What women want in an adviser

Dune Thorne is a partner at Brown Advisory, where she serves as a portfolio manager and strategic adviser. She also founded the charity Invest In Girls Inc., a 3-year afterschool financial education program for young women.
In this Q&A, Ms. Thorne discusses how women investors have changed over the years, the do’s and don’ts for advisers working with women, how to build a practice focusing on women and how this market segment will change as Gen X and Gen Y women build their assets.

Q: What is different today about the established female investor than a decade ago?
A: The market environment is different — 2008 was an incredibly challenging market environment, and the economy dropped beyond what anyone thought it would. It’s not something anyone is prepared for. There were red flags for many individuals, not just women. But many women began to get a real sense that their financial goals were at risk. Their ability to provide for their children and their family was at risk, and so they decided it was time to get engaged in how their investment decisions get made and how much risk is in their portfolio and what their investments are doing to help them. I have really seen increased engagement from women. They have decided that they’re not going to let their husband or father or brother to do this for them. You can have women that are very smart, very engaged in the world but often say they would not like to spend time thinking about investments. I have seen that begin to change.
Q: What are common mistakes that financial advisers make when they are working with women?
A: The most common is assuming that they’re not interested. It’s assuming that women don’t like to think about investments. Having a strong financial base is the No. 1 priority for families to meet their goals, whether it’s tuition, retirement, going on vacation or buying a home. They do really care, but they just may not communicate that enough. They may not be updated, up to speed on the process and the decisions being made for them. I hate to say this, but I do find women often have a lower starting point in terms of financial knowledge than men. A part of it is that there’s not that certain DNA in them, because parents haven’t thought to pull daughters aside to teach them the basics [of finance]. I think that’s starting to change, but in the past, women were starting at a different level, and it takes more time to educate them. Advisers who take the time to talk to these women about their investments find that the relationship is much stronger and well worth their time over the longer haul.
Q: How important is it for financial advisers to reach out to female investors and build this part of their clientele?
A: It’s incredibly important. Not only are women working at building their own wealth, but there is also a tremendous wealth transition happening with the aging baby boom generation, and that money is going equally to men and women. Also, divorce rates are high, and many women are sadly widows. There are studies that show that 80% of the time, they will change advisers when they are now on their own. Advisers will see a much higher turnover in their business, so they have to be proactively reaching out to these women.
Q: Do you think that the industry is making improvements, generally speaking, in how it works with women? Do you think it would help if the industry saw an increased presence of female investment advisers as we see the growing market of women investors?
A:Personally, I would love to see more women become advisers — it’s a phenomenal career for women, and I think more young women are looking at becoming wealth advisers. This job is so much about the personal relationship, and many women like to work with other women. That being said, this business is also about who do you trust better and connect with, and I know many women who would prefer to work with a man. I also have male clients who have said they like to work with female advisers. But a lot of the work you do are with families, which is very well-suited for women. Our job as advisers is to not just be investment recommenders or implementers but also listeners and counselors. Women tend to have more of a feminine approach and are good at counseling.
Q: In what ways do you think this market will change in the coming years as women from the so-called Generation X and Y segments begin to build their assets?
A: There is a very major change happening — and I wish I had the data to support it — but what I’m sensing and hearing is that as an industry, we have lost the trust of individuals and of clients. There is a general lack of trust because of the banks’ behavior and with the lack of transparency on fees, incentives and compensation structures. You have young people growing up with this lack of trust. They are putting a huge focus on transparency and they want to see this data themselves. They go online, access reports on their transactions and holdings, and look at their performance. There is a much stronger commitment to aligning values with investments. They want their families to be sharing personal financial information with one another. Most people would rather talk about sex than money, especially with their kids. But most teenagers understand a lot more about their family finances than most families know they do, and they are into sharing a lot more. There are two sides to this, though: They are becoming more educated about finances at a younger age, and advisers can create more seminars for them. But they also have to be careful talking about something before they really know what they are talking about.

Related Topics: Practice Management