What Women Want. In the movie of that same name, ad exec Mel Gibson dressed up in stockings and applied makeup to try to better understand the opposite sex. Through a fortuitous or perhaps unlucky accident involving too much wine, a hairdryer and a bathtub full of water, he received the “power” to “hear” what women were thinking. He was then able to land juicy, multi-million-dollar accounts as he effortlessly channeled “what women want.”
While gender differences provide humorous fodder for movie scripts, few people are ready to cross-dress or risk death by electrocution to gain insight into the opposite sex. So, understanding how men and women approach the buying process remains a significant stumbling block when trying to market and sell financial products and services.
Men and women are not the same. Triteness aside. Women do not view their financial advisors in the same way as men do, nor is their buying process similar. Their life span is different, their retirement needs are different, their financial needs are, well, different. And yet, for all those differences, there is an approachable, common ground on which to assist women with their long-term financial planning.
You may be asking yourself: “Do I really need to bother figuring this out? Is it going to be worth my while to market and sell specifically to women?” The answer is yes. According to the Economist Intelligence Unit, American women constitute the largest economic force in the world, spending $4.9 trillion a year. American men pull up in third place—behind Japanese women—spending $4.4 trillion.
And if that isn’t enough financial clout, by 2019, two-thirds of America’s wealthy will be female, reports Debra Nichols, director of women’s financial advisory services at First Union Corporation. Add to that the following food for thought: Over the next 30 years, it is estimated that women will be the primary recipients of between $42 trillion and $110 trillion of inherited monies—the largest transfer of wealth in history. Claudia Gauches, president of 360 Marketing LLC, sums up the effect that this amazing money transfer is having: “The days of running after affluent white males are over. They are an extinct species.”
Still unsure? Let women speak for themselves. LIMRA International’s studies have found that half of all women surveyed were “very concerned” about outliving their assets. And only 50 percent feel they are “fairly knowledgeable” to “very knowledgeable” about investments. Linda Denny, national director of women’s markets for ING Aetna Financial Services, emphasizes that women make the majority of all purchase decisions: 81 percent of all products and services are purchased by women, 53 percent of all corporate purchasing agents are women, and women sign 80 percent of all checks written—both business and personal. The bottom line: Women control a greater amount of money than men. Sound like a good market to pursue?
Barbara J. Raasch, CPA, CFA, CFP, PFS, a partner at Ernst & Young LLP, and co-author of Financial Planning for Women, gives some straightforward advice to financial advisors about the wisdom of marketing and selling to women: “You should focus on the female market because they live longer, and so will be a client longer; they recognize they need more help—and they control the purse strings. So, educate them and empower them because they are writing the checks.”
How women buy...
Women and men go through the buying process differently. By understanding the differences in buying styles, advisors can better understand how to approach women with financial advice, products and services.
Denny offers her Men-are-from-Mars version: Men buy on a more transactional basis than women and typically make their decisions on facts, logic and especially hierarchy. A good example: A man would be quick to buy the same golf clubs his boss has. In addition, they tend to make their buying decisions more quickly. Women, on the other hand, buy products and services based on relationships, facts and values. They often do “information gathering” before they buy. A good example is when both groups go shopping. A man goes to his favorite store and buys a shirt—most likely a brand he already wears and knows fits. He may or may not try it on. On the other hand, a woman may hunt at different stores and try on various options.
When buying financial products, women tend to use the same method. They cautiously look into options and seek education before making a decision. Unlike men, most women do not want to do financial planning on their own. They learn first, and then seek an advisor. “They are comfortable seeking advice and they value an advisor’s advice,” says Denny.
Most sales training programs teach how to sell to men. Because women make their buying decisions more slowly, many agents and advisors think it is a waste of time to sell to women. Denny says, however, that while buying styles differ, that does not mean that advisors have to make a major shift in their selling techniques. Also, they should be prepared for a longer sales cycle. “A woman will probably say that she wants to think about it, and unlike men, she means it. So don’t do the traditional ’overcoming the objection.’ Just let her think about it,” emphasizes Denny. “This also means you must do a follow-up to get the sale.”
There is a reward for the time and patience put into pursuing this market: women are less likely to change their decisions. Advisors also get a more loyal client because women are looking for long-term relationships with their financial advisors. This loyalty translates into more sales. “If you maintain the relationship, communicate with her as an individual and pay attention to her needs, she will buy more products over time,” advises Denny.
