Women and investing: How to attract a key demographic

The following is an edited transcript of an April 17 webcast, “Attracting Women Clients: Adviser Success Stories.” InvestmentNews deputy editor Evan Cooper and contributing editor Mary Beth Franklin moderated. The accompanying poll questions are from the results of InvestmentNews' Women and Investing Survey of 479 male and female advisers, conducted in March.

InvestmentNews: Women now own half of all U.S. private wealth, which means they control or influence at least $16 trillion in assets. In addition, about a third of all U.S. households are headed by women. Given those statistics, you can see why women now represent the greatest potential market, as well as a great recruiting opportunity for the financial services industry.

To start off, Eleanor, can you tell us a little about Directions for Women and its genesis?

Ms. Blayney: Basically, it's a communications and consulting firm that works with advisers to improve their outreach to women. We also speak directly to women through publications, blogs and in-person opportunities to let them know that there are advisers who are working very hard and thinking about their unique needs.

Directions for Women began because as a woman, I knew that I thought and talked about money very differently, and that as advisers, we needed to change our conversations.

The big disconnect is what I call the opportunity and the challenge. The opportunity is that affluent women are much more likely to admit that they need financial advice than men. They'll ask for direction and appreciate advice. But here's the problem: According to a Boston Consulting Group study done in 2009, women put financial services at the absolute bottom of a list of 32 industries in terms of responsiveness to the needs of women. They need us, but they don't like us very much.

Directions for Women is exploring and thinking about this challenge. We've identified some of the gaps that exist, and it's like women and advisers are speaking two languages. They're not necessarily speaking to one another.

InvestmentNews: Don, you say that the essence of dealing with female clients is to listen, listen, listen. Could you tell us a bit about your practice and how you found yourself working with women?

Mr. Grant: Yes. I came from the broadcasting industry, having spent about 20 years as a news anchor with NBC in various markets. That bored me pretty quickly, so I started reporting on business issues. I learned quite a bit about investor behavior from that.

When I moved to Wichita [Kan.], I became friendly with a woman adviser, and she and I co-founded a group teaching personal finance to kids. We helped pass a bill mandating financial education in Kansas, for which we created the curricula, and she talked me into getting into this business and became my mentor.

Of course, when you're starting, you grab whatever accounts you can, but I found myself gravitating to and enjoying the relationships that I had with my women clients. It was around those conversations that we created our Wine, Women and Wealth program, which are small events I'll explain a little later that have led to some pretty interesting conversations. They've also led to what we sort of jokingly call “Oprah moments,” in which we get into a discussion and tell stories. It's my job to try to interpret the story and attach money to it in one way or another. But the meetings have taught me so much about the way that men and women work with their money that it has helped create a focus for my business.

TAKING CHARGE

InvestmentNews: Don, we'll come back to your program, but let's ask Karen Altfest, who's based in Manhattan, about some of the social gatherings she's put together for her female clients.

Ms. Altfest: I grew up in a family in which the men were taught all about finance and business, but the women didn't have those expectations and didn't have that education. We were well-educated and were expected to do charitable good works, which I still do today. I'm on many boards and have actually founded some organizations. But I learned financial skills as an adult, because I didn't like the alternative. I didn't want to sit and wait while somebody else made all these decisions for my life and my family's life.

So very much like the women I serve, I wasn't brought up to deal with finance, which makes me one of them; I'm very sympathetic to their situations. I believe I became a financial adviser to women very purposefully, not at all by accident. I have a Ph.D. in history, so I'm used to writing and teaching and directing programs, but I find many of the women I meet need confidence. They have a lot of fears and a lot of anxieties.

EDUCATION FIRST

As a result, we do a lot of education at Altfest for our general population and even more for our women clients, because I believe women like to speak openly on their own and not be intimidated. So at Altfest, education is key. And I also believe that you can't fake an interest in women or you're going to be found out. Let me give you a quick example. I was once at one of our events, greeting all my women clients, and one was hanging back. At the end, she said, “You know, Karen, you act like you're happy that they're here.” And I'm thinking, “I'm not acting.” I really was happy to see each client and to think that each one chose to spend a few hours of her day with me and to learn from me. I'm truly happy when people come to our events, and I think they would know if we weren't truly happy.

