Advisers said to be missing out on potential clients

SAN DIEGO — Financial advisers are missing out on potential clients by failing to reach out to women…

SAN DIEGO — Financial advisers are missing out on potential clients by failing to reach out to women and not proactively seeking referrals from lawyers and accountants, according to two speakers here at the TD Ameritrade Institutional Partnership 2007 National Conference.
TD Ameritrade Institutional is based in Jersey City, N.J.
Females represent 40% of individuals with a net worth of more than $10 million, said Cheri Kuick, national director of client services and a senior vice president of institutional sales at Neuberger Berman LLC in New York.
To access their financial assets, it is necessary to understand how women function and to gain their trust, she said. Ms. Kuick explained that affluent women “choose advisers based on competency and based on chemistry.”
The first mistake advisers often make is to ignore the female partner in a couple, Ms. Kuick said. However, husbands will seek the female partner’s advice in choosing an adviser.
Women make the majority of household purchases and are responsible for about half of all purchases involving securities, Ms. Kuick said. In addition, they control 80% of all day-to-day household finances, she added.
Additionally, women outlive men, and 70% wind up dumping their financial adviser after their husband’s death after years of being ignored, she said.
Ms. Kuick recommends asking couples to come to meetings together, stressing that it is an important part of the planning process.
Women also are ignored as independent clients, yet they control 89% of all bank accounts, and more than 60% are either in corporate or professional employment, or have inherited their family business, she said.
To capture a woman’s business, it is important to connect — and that usually means sharing personal stories and identifying similarities, Ms. Kuick added.
“If you connect with a woman as a client, she is going to be one of your most prominent advocates,” she said. Women talk to other women, Ms. Kuick explained. “They’re going to be some of your most loyal clients,” especially because women spend more time researching, she added.
Because most women are fastidious decision makers, they are an adviser’s best cross-sell opportunity, Ms. Kuick added. Women want to hear all the information and details, she said.
Some tips for attracting female clients include hosting social events such as wine tastings, cooking classes or a girls’ night out at a jewelry showing, she said. Ms. Kuick suggested creating events targeting a niche market, such as an annual St. Valentine’s Day dinner for widows or contacting board members of community groups to speak at a luncheon.
But Patricia J. Abram, senior managing principal of CEG Worldwide LLC in San Martin, Calif., said public seminars and general marketing campaigns are a waste of time.
Instead, financial advisers should focus on developing high-quality referrals from such sources as accountants and lawyers, she said.
Members of these two professions work with the “types of clients advisers want to attract” and have deeply trusting relationships with their clients, Ms. Abram said. Financial advisers need to be more active in taking steps to contact them directly to get those prized referrals, she added.
Ms. Abram advocates building strategic alliances as the best way to take advantage of the well of clients both offer.
But forming a partnership with an accountant is not the same as forming one with a lawyer, she said.
Agreements with accountants are formal and usually include revenue sharing. They should stipulate that each side will refer clients only to the other.
And advisers have room to be picky in their decision, because accountants want to offer these services to clients, and clients ask for them, Ms. Abram said. An adviser’s partnership could offer a substantial revenue stream to accountants, she explained.
When exploring potential lawyers with whom to team up, locate the private-client lawyer or the estate and trust specialist in a firm, Ms. Abram said. These attorneys already are making referrals to financial advisers, and research shows that almost 25% are actively looking for eligible clients to refer, according to CEG.
Alliances with lawyers typically take a less direct form than with accountants. Rather than splitting revenue, advisers provide attorneys with referrals for their own firm. Business growth, after all, is a primary responsibility for partners in law firms, Ms. Abram pointed out.
“Assure them you’d never refer your client to someone else,” she said. “Set the stage from day one that they’ll be referring [their clients] to you.”
“The most important thing in developing a strategic alliance with an attorney is for them to understand what you do,” Ms. Abram added. “They think we’re all brokers.”