In addition, women pass information on to friends. They talk on a much more personal level than men and will tell their friends about their experiences—both good and bad. Anecdotal evidence suggests that they give more than twice as many referrals as men. Advisors should remember, however, that women will give a lot of referrals, if they are asked.
Cracking the code
So what is the best way to unravel the gender mystery? The advice from Ernst & Young’s Raasch is to take it in stages. She outlines four financial planning stages women move through over the span of their lives. And at each stage, women tend to have a particular reason or excuse for not planning and saving for their financial futures. Financial advisors can use these different life stages to appeal to women’s sensibilities and help move them through each stage with financially sound strategies.
The first stage is that of the young, single woman. At this phase of a woman’s life, her excuse tends to be: “I don’t need a plan. My life is in transition, so I am not saving.” Raasch says that the priorities financial advisors need to emphasize at this point are getting young women to focus on saving. Although they might not be motivated to save large amounts of money for retirement, which they cannot touch for decades, they should begin some kind of savings plan.
She tells advisors to focus their attention less on telling them where to spend and more on how to save. They also should emphasize that it is never too early to start saving—that the returns for starting to save at 30 years old versus 45 are substantial. She also stresses that they should obtain insurance, including health, disability, property and casualty, life and long-term care—perhaps for their parents.
From there, most women move into the married or committed-relationship stage. Their cry for not preparing adequately for their financial future tends to be: “My partner has this planning thing under control.” Raasch calls this the “passenger-seat syndrome.” But she warns that “married happily ever after” is no longer the norm.
At this stage, financial advisors should advise women to think about themselves. This means coordinating their employer benefits, including an equitable way of accumulating and titling assets. For example, if the husband’s 401(k) plan is better than his wife’s, while her company’s health plan is better than his, those benefits should be maximized and money should be allocated accordingly. However, the wife should not be left out of the titling of the 401(k) benefits, or she may be left out of the loop at retirement time if they end up divorced. Raasch is a proponent of post-nuptial arrangements to ensure that this does not happen. Also at this stage, stay-at-home wives and mothers should take advantage of tax-deferred vehicles like IRAs.
The family-centered stage comes next. At this point, the excuse tends to be: “There is no money to save and no time.” Advisors need to appeal to women’s sense of family and their desire to protect the family. This will resonate with women, who will somehow find the time and money to save. At this stage, Raasch cautions that women should be advised against locking money into specific categories, such as a college fund. And in terms of estate planning, she recommends titling assets as “tenants in common” so that 50 percent belongs to the woman.
The last stage women move through is “single again,” whether that means through divorce or widowhood. At this point, women often question whether there is really enough time to save or improve on what they have saved for retirement. They have concerns about the future and are looking for a relationship with an advisor they can trust and one who will not take advantage of them.
Women at this stage in life need advisors who will help educate them to invest wisely, teaching them especially about risk-return. A savings and spending plan becomes important as well, as many women fear that they will outlive their money.
But before taking comfort in this seemingly straightforward recipe for selling to women, we can throw an age and generational wrench into the works. Although women go through life stages, they may be going through them at different ages. “‘Fifty anythings’ could have young children or grandchildren or could be widowed or recently remarried,”; says Anne Bernstein, senior vice president, Roper Starch Worldwide, which published Women and Money: A Perspective on Women as Financial Services Consumers. This means that age cannot—and should not—be used to judge the financial stage a women is currently in.
Gauches adds more information to the mix. Different generations also view life—including their financial futures—through different lenses. “Gen-X women are different from Boomer women. So how you market and deliver your services must be both gender and generationally sensitive.” She recounts a story of a financial planning firm that sent out a direct mail piece with the following question on the envelope: “Who could ever replace you?” Well, a number of the 50-something, recently divorced women who received this letter could name the woman who had replaced them!
Begin where you are
If you want to grow your base, you have to know who your existing clients are and the people you are marketing to. Gauches suggests that understanding your starting point is essential to knowing where you are going. Ask yourself these questions: How many female customers do I have? What do they “look like”—what are their characteristics? How long have they been customers? How were they acquired? What types of customers am I targeting? Do they match my current female customers? “Remember, you are not going after all women. You have to find out what your segment is: Business owners, Boomers, the elderly, based on life events—new mom, divorced ...” she adds.
Women are underserved in a number of important areas and are looking for assistance in planning to help close the financial gap with men. Consider these key areas:
Leaving a legacy: “For women, money does not equal wealth,” says Bernstein. “What women want most from money is security, independence, freedom and [the ability] to leave a legacy.”