InvestmentNews: Tell us about those events.

Ms. Altfest: We try to deliver information in comfortable pieces. We don't spend a lot of time looking at charts and graphs, or the women wouldn't come. We talk to them about how they live — I've had a professor teach how to negotiate a car purchase and a doctor discuss how women can live very, very long lives.

We go from small round tables to large seminars. I usually like the women to participate and discuss. After the last presidential election, I held a session on what the new president would mean to women in New York City. We've noted that women like to come to events with a friend; those friends get used to seeing us time after time, and after a while, they become our clients.

Ms. Blayney: Karen's comments reinforce the importance of having two-way conversations. We really need to show up as listeners, as Don said, and as facilitators. Women don't like to be “fixed.” You know the story about the woman who comes home and complains to her husband about being stuck in traffic, having her assistant not show up at a meeting and dealing with a jerky boss. Her husband, thinking he's being helpful, says, “Well, why don't you take a different route home? Fire that assistant and be in the boss' office first thing in the morning and tell him what you think.” He thinks he “fixed” the problem and she's fuming because she doesn't want “fixing” — she needs listening and empathy.

In addressing the issue of women and money, we're prototyping and piloting women's money circles using a very respected and established “conversation technology” in which there are very clear guidelines and roles. At the retreats we run, we do circle training, in which advisers learn how organize leaderless groups in which women define what they want to discuss in a sort of broad container of topics.

InvestmentNews: Eleanor, do you keep a list of financial planners that adhere to these strategies or have learned these strategies that you, in turn, can recommend to female investors?

Ms. Blayney: We have several retreats where we do circle training where we actually have the advisers — and this is both women and men advisers, I should add — come and actually experience what it means to sit in this kind of a leaderless type of social space.

MARKETING

InvestmentNews: Let's follow up on those points. If an adviser is attuned to the needs of women, which may be different from those of men, is calling attention to those differences offensive?

Mr. Grant: I've learned that we need to understand that there are differences, but I've also learned that in marketing to women, it's not a good idea to put on a women-and-investing seminar. You're marketing to people, and if you understand the differences and that the process is a bit different — without pointing out that the process is different — you garner much more respect.

As Karen pointed out, you've got to be genuine about it. You can't go out and try to fake it. If you are genuinely enthralled with what you're doing and have an aptitude for it, and if you listen and show people that you heard what they said, and then finally help them convert that into an investment strategy, that's where you find success.

Listening means that you don't start a relationship assuming you know the solution. How do you know what to fix if you don't hear it? It's just like making a cold call trying to sell bonds. You don't know if the person on the other end of the phone needs a bond. That's why you have to learn about the person you're talking to and hear their stories. If we can just talk to each other, we can glean what the specific needs are.

The key, once again, is being able to attach some sort of a financial solution to those needs. I encourage and actually insist that my clients are educated as to exactly what we're doing. They don't need to know the minutiae of everything, but they do need to know why we are where we are, so that when we have the next conversation, we don't have to start from scratch.

Ms. Blayney: I totally agree with that, especially the part about stories. I would suggest to advisers that they tell their story as to why they like working with women. Too often, advisers lead with what we do — financial planning, capital needs analyses — as opposed to addressing life circumstances.

Mr. Grant: We can probably blame this on society and the way we've been raised, but it is often the man who handles the big money in a relationship and who does all the negotiating for anything that has to be done around the house. Some of the most rewarding experiences I've had with my clients involved negotiating on their behalf at car dealerships. One of my clients had no experience doing this, and if I weren't there, she would have spent about $10,000 more for the car.

InvestmentNews: Did she ask you to be there or did you offer?

Mr. Grant: I offered. She told me what she was doing and then I did a little research and found out what they were trying to charge her. I said, “Let me just stand there.”

It's not that women need to be protected that way, it's just that she's in her 60s and recently widowed and had never bought a car herself. It's those kinds of things that I truly, truly enjoy doing, and it's much more rewarding than just managing assets.

I've also gone to help with cellphone negotiations and figuring out which cellphone to get. The biggest one — and I don't want to open up a whole new can of worms here — is understanding Social Security and Medicare, because those things are huge and they're going to be in all of our lives. It was important for me to show up at the Social Security office with one of my clients.

