by I just finished reading, How to Give Financial Advice to Women and plan on reading How to Give Financial Advice to Couples by Kathleen Burns Kingsbury. I thoroughly enjoyed the read. The book was written for financial advisors who want to better understand female and couple psychology to connect and communicate more effectively with their clients. But non-professionals, both men and women, can also benefit from the read and glean important insights on ways the financial services industry is evolving.
Throughout the book, I found myself nodding in agreement with many of Kingsbury’s key points, finding them similar to what I’ve learned over the years in my own practice. It’s not unusual that during a consultation the husband will tell me right in front of his wife that she is not really interested in this “stuff.” Or even worse, the wife will say, “Please tell my husband that I really don’t get the investment world.” For the wife to choose not to participate is a mistake. For her male counterpart not to enthusiastically encourage her to participate in the conversation is a bigger mistake. A key reason is that on average women outlive men 5-10 years. Sooner or later women will have to make important financial decisions. If they’re not participating now, when else will they learn to make sound financial decisions?
The notion that women are somehow less able than men to understand the implications of long-term investing decisions is simply not true. Look at it this way: Women are already making most of the short-term budget decisions in the household. They plan the budget, make the grocery list, pay the bills, and manage their household’s day-to-day finances. Yet, they lack confidence when it comes to making longer-term decisions about retirement, investing, saving for college and long-term care needs.
To make matters worse, most advisors are lousy listeners, a quality that is important, especially to women. Advisor’s lose as soon as they start blabbing on about an asset manager’s great performance. Women–and most likely men too–immediately tune out. The paradox, or as the media has labeled it, “the female financial paradox,” is that according to the Boston Consulting Group, women are a growing economic force and expected to add about $6 trillion in earned income globally over the next five years. Yet many women lag behind men when it comes to using those assets to plan and build long-term financial security. I particularly liked how Kingsbury organized her book.
In Part 1: Women and Wealth, she considers the psychology of women and wealth. In Part 2: Essential Skills for Advising Affluent Women, Kingsbury spends time discussing the importance of active listening. I’m convinced that a primary weakness of many advisors is their lack of listening skills. Advisors simply have to close their mouths and tune in.
It’s been said that people don’t care how much you know, until they know how much you care. The notion that the advisor has to flaunt how smart he is by rattling off financial factoids to impress his clients erodes the foundation for an impactful conversation.
If you are old enough, you may remember a popular book which sold 50 million copies–Men are from Mars, Women are from Venus, written by relationship counselor John Gray. The book states that most problems between men and women stem from the fact that the genders are just wired differently.
Financial advisors must be aware of the gender differences and tailor their financial advice to fit the needs of their female clients.
For a quick laugh at how one humorist looks at the gender difference, watch this “It’s not about the nail,” video: