"If you want to attract affluent female investors, you need to create strategic alliances with the professionals who serve them in other aspects of their financial lives."

Women of Wealth

By John Bowen

When it comes to money, it has traditionally been a man's world. But today, wealthy women have become a large and growing demographic—one that spells opportunity for you.

Reprinted from:

One of the most effective ways to build a strong advisory business and keep it growing is to provide an underserved market with exceptional service and solutions. Affluent women fit this model exceptionally well. Women today are better educated, earn higher salaries and own more businesses than ever before. Consider these facts:

• Since the early 1980s, women have earned more bachelor's and master's degrees than men.
• Women account for 49 percent of all law school students and 49 percent of all medical school students.
• The number of women-owned companies with 500 or more employees grew by roughly 125 percent from 1997 to 2002.
• According to the IRS, close to half (43 percent) of all individuals in North America with $500,000 or more in investable assets are women. Women represented 39 percent of the "top wealth holders"—those with gross assets of at least $625,000. Among that group, 1.1 million women had a net worth of at least $1 million.

UNDERSTANDING WEALTHY WOMEN

To serve this group effectively, you have to understand who these affluent women are, their biggest financial concerns and how they prefer to work with advisors. For that insight, we turned to Russ Alan Prince, a CEG Worldwide senior managing principal who interviewed 743 wealthy women with the following characteristics: Each has at least $3 million in investable assets (excluding business and real property), $8 million in net worth, is the principal decision maker on investment and financial issues and works with one or more financial advisors. His research reveals a number of surprising insights.

• Age. Most of the affluent women surveyed (61.5 percent) are age 45 to 54—firmly in the baby boomer demographic. This suggests that many of them are still working and facing issues related to retirement planning. Those who own businesses also face issues of business succession. Post-retirement concerns are minimal to nonexistent at this point, as just 4.4 percent of women in the study were age 65 or older.
• Education. Affluent women tend to be well educated—33.1 percent have graduate degrees and 61 percent have undergraduate degrees.
• Sources of wealth. The research shatters the myth that affluent women inherit or "marry into" their money. Instead, wealthy women are generally self-made: 31.4 percent earned their wealth via their businesses, while the source of wealth for 21.9 percent was corporate employment. Given that most affluent women earn their wealth, it's not surprising that 61.2 percent said they want to manage their money themselves because they worked hard to get it.
• Biggest financial concerns. The biggest fear of affluent women: losing money—cited by 47.4 percent of respondents. Just over 40 percent (41.7 percent) said they feel fearful when they have to make financial decisions. Also, wealthy women feel they need even more wealth to feel financially secure. More than half (51.5 percent) said they need between $10 million and $15 million in assets to feel comfortable.

The upshot: The "typical" affluent woman can be characterized as well educated and in the prime of her life and career. She has worked hard to earn her wealth. She takes an active interest in financial decision making but also relies on professional guidance, partly because of feeling fearful when making financial decisions. She worries most about losing money and feels she needs even more wealth than she currently possesses to feel financially secure.

HOW ADVISORS CAN HELP

Knowing a typical wealthy woman's profile is only the start if you want to work successfully with this group. You also need to understand how affluent women work with advisors so you can attract and retain their business.

It's important to remember that affluent women typically have more than one advisor. Of the women surveyed by Prince, 38.1 percent had three advisors and 43.5 percent had four. This finding is consistent with our past research on the overall affluent market indicating that the affluent aren't comfortable selecting one advisor to manage all of their assets. They prefer to "diversify" their advisors.

So how do affluent women find their advisors? The biggest source by far—cited by 69.9 percent of the women surveyed—is a referral from another professional advisor such as an accountant or an attorney. No other source comes close. The message here is obvious: If you want to attract affluent female investors, you need to create strategic alliances with the professionals who serve them in other aspects of their financial lives.

Of course, getting referrals is only one step. You've also got to convert these prospects into clients, and to do that you need to understand the factors that are most important to affluent women in selecting their advisors.

The characteristic most important to women is the level of personal chemistry between them and their potential advisors. Personal chemistry, cited by a full 91.7 percent of affluent women surveyed, is a true "deal breaker"—if it's not there, most affluent women won't even consider doing business with you. Three other factors related to interpersonal relationships are also crucial: the way an advisor focuses on a client's personal goals (87.5 percent); a feeling of trust (82 percent); and the advisor's personal reputation (69.2 percent).

There are also other "must-haves" that you must provide. One, naturally, is financial expertise. When selecting advisors, wealthy female prospects care deeply about your approach to financial and other types of planning (75 percent), the way you focus on a client's financial goals (70 percent) and your knowledge of financial tools (69.9 percent). The other is communication skills—the ability to listen well (70.4 percent) and the ability to explain financial concepts (65.5 percent) are key abilities you need to demonstrate to earn this group's business.

Just as significant are those factors that aren't especially important to affluent women when dealing with advisors. Given that your time and energy is limited, it makes sense to also know what these women don't want. For example, proposals and presentations—two areas where advisors often spend a great deal of time—don't mean a great deal to wealthy women (only 37 percent listed them as a factor).

Other marketing tools such as brochures are essentially a nonissue—just 0.5 percent of surveyed women said marketing materials (including your website) are a selection criterion. Likewise, shared attributes such as gender, religious beliefs and age don't factor into high-net-worth women's decisions-roughly 5 percent or less called these characteristics important.

The "aha" of this research is that women generally care more about the quality of the advisor-client relationship than other factors—including financial expertise. Therefore, your efforts to turn prospects into clients should focus on using your interpersonal and communication skills. Indeed, when asked about the factors that contributed most to their overall satisfaction with their advisors, affluent women's most common answer was "the advisor's listening skills" (62.4 percent).

FOUR STEPS TO SUCCESS

Clearly the market of affluent women presents a significant opportunity to grow your business. Use your knowledge of what women expect from their advisors to take the following four action steps:

1. Focus on a niche within the affluent women's market. By concentrating on a niche within the larger market of affluent women, you'll more easily become an expert in meeting its needs. The more specific your niche—for example, female orthopedic surgeons in your geographic region—the more successful you'll be in this effort.

2. Form strategic alliances with accountants and attorneys who serve women. This will enable you to get referrals from affluent women's other trusted advisors—the most common way women find their advisors.

3. Implement a consultative process with clients. A systematic consultative process will ensure that you identify and address your female clients' financial concerns and goals. As we've seen, many affluent women are concerned about losing their money and about making financial decisions.

The consultative process addresses these issues by helping you to create a long-term road map to grow and preserve wealth and by providing a framework for methodical decision making. But regardless of your clients' particular concerns, the consultative process will help you build the high-quality advisor-client relationship they are looking for.

4. Ensure quality client contact. Advisors' ability to listen well determines satisfaction among affluent women. But you must also ensure that you are providing appropriate contact frequently—reaching out to each valued client as often as she wants—as well as discussing the topics she cares most about.

You can use your knowledge of affluent women to create a unique value proposition, and put yourself in a tremendous position to serve an important group that's been too long ignored by many of your peers—and capture more business than ever before.