InvestmentNews: Karen, following up on what Don said, do women raise these issues or do you elicit from them what's on their minds?

Ms. Altfest: Well, I agree and disagree with Don. A lot of women have delegated the financial component of their lives to the men in their lives, and yet when you meet with a married couple, one of them is more in charge of the finances. Until you speak to them and get to know them, you're not sure which one it is, which is why it could be a terrible mistake to ignore the woman. And that's why so many women leave their advisers when their husbands die, because the adviser was speaking to the man in the marriage and not to the wife.

On the other hand, women have a language of our own, and you can't learn it at Rosetta Stone [a foreign-language tool]. My husband, the CEO of our firm, says that when I talk to women, it's like we're speaking a different language, and indeed it is.

Last night, he was meeting with a client for an hour and a half, and I was down the hall with another client. When my meeting ended, I went to meet this new couple, and during the last half hour, she told me things she had not mentioned to my husband or to another adviser in the room. She wanted to talk to me about those issues woman-to-woman, and my husband was really shocked.

She had told him all about her job, but she didn't mention that she really doesn't like the new [chief financial officer] she reports to, and that she's thinking of leaving.

My husband's jaw dropped. He asked me why she didn't tell him about that important information and why she talked to me instead of him. The answer is just that she was more comfortable telling this to another woman who she thought would understand her point of view, and I did. I took it all seriously. I heard everything she had to say, and I feel I understand her; we were beginning to develop a sure bond in the half hour I spent in that room.

InvestmentNews: Do you think a male adviser could have done what you did, or is it something that only women can do?

Ms. Altfest: That's a good question, because I know that a lot of married women, widows and single women like speaking to my husband, Lew. They enjoy his point of view about investments, but I would say many, many more like coming to my sessions. They use the word “trust” a lot. They believe in what I do and they know I'll get it. I've had women call me from a carpet store to ask how much they could spend on a carpet; they wouldn't tell that to Lew. They don't want to look silly.

Ms. Blayney: In that regard, we should recognize that women's events are often a source of empowerment. Look at how many professional organizations there are for women lawyers and accountants; we don't have that counterpart with men. That recognizes that women get support and empowerment from one another.

There is some sensitivity among younger women, in particular, when you have an event that's labeled a women's event; they may be a little suspicious of it. Baby boomer women, who have worn their feminism on their sleeves, have had to fight for everything they've managed to accomplish, which is not true for their daughters.

GENERATIONAL DIFFERENCES

InvestmentNews: Regarding generational differences. Since advisers may be dealing with three generations of women — boomers, the boomers' parents and the boomers' daughters — can each of you speak to the differences among these groups?

Mr. Grant: In general, as far as generations are concerned, if you're older, there's more of the male dominance of financial issues. Women have not been included in that conversation, or as Karen pointed out, they may have relegated it or delegated it to their husband and just accepted it that way. I bend over backwards to make sure that all people are involved in the conversation, primarily because generally, the woman will outlive the man and she's going to be the one who needs to handle the assets.

But when it comes to younger people, it's kind of genderless as far as I'm concerned. There is a different process, of course, but I do believe that younger couples and younger women are a little less intimidated with dealing with money. They want education from an adviser and they want to be involved. But then again, once I've had the opportunity to educate some older women about their finances, some of them kind of go overboard and are so involved that the relationship gets even better.

Ms. Altfest: I wish it were true that younger women were much smarter about money than older women. I have not found that to be the case. Yes, they are more self- sufficient. Yes, they are having success in their careers. It's wonderful to see. But when it comes to questions, there's still the same hesitation, the same fears and the same lack of confidence. My daughter and her friends are like that, while my son is a financial whiz.

But I've spoken about financial knowledge to the young women in our office in their 20s and 30s, and they say it's just not happening. They say that because they work for a financial firm, they're the only ones they know in their group who are at all interested in finances. The rest aren't. So I wish the world was turning a little faster, but in this one case, I'm afraid it's not.

Ms. Blayney: I agree with you, Karen. In many cases, these younger professional women are making great salaries and have potential but really are clueless financially. But I think it's important to note that we should be talking to different generations in different ways. For the millennials, it's social media; the whole idea of actually meeting with an adviser is not imperative. The baby boomer woman is going to want an e-mail and a meeting. She wants more of the eye-to-eye contact, the actual relationship.

