared and distributed solely for information purposes. First Clearing, LLC, has not verified the information and opinions in this report, nor does it make any representations as to their accuracy or completeness.

First Clearing, LLC is a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. ©2012 First Clearing, LLC. All rights reserved.

wwa lte 11 2012

Documents

wealth market

financial services market

number of working women

married american women

baby boomer women

financial advisors

niche market

financial services industry