Targeting the Female Market

The following was a cover story for Annuity Selling Guide, Stategies for Success
January 2005

Targeting the Female Market
Personal finance is no longer the domain of the traditional male head-of-household. Here’s what you need to know about women investors in order to capture this affluent market.
by Sharon Rockey

Illustrations by Kathy Locke

Have you taken inventory of your client list lately? Do you know what percentage of your clients are women – particularly those who are divorced, widowed or otherwise single? You’re no doubt aware of the growing number of women who make financial decisions for themselves and their families, but have you seen any recent statistics on how dramatically things are shifting between the genders and how much money women actually control?

According to “Women and Diversity WOW! 2004,” a report that compiles data from a wide array of sources, 43 percent of all U.S. individuals with more than $500,000 in assets are women. Women also represent nearly half of all investors with $100,000 or more to invest, and more than 50 percent of them are financially independent – they don’t rely on a spouse, family or inheritance for income and assets. And, what’s more, by the year 2010 half of all U.S. wealth is expected to be in the hands of women.

Clearly, personal finance is no longer the hallowed domain of men, now that scores of women are becoming more savvy about investments.

Single women represent a growing pool of potential investors for annuity producers–often because changing circumstances have forced them to take charge of their own financial affairs. According to the U.S. Department of Health and Human Services Administration on Aging, the average age of widowhood for American women is 56. And since women are projected to live an average of 5.7 years longer than men–or up to approximately 80 years of age — women may live about 19 years into their retirement and many of them will be solely responsible for their own financial well being.

When you throw a 50% divorce rate into the mix, you can get a pretty good picture of how large a market segment these women represent. But, how do you reach this market? Should your strategy for marketing products to women differ than the one you use with men? Do women even feel in need of your financial guidance? Before you answer, consider a few facts uncovered in another recent study.

More women are seeking professional financial guidance
After polling 1,134 American women ages 25 to 68, the 2004 – 2005 Prudential Financial’s Study on the Financial Experience and Behaviors Among Women” revealed that not only were the women in agreement that it’s best to seek professional help, 32% of them said they were likely to seek outside counsel from an advisor during the upcoming 12 months.

Spectrem Group, a Chicago consulting firm released a new study based on the results of polling about 3,300 affluent households. It found that a full 70% of affluent women would use professional advisors compared to 62% of the men. These woman tended to be more cautious than men and are usually more demanding of their advisors. But if a good relationship has been established, 54% of the women clients said they would follow their advisors even if that advisor switched firms.

What are women looking for when they choose an advisor?
Hannah Shaw Grove, Managing Director of Merrill Lynch Investment Managers and Russ Allen Prince of consulting firm Prince and Associates share their findings at In a survey of 743 women with at least $3 million in investable assets, women were asked what they expected from their financial advisor. The two top answers were values (66.9%) and listening skills (62%), which indicates that women prefer a quality interpersonal relationship over technical skills and financial expertise.

Female Mentality: Understanding How Females Approach Investing.
Approaches for reaching wealthy women clients vary from one advisor to the next. Linette Dobbins, CFP with McGee Financial Strategies in Portland, Oregon suggests using Referral Groups, a network of professional women coming together to conduct seminars. Presenters may include divorce attorneys, CPAs, CFPs and other professionals who offer solid advice on a variety of topics. Linette handles the topic of financial planning and how women can be more in control of their own financial future. “It’s important to choose the right product to fit the client’s need,” she said. “I believe that annuities work best for women if they are over fifty-five.

“For instance, I might offer an immediate 5-year annuity to a middle-aged woman who was recently divorced. Maybe she has received assets from the settlement, but has no regular income and needs to finance a new home or refinance an old one. The annuity would give her a guaranteed income stream for five years which would qualify her for a mortgage loan. But in another case, I might suggest a fixed annuity for a woman who needs a long-term income stream without having to worry about changing market conditions.

“It’s also important to understand how differently the genders perceive money,” Linette added. “Men generally see money as a tool. With a more inherently competitive nature, they may be more likely to take bigger risks, be more aggressive. Women on the other hand, equate money with security. Naturally, we strive to match every investment with the needs of each client, but typically, when an annuity is the right choice for a woman, her focus is on how secure it’s going to make her future or how she can reach her goals with more ease, and less on any profit she expects to reap. You must speak to a woman’s needs,” she stressed. “Helping a women client understand how the product suits her need for financial security is key to helping her make the right choice.”

Kathleen Miller, of Miller Associates in Kirkland, Washington is a specialist in post-divorce investment management, a noted speaker and author of “Fair Share of Divorce for Women.” Her business is primarily fee-based and her clients come through the referrals of a well-established network of professionals. Since Kathleen works with a lot of divorced women, many referrals come from attorneys, CPA’s career advisors and therapists.