InvestmentNews: Conventional wisdom has it that men are interested in investment performance, while women are more concerned about security and having enough so as not to become a shopping bag lady when they're older. That might be the extreme way of putting it, but is that picture basically true?

Mr. Grant: A lot of what I read says that women are not as concerned about performance as men and are more concerned about feeling secure. I find that men and women who enjoy the relationship are not as concerned about the bottom line. But there are many of my female clients who put me through the paces far more diligently than men. Men are quicker to make a decision and just trust that it's going to work. Not that they're afraid to do their own due diligence, but I'm tested much more by my women clients. They are concerned about performance, but they also want to know that they made the right decision to begin with. I also have found that they are less apt than men to want to make changes in their portfolio at the drop of a hat.

Ms. Blayney: I can remember a meeting where I was presenting the quarterly results to a couple and we went over everything. He was asking about my performance compared to the S&P [500], the benchmark and other clients, and then he got up and left the room. The wife, who had said nothing until then, turned to me and asked, “Eleanor, what does it mean?”

She wasn't asking for an answer in basis points. She was asking what the up 5% or down 5% meant in relation to the couple's decision to send their kids to camp or to college, what it meant about their vacation. She needed that context to put whatever that performance, whatever that number is, into the texture of her life and understand its impact on the people she cares about.

Ms. Altfest: Our male prospects do seem to ask for our performance records more often than women. I think that women like returns and want returns but ask about it differently. They ask about achieving their own goals, which is what Eleanor was talking about. Just yesterday, I had a widow in who's been so buffeted by the loss of her husband, the loss of her mother, problems with her home, a dread disease and terrible treatments for it, and yet she came in and asked about her performance. We had all the numbers for her, but she wanted it broken down by year, broken down without our fees, broken down in many ways so that she could understand it. She was asking the same questions in a different way, but she — like women in general — likes to achieve good performance.

COST OF ADVICE

InvestmentNews: Let's talk about women and fees. Are they concerned about what they're paying? Are they willing to pay if they feel like they're getting value or are they looking to get the advice as cheaply as they can?

Ms. Altfest: We are fee-only advisers, so the fee is right upfront, and for people who have never hired an adviser that way, sometimes it's hard for them to make that decision. People who come from another adviser are certainly more willing to continue to pay. It just depends on the individual and whether they perceive value for what they're getting. Obviously, our clients are comfortable with it. With prospects, I think, sometimes you have to educate them on what they'll be paying in a fee rather than in a commission-based relationship and just teach them how it works to make them comfortable.

ALLOTTING TIME

InvestmentNews: It seems that courting potential female clients requires spending more time upfront. Does it pay off?

Ms. Altfest: Absolutely, and I think people are coming to visit advisers more than they did before 2008. But it seems people want to come and look at you three times before deciding whether to be a client. We had one prospect, who is now a client, who went to four other firms, and each time, she would come back and ask us to evaluate the other firms' proposals. After the fourth time, we told her that we really didn't have the time to let our advisers do another four. So she signed up, but it did take her a while.

InvestmentNews: Don, Eleanor, have you had similar experiences of investing a lot of time upfront?

Mr. Grant: I find that to be true. As I mentioned before, the due- diligence process is longer for a woman than for a man. Of course, as an adviser, your time is valuable, so you don't want anyone to waste it. But I really, honestly don't look at the investment as wasted time. Because even if a woman does not come on board as a client, I feel gratified that she knows I was upfront and that she hopefully learned something from me. Maybe now she'll be a bit better-equipped for whoever she decides to go with.

Ms. Blayney: I agree with Don. A woman's decision-making process does tend to take longer, but it is time well-spent. Remember, if she has been treated well, she will tell other people. So as you're talking to one prospect, just imagine all the other women whom she will be talking to about what you've provided and what you've said. Women's talk can be positively viral if you're really listening and spending the time.

ATTRACTING CLIENTS

InvestmentNews: An audience member wants to know if there is a process for attracting women or is it just an outgrowth of the way you normally do business?

Mr. Grant: I think Wine, Women and Wealth says it all. It has spread pretty much by word of mouth. The first one came about from talking to a few of my clients and asking them to bring a friend. I know it sounds contradictory to what I said before about not wanting to do a women-and-investing seminar, but these sessions are not like that. They're educational, and I usually have an estate-planning attorney there in addition to me talking about the basics of stocks and bonds.

