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Principal Point of View

Principal® Point of View analyzes financial news and trends face to face with our internal experts in a monthly roundtable discussion. Panelists highlight issues to help keep advisors up to date with tips they can directly apply to their practice.

How do we encourage more women to become financial advisors, or their clients?  

Two women in a business setting, sitting at a table talking. Principal Point of View roundtable panel discussion on gender and financial advice.

Women are talking about money in their everyday lives—just not to the overwhelmingly male ranks of advisors. How can advisors better serve the market? And how can we support women in the financial industry?

This month's panel

  • Robin Anderson, senior economist, Principal Global Investors
  • Bob Baur, chief global economist, Principal Global Investors 
  • Patti Bell, assistant vice president, advanced solutions 
  • Candy Bidler, vice president, Principal Advisor Network 
  • Jill Brown, managing director, internal wholesaling, Principal Funds 
  • Kerry Gumm, head of human resources strategy and planning 
  • Heather Winston, assistant director, Principal Advised Services

As an industry, financial advisors aren’t serving women. At least not very well.  

That shouldn’t be a radical statement considering that only 23% of CERTIFIED FINANCIAL PLANNERTM professionals are women.1 

The statistics are even more stark in asset management, where the U.S. workforce share of women in recent years has stalled at about 10%.2 

And then there’s the other side of the desk: Among U.S. investors overall, women on average have saved $41,900 less for retirement than men.3 

 April 2019 Principal Point of View quote: only 23% of Certified Financial Planner professionals are women.   April 2019 Principal Point of View quote: only 10% of the asset management workforce are women. 

Principal is committed to greater gender equity. That’s why Forbes ranked us the best employer for women in America in 2018.4 Chief Financial Officer Deanna Strable, the first woman to become a division president at Principal, also helped start the company’s first leadership support group for female executives.  

On the front lines of financial services, Heather Winston, assistant director, Principal Advised Services, knows precisely the sort of situation to avoid: 

“I remember walking into an advisor’s office a few years ago with my husband, who knows nothing about how our money is managed,” Winston says. “And the conversation was focused solely in his direction the entire time. I thought, Wow, I’ve been in this business for nearly 20 years. And yet I was dismissed in an instant. 

“Nothing made me change firms faster than that one meeting.” 

Advisors leave serious money on the table by not taking care to engage women as clients or help bring them into their ranks.  

Consider that women already outlive men and eventually take over a lot of wealth, either through divorce or the death of a spouse. 

In a hypercompetitive market where clients' money is more fluid than ever, here are six recommendations for advisors to take a more progressive and proactive approach to win more women as both clients and recruits:

Reframe the conversation.

Check your assumptions before you begin an individual client meeting or group seminar. Just the way you outline financial solutions can make a big difference.  

How you open a financial planning conversation should account for those women who may move in and out of the workforce due to things like childcare and elder care, which may create bigger fluctuations in earnings.  

Ask, “How do you plan to work over the next 10 or 20 years?” Then tailor your approach and financial products to that answer, rather than the assumption of a continuous full-time (traditionally male) worker.  

Treat your clients’ female spouses as individuals.

It can be a delicate balance: Financial advice needs to be more welcoming to women by rethinking the entire testosterone culture—without going so far as to needlessly pander to women as if you’re a car salesman in the 1960s asking whether hubby will let them splurge on power windows and leather seats. 

But respect that the spouse may have entirely different financial goals than your client.  

The couple sitting in front of you “might have very different investment strategies,” says Candy Bidler, vice president, Principal Advisor Network. “Just because they’re husband and wife doesn’t mean they want the exact same thing.” 

Bond early with clients’ families.

Within a few years of the death of a spouse, 46% of widows leave their financial advisors.5 After what might have been years or even decades of your hard work, the client and their money walk out the door.   

Building a strong relationship with your client’s spouse and family well ahead of time can help your relationship weather the inevitable milestones and trauma of aging.  

Also keep in mind that adult children often look to their parents for
guidance—another potential avenue for business that strengthens the relationship with your core client. (Hold separate confidential conversations with adult children, as you would with any other client.)  

Make caregiving and teamwork part of financial advice.

It’s not absurd to consider a financial advisor to be more than a gregarious salesman or cold calculating analyst; what’s stopping you from thinking about the profession to be just as much about caregiving? Nurturing clients and their families to prepare for emergencies and fund their dreams? Subtle shifts in framing the job plus experiments in collaboration can help recruit more talented women.  

“Teaming" helps newbies break into a tough business with a built-in support network.  

“You’ve got people to call on, you’ve got a book of business that you’re helping with,” Bidler says. “We’re seeing where that tends to be more attractive to females and to younger people. They want to be part of something bigger versus on their own.”  

Tap into promising trends.

There are early indications that female financial advisors tend to utilize ESG (environmental, social, and governance) measures in their portfolios more than their male counterparts. Principal Global Investors is closely monitoring this trend.  

Robin Anderson, senior economist, also has reviewed “evidence that women might be better money managers than men.”  

“There are studies out there that suggest you could even be missing out on some alpha by not using women as portfolio managers,” she says.  

Part of the theory: Women investors may be better at avoiding herd mentality in favor of out-of-the-box thinking.  

Cater to women business owners. 

tremendous opportunity for those that adapt their approachWomen-owned businesses that must maintain 51% female ownership to secure certain federal contracts often need the help of a small-business specialist.

“If you don’t have a good succession plan and you lose that status, you lose your ability to drive that same revenue,” says Patti Bell, assistant vice president, advanced solutions.

One size doesn’t fit all. But this much is certain: Tremendous opportunity is possible for those who can adapt their business approach. 

Principal already provides an initial “Women and Wealth” program to advisors, including recommended talking points and a workbook.  

It may take two centuries for the globe to reach economic gender parity.6 But as a financial advisor you can’t wait that long to put some of these good strategies into practice.  

1 CFP® Board Professional Demographics, Feb. 28, 2019
2 Fund Managers by Gender, Morningstar Research, March 2018
3 BlackRock Global Investor Pulse survey, 2015
4 The Best Employers for Women, Forbes 2018
5 Survey of Widows and Widowers Topline Report, The American College State Farm Center for Women and Financial Services, July 2016
6 108 Years: Wait for Gender Equality Gets Longer as Women’s share of Workforce, Politics Drops, World Economic Forum, December 2018
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