While this may be true, it appears that women may not be actively pursuing that last goal. A recent Prudential Financial study found that while 70 percent of women surveyed thought that the idea of passing money on to their heirs was important, only 14 percent had done some form of detailed planning such as drawing up a will, a trust or an estate plan. Deloitte & Touche says that only 34 percent of women earning $150,000 to $200,000 have an estate plan. This represents a large untapped market for financial advisors to pursue.
Retirement planning: In that same Prudential Financial survey, 97 percent of the women surveyed said that having enough money at retirement was an important goal. Yet only 70 percent understood the function of a 401(k) plan and only 58 percent said they had assumed responsibility for managing those accounts.
Ernst & Young’s Raasch says: “Women need retirement planning. A gap exists between what women have saved and planned for retirement and what men have.” This is due to a number of factors including a tendency of women to come and go in the workforce, not having worked full time and contributing half as much as men do to their defined-contribution plans. In addition, women live longer and so will need more money to see them through their later years.
Insurance: More than a third of women feel underinsured, according to a recent LIMRA study. Nilufer Ahmed, research scientist at LIMRA, and author of The Women’s Market: Myth and Reality, says that in addition to making sure women receive better insurance coverage, insurance companies—and by association their agents—need to address the needs of the widow who is presented with a death-claim check. Most do not know what to do with the money or how to manage it properly. Statistics show that a widow will go through the benefit in an average of two years.
Gauches of 360 Marketing agrees that death-claim benefits to widows need to be handled differently. “You should try to retain or make a new client.” She adds that Boomers are currently receiving small death benefits from their “Depression Era” parents. Many agents feel that it is a waste of time to follow through with these insignificant transfers of money. Gauches, however, says that these checks belie the affluence of the Boomers who are receiving them and that they should be seen as merely the foot in the door.
Women-owned businesses: According to the National Foundation for Women Business Owners, women-owned businesses are growing at approximately three times the rate of regular businesses. The growth in the number of these firms, employment and revenue continues to exceed the growth in the number of businesses in general. Women account for two in five business owners and start new businesses at twice the rate of men. In addition, women business owners are brand loyal—86 percent use some of the same products and services in both their businesses and their households. “It is an underserved market,” says Nichols. “Working women, affluent women and especially women business owners all report they are not taken seriously by their financial providers and feel neglected.”
There are several straightforward ways advisors to reach out to women and address their needs and concerns. These include:
Community involvement: To reach women, advisors will do well to focus on relationships. Partnering is important in the eyes of women. They are looking for companies and individuals who are involved in their communities and charitable organizations, not just those who write sponsorship checks. Advisors should get involved in women’s events and organizations such as associations of women business owners, women’s sports or Race for the Cure. This is also a good way to recruit women into the business. “The important fact is how you are touching women’s groups, not just writing a check,” stresses Nichols.
Seminars: Women are open to advice and will admit that they don’t know about financial planning much more readily than men. They are more open to learning and are a great “word-of-mouth population.” Therefore, seminars are very powerful tools. But advisors must be sure to “talk to them, not down to them,” says Bernstein of Roper Starch Worldwide.
Nichols agrees that educational workshops are a good way to reach women. “The big-picture approach works best, like ‘Be Prepared for the Unexpected,’” she says. She cautions, however, that although seminars can be targeted to women, they should not exclude men.
Marketing materials: Women are more compelled by being presented with a long-term financial picture. Marketing materials like direct-mail pieces should not push a specific product; instead, they should be strictly educational, although they should not be “special education just for women.” When First Union took this approach, sales of annuities rose 63 percent, IRAs 22 percent and CDs 14 percent.
A good strategy is to imbed knowledge of the women’s market—and gender and generational differences—in all marketing initiatives. “Cross-pollinate the women’s market with the general market and use it in all your marketing,” advises Gauches.
While there are many avenues to pursue when marketing and selling financial products to women, Judy Hoyt Pettigrew perhaps sums it up best in her book The Secret of Selling to Women: “Marketing to women needs to be as personal as it is professional, as much heart as head, and needs to address benefits to her quality of life even more than the benefits and quality of the product or service.”
woman at a time
While not exactly a disclaimer, the yellow-warning flag must be waved here. Generalized advice about a group of individuals will always be just that—generalized advice. Many gender stereotypes have been destroyed over the last 20 years. So as we move into uncharted territory, we must do so with sensitivity lest we replace one stereotype with another. We must always look beyond the woman to the individual who is sitting in front of us, with her very personal needs, wants and expectations for her financial future.