InvestmentNews: Tell us more about the specifics of these meetings.

Mr. Grant: Well, there's usually a reception and some sort of a demonstration we all get involved in. That's usually 30 to 45 minutes and then we get into a discussion that generally lasts between 15 or 20 minutes, or maybe a half hour. After that is when we start telling stories and getting into examples. We don't have a moderator, but somebody does sort of have to direct things. For the most part, however, it's just a bunch of people hanging out in a very nice, warm situation and sharing things with each other. To me, that is the most rewarding. That's where I learn the most, and quite frankly, that's where I generally find people to meet with in the future, as far as taking on clients is concerned.

InvestmentNews: What's the size of the group, Don?

Mr. Grant: No more than a dozen. If you get any bigger than that, it loses its intimacy. You need to feel safe. You need to be with people you know and with those whom you get an opportunity to get to know a bit with the ice breakers we have at the beginning of the get-together. The intention can't be to sell anything. Your intention truly and genuinely has to be educational. You'll find that when you do that, business comes from it. Not everyone buys, of course, but most do, and my regular clients know that I hold these, and they are anxious to bring friends. We hold the gatherings at least quarterly.

InvestmentNews: Do you hold them in your offices or at a local restaurant?

Mr. Grant: One of my women clients, a decorator, rents us a converted loft in an old part of town. She's done a wonderful job with it and loves having us up there. We can hold 100 people up there, but we obviously don't use the entire space.

InvestmentNews: Karen, do you have a program or a particular process to attract female clients?

Ms. Altfest: We have a lot of programs. We have programs for all types for people in all walks of life, including for those who have been divorced and widowed. We also have newsletters. It isn't so much that we mail to people we don't know; we mail to people we know, and they send the newsletters to their friends, because everybody knows somebody in one of these situations. We hold events for people in younger generations, and they tell us that their aunts and uncles who are clients made them come, but that's really to help the family, not so much to attract clients.

We do small groups. We do large groups. Sometimes I like to surprise people and have something that doesn't seem financial, but it will have a financial component before it ends. For me, education is very, very important. Treating people with respect, consulting with them — not making decisions for them — and communicating with them is the most important thing you can do. Being a good communicator and teaching your staff to be good communicators is essential.

InvestmentNews: Karen, which group size works best?

Ms. Altfest: To encourage discussion, we have small groups that are probably about 20 or 24. Larger groups might be 40 to 50. If it gets larger than that, you're not getting their questions or their input. And I like when they learn from each other, too, because everybody can tell their own experiences.

InvestmentNews: Eleanor, what about the money circles that you talked about? Where do you hold them? How many people are involved? How often do you do it?

Ms. Blayney: We recommend a maximum of about 18, but as Don was saying, 12 is a good number. We like to hold them away from the office, but if it is an office setting, we like to transform the space into something that's a bit playful, a bit fun — very open and welcoming. The whole structure changes if you've got 50 or more people. Then it's going to be more of a unidirectional, one-way event where you're speaking. You will get questions, but many women won't speak up. We really want a format that encourages everyone to share what's on her mind and where everyone can be heard and everyone can basically shape the conversation.

InvestmentNews: You talked about the importance of building trust with your clients, and there's an interesting question that one of our listeners submitted. What has been the impact of Bernie Madoff on your female clients?

Mr. Grant: A lot of my practice is in California, because I'm from there and I visit there quarterly. A client of mine there has been on her own for the most part since her husband entered a nursing home. They lost about $6 million to Bernie Madoff, and at this point, she's having a hard time maintaining her beautiful home in Beverly Hills. It's heart wrenching, and I feel like she trusts me because of what we've been able to do, but we are just close to the edge with someone who was extremely successful. Her husband was a producer and she was an actress. It's just heartbreaking. Nobody saw it coming. A family friend who was an adviser was representing some of those investments, and then all of a sudden, he's gone and the money's gone.

