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Harris myCFO Interview: Don't Treat Females As The "Silent Partner" In The Client Family

Wendy Spires

9 August 2012

Debra Doran, managing director of family office services at Chicago-headquartered Harris myCFO, discusses how wealth management firms should be shaping their offerings to involve females more.

Female high net worth individuals are increasingly looking to take more control of their financial destinies and helping them to do that should form a fundamental part of wealth managers’ strategies going forward, Debra Doran of Harris myCFO told this publication in a recent interview.

Doran, who is based in Seattle, believes that the financial crisis was a “wake-up call” to many women, meaning that now, more than ever before, they are concerned about the security of their family’s lifestyle and the legacy they will leave behind.

According to Doran, a step-change is occurring whereby even women in very traditional family set-ups are taking a more hands-on approach to wealth management, whereas before they were fine with ceding this responsibility to their husbands.

This change is ongoing however, meaning that there are lots of female clients out there who aren’t as involved in the management of their wealth as they might be wish to be. In fact, Doran also believes that a professional disconnect exists which means that many successful female financial services professionals defer to their partners on domestic wealth management matters - this despite the fact that they run large sums of money at work for their clients every day.

Recent research would seem to bear this out. A study released by Schwab Advisor Services last month revealed that 29 per cent of HNW married women would like to be more involved in the financial decisions for their household.

Deferral by default

At this point Doran is quick to point out that she isn’t talking about endemic sexism in the home, but more that this is a situation which “happens by default” – particularly in today’s age when so many women are combining the demands of work and family. For Doran, it’s more a matter of where women tend to deploy their time and energies. “Women in careers are handling competing demands and they are often more interested in prioritising their family. Therefore, day-to-day wealth management tends to fall to the husband,” she said.

According to Doran, female HNW clients can be in a difficult position of necessarily ceding wealth management responsibility to their spouses, but still worrying about it: they emphatically do not have a laissez faire attitude. Women want their family to be secure and “want to know that something is in place,” she said.

Increasing financial literacy

There is ample evidence to suggest that women today want to improve their financial savvy and Doran agrees that there has been “a marked rise in interest among women in increasing their financial literacy.” In fact, females’ desire to improve their financial skillset also seems to have a significant impact on the tone of client-advisor relationships, if we compare male and female attitudes. For example, Does Gender Re­ally Matter?, a 2011 study by Brinker Capital, found that 46 per cent of female clients said their advisor helps them “build knowledge,” against 37 per cent of male clients.

In light of this, wealth management firms would do well to have a strong educational overlay to their offering which helps female clients to take a more active part in their household’s wealth management. “Firms should make education a key part of their strategy,” says Doran, but this is not just to make them feel more confident about the plans that are in place for their children. Not only are divorce rates ever rising, but women also tend to have longer lifespans, which means that a significant proportion will have to “go it alone” during their lives. “Women are probably going to outlive men and be single at some point,” she said.

There is an ongoing debate as to whether it is wise for wealth management firms to target women specifically on the basis of their gender. Firms are naturally anxious to avoid patronizing women and seeing them first and foremost through the lens of their chromosomes – after all, in the year 2012 female HNW individuals are as likely to be hedge fund supremos or business owners as they are to be the widows of rich men.

Specific selling points

That said, Doran – like many other experts – points out that women do have specific needs and concerns which need to be addressed. “There are some different conversations women want to have,” she said. Along with them being very concerned about their children’s financial independence, women also have philanthropy very high on their radar, she points out. This fact appears to have been duly noted by the world’s biggest wealth managers, many of which have started philanthropic networks for their female clients so that they can pool their collective financial might and intellectual capital. In fact, research seems to indicate that women generally tend to be more strategic about their charitable giving than men: a December 2011 report by Bank of America, The Coming Gender Transition in Wealth, found that 78 per cent of HNW women create an annual giving strategy and/or budget compared to 72 per cent of men.

Education and helping women to give strategically are then two key ways to help retain their business in the long term. Doran also thinks that mobile technologies have “a key role to play” in addressing females’ under-engagement with wealth management firms. Indeed it’s not hard to image busy working mothers becoming a lot more engaged if they can view their families’ portfolios on their tablet, or communicate with advisors via social media on a smartphone.

In fact, for Doran, upping females’ engagement with wealth management providers is all about communication and the conversation being addressed to them from the start. Sadly, this doesn’t appear always to be the case. The same Brinker Capital study of last year found that 63 per cent of married female clients said their advisor directs their relationship joint­ly to them and their spouse, while for male clients this figure dropped to 41 per cent. In a finding which will likely irk feminists, only 29 per cent of married women said their advisor di­rects their relationship solely to them.

But all of this isn’t just about equality, it’s about preventing assets from going elsewhere when wealth transitions to a female who was latterly a “silent partner” in the wealth management relationship. Brinker Capital’s study found that 47 per cent of female clients said they would be “extremely likely” to retain their advisor in the event of a death or divorce (versus 32 per cent of men), but this still leaves 53 per cent who are not “extremely likely” to stick with the same firm. This becomes even more resonant when we consider that firms lose 44 per cent of all assets transferred to a woman from a man, according to the 2011 World Wealth Report.

For Doran, it is unsurprising that many firms sleepwalk into losing female clients if they haven’t paid attention to the family as a whole. “Establishing a relationship and involving both spouses is a priority,” she said. “If women haven’t been listened to and haven’t been part of the process then of course they will think about leaving.”