“After the recent downturn in the market, I think using split annuities works well for divorced women with large 401Ks. If they start with $400,000 to $500,000, I might put $150,000 into an annuity and create a lifetime income or an income for a specific length of time, but then I might suggest putting the rest into a variety of investments. The principal guarantee from the annuity is an attractive feature for those who are somewhat risk adverse, and they can still be in the equity market knowing they have some guarantees. Of course, it’s important to disclose the costs of those guarantees.”

Kathleen noted the differences in how woman approach financial matters compared to men. “I find that women are more likely to research for answers before they ask questions, they take a more orderly approach to analyzing the facts, and it’s easier for them to admit that they don’t understand something or that they need guidance,” she said. “When working with couples, sometimes a man will tell me he really doesn’t need my services, but if it will help his wife understand what’s happening, then let’s do it. In the past, women have been presented with financial concepts using the male model,” she added. “I find women are more comfortable and receptive when I use imagery and ideas that appeal to today’s independent woman.”

Elisabeth Plax, CFP and founder of Plax and Associates Financial Services in Pepper Pike, Ohio attracts new clients through referrals and with her financially-related TV segments aired every other week. The shows are geared for seniors and frequently presented with single women in mind. Elisabeth’s client list includes many single women as well as couples.

“When I meet with couples, I make it very clear up front that I want to hear from each of them about their concerns and their goals and objectives,” Elisabeth said. “The husbands tend to ask fewer questions and they’re usually interested in answers to more technical questions. I want to be sure I understand the wife’s concerns so I can present things in a way that address her issues. As a former educator, I know that people learn in different ways. I find that women like to consider things from all sides and they have a need to understand the details.

“I also keep in mind, that women typically outlive their husbands,” she continued. “I want couples to make mutual decisions about how products will work for the woman once she’s a widow. Whether the product is an annuity, a mutual fund or stocks and bonds, the question simply has to be addressed. It’s often an unspoken question, but it’s my responsibility to ask it and clients appreciate the frankness.

“In general, men seem to be more optimistic about having a source of income no matter what happens in their lives,” she added. “But I’ve seen women with annual incomes of $200,00 ask themselves, ‘What if I go broke?’ It’s that old fear of becoming a bag lady, when that possibility is clearly not even in the picture.”

Elisabeth noted that when single women invest, especially women in their 50’s, 60’s and older, they are usually more interested in the security of having living benefits for themselves rather than having a death benefit to leave for their children. She feels that’s a big reason they are attracted to annuities and the guarantee of an income stream.

The marketing approach
What these advisors have discovered in their practices is in accord with numerous market studies: women in general are far more concerned about losing money than taking the risk of gaining more; women have more patience for trying to understand the big picture; plus they also tend to blame themselves if an investment loses money, whereas men will blame their advisors, weak markets or bad luck.

In your marketing campaign to older women, it’s wise to focus on the benefits of retirement rather than how to overcome negatives like poor health or debt. Appeal to the woman’s independent spirit and her ability to make decisions herself.

If you look at any list of retail consumer marketing tips for attracting and retaining female customers, you’ll see that women buy quite differently than men and that many of the same marketing principles used in the retail industry apply to financial services.

For instance, before a woman makes a major purchase, she weighs all the factors just as she would if she were about to enter a relationship. She wants to take her time and evaluate things in order to determine what kind of relationship she’s getting into. If the advisor is not a good listener, the relationship will probably never get off the ground. Women are quick to sense whether or not you are more interested in the sale than you are in helping her meet her financial needs. If it’s just a sale you’re after, nothing will kill a deal quicker.

Throughout recorded history, woman have been society’s gatherers while men were out there going it alone. Today, women are still more likely to gather and share information and learn from one another than men. That’s why seminars designed to educate women work so well. It creates opportunities for them to develop a sense of community or connection with you and your planning practice as well as with each other. Positive word-of-mouth will never go out of fashion.

Women’s workshops have been successful for a group of advisors in Bellevue Washington. In a series of monthly workshops for affluent women, called “The Wealth Program,” a unique attraction is the meeting locations — high-profile public companies — which they found to be the perfect place to talk investing. The 12-session program covers a range of topics, including investment choices, asset allocation, retirement planning, family wealth management and philanthropy.

Whether you use seminars, direct mail, cold calling or a company Website to reach women clients, make it clear who you are and what you stand for. Skip the hard-sell approach and just give them what they need to make educated choices.

Regardless of how you attract your clients, here’s the bottom line in recognizing the differences between how men and women think. You can read it between the lines in all the gender and marketing studies and it could be the key to building a lasting client relationship. Women are spherical thinkers. Men are linear thinkers. He’ll set a goal, pick an investment that he hopes will get him there the quickest and then go for it. She’ll spend more time weighing all the factors, taking in the whole picture, seeing how it all fits together and then she’ll make a decision.

When you help your client make the right decision in a way that’s most compatible with their way of thinking, chances are you’ll have that client for life.