SCANDAL’S AFTERMATH

Ms. Altfest: The Madoff question is very important, and one that is asked all the time. We never used to hear questions like that, and now we do by the end of every meeting. Some people ask it sheepishly. You've got to worry about the ones who aren't asking it, because they're thinking it. As a principal in a family-owned business, you can believe that we're always asked this. In fact, I wrote an article on just this topic for the American Association of Individual Investors, as well as several others, on how not to be “Madoffed.”

There are many, many answers, but the main one is to show people that you don't have money in your desk drawers; you have a third-party administrator who brings their own statements. You've also got to give a believable response reflecting that it's not the first time you've heard the question. You've thought about it and you receive it the way it's meant and you certainly address it, which makes people much more comfortable. Nobody has ever told us that they can't come to us because of what happened with Madoff. They ask the question and they move on.

InvestmentNews: Don, you mentioned your client whose husband is in a retirement home. This is an issue that concerns so many women who may be on their own at some point in their life. Some of our listeners have asked questions about long-term-care insurance. Do you find that your female clients are interested in talking about long-term-care insurance?

Mr. Grant: Definitely, and thank goodness that they had the wherewithal to have purchased it early on. It's a rather crude contract that they have, but it's enough to cover for him. It is part of the conversation mentioned earlier about Social Security and Medicare, and risk management in general. There are calculators and formulas that you can use to help determine if you have enough wealth to warrant having LTC insurance, but depending on your legacy wishes and other factors, it's a huge conversation to have.

Ms. Altfest: There are other issues, as well. It's sometimes very difficult for people who've been widowed to move on with their lives. They're definitely facing a new normal. You have to help them identify their lifestyle, but you have to be very believable. For example, one of our longtime clients, a widow, was reluctant to visit her son or grandchildren because it involved taking a taxi that would cost $10 or $12. She was afraid to spend the money. If we said to her, listen, you can really spend another $50,000 a year and be OK — which we believe is the correct financial analysis of the situation — she would say, “Wow, these people don't get me and my lifestyle.” It's too much for her to absorb. So we asked her how often she visits her son, and we worked out a taxi budget, and so now she can visit him and she's feeling very comfortable; so one step at time sometimes works best.

Ms. Blayney: I think behind a lot of women's fears — it's behind the long-term-care issue for many women, I believe — is that for women, the last third of life is going to be spent as a single person, and that is not true of men. At age 65, for example, 56% of women are single, and obviously, the numbers move up as they get closer and closer to their 80s and 90s and the end of life expectancies.

Men die married. When you just think of all of the living situations that depend on having a partner versus singlehood, the question is so much larger, and it needs to be larger in our discussion with clients. It's really about housing. We have to start understanding the various options and what's being done for women in terms of living in cooperative communities and shared housing. This is a huge subject in helping women age gracefully and with dignity, and depending more on community resources, for example. So as advisers understanding what the community provides, what social resources are there to support that single woman in retirement?

At the other end of the spectrum, for young women, human capital is a huge topic. Helping them understand the role of work and home, the choices they have to make and how they can maximize their relatively shorter time in the workplace is very important. How do we help them negotiate raises? How do we help them prepare for a job interview? How do we encourage them to get what they need from the workplace?

InvestmentNews: You all touched on important points. But as we near the end of the webcast, are there any last thoughts you might have as to how advisers, whether men or women, can succeed with female clients? Karen, let's start with you.

Ms. Altfest: It's not enough anymore to handle a situation for women. You have to be partners in this. You're concerned, it's their lives, and you have to work together. I think that women want good treatment. They want respect. We can present nicely in a social setting, but women are smart and they're ready for knowledge. We have to give them substance. Finally, there's something in our industry that's not conducive for women clients or for women advisers. Hopefully, we'll do a better job of making what we do accessible to women and making them feel comfortable.

“SOCIAL SPACE’

Ms. Blayney: I would recommend that we make space for or take the time to create the social space for women. We should make that space safe and let women measure the outcomes their own way. Oftentimes, outcomes are emotional: A woman will feel more confident, feel as if she's made the right decisions and done better for her family. So let's start using these kinds of methods in our discussions of what we're doing and the value we're providing. Finally, listen a lot and tell stories.

Mr. Grant: Eleanor just summed it up. I agree that listening is the key, and then once you listen and share stories, it will become evident as to what you need to do.

To listen to this webcast in its entirety, visit: InvestmentNews .com/womenwebcast

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