What Wealthy Women Want ... From Their Financial Advisers

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Molly Mahoney Matthews is smart, successful, and financially independent.

She's CEO of The Starfish Group, a consulting business in Bethesda, Md., that she's been cultivating since 2000, when she sold her previous business, a marketing and PR firm.

Matthews keeps her finances separate from her husband's, a government official who can't be involved in her portfolio. Yet despite all that, something frequently irks her when she attends meetings at Bernstein Global Wealth Management, the firm that manages her investments.

"I have often been asked at social functions if I am 'staff,'" she said. "I wonder if people would assume a man at a cocktail party for investors was the staff?"

Affluent and in Charge

Financial advisers would do well to banish from their offices any lingering biases and myths that may remain against women and investing, according to a new Schwab Advisor Services study of high net worth women. After all, women account for 40% of the affluent population, according to a Gemini study -- and they aren't willing to be taken lightly.

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It's well known that women are usually in control of the purse strings: In 75% of American households, women manage the expenses and pay the bills, reports Harris Interactive. But not as widely known is that women are a growing presence in investing, a trend that is only amplified among the affluent: According to the Schwab survey, 93% of women said they were either the primary or a shared decision maker when it came to household finances, and 84% said the same about investments.

But women's needs aren't the same as men's when it comes to investing, and investment advisers would do well to learn what women really want.

What Women Want

Here's the first surprise: By a wide margin, women consider continuous investment performance more important than long-term financial planning -- with 58% favoring the former and 38% the latter.

"There's a belief out there that all they care about is planning or for their children's needs to be met," said Neesha Hathi, senior vice president of technology solutions at Schwab Advisor Services. "But the message to advisers is you can't focus on planning and avoid performance and think you're serving the women investor well. She's not going to be satisfied with the performance just because you're good at planning."

Matthews, for instance, expects regular, healthy returns on her investments -- and she's not twiddling her thumbs waiting around for long-term security.

"Here is how I'm different from my husband on finances," Matthews said. "I admit to math anxiety but did well because I loved my business and knew to care about cash flow ... I'm a pretty steady investor with a moderate tolerance for risk."

But investment risk-taking for women is not merely about spur-of-the-moment brazenness.

"Men historically have been focused on investments and investment performance," Ettinger said. "Women are focused on how investments fit into financial plan," says Heather Ettinger, Managing Partner at Fairport Asset Management.

Instead of focusing on performance versus the S&P, Ettinger said, women are more focused on how they are doing relative to their goals or strategic benchmarks.

Decisions, Decisions

Women also want to be actively involved in the decision-making process, Ettinger said.

"When I'm working with women, they're looking for you to present two different strategies and discuss pros and cons, and make the decisions from that," Ettinger said. "They want to be involved in the decision-making process, so they want you to present scenarios and walk through the pros and cons of those scenarios, rather than you telling them."

Do America's Most Valuable Companies Welcome Women Executives?
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What Wealthy Women Want ... From Their Financial Advisers

Many studies have demonstrated the income disparity between women and men who do the same jobs. Others have pointed to how poorly women are represented on boards and corner offices of American companies. The discrimination problems are clear. And, according to analysis done by 24/7 Wall St., they get much worse among the ten most valuable companies in America.

24/7 Wall St. examined the top officers and board members at the largest companies in the U.S. based on market cap. Exxon Mobil and Apple, the two biggest, each have only one board member and no women in senior management. Even consumer products giant P&G, which has five women on its 11-member board, has no senior female executives based on both SEC "named executive officers" and company's public website reports. This makes P&G the one standout in terms balance board balance among the top ten, despite the absence of female senior management listed at PG.com.

24/7 Wall St. reviewed proxies for board and management composition, as well as data from the investor relations sections of the companies on this list. We took note, when necessary, of any board or management additions or retirements that the firms announced after proxies were issued. In order to compare all of the companies on the same basis, SEC data was the primary source for the analysis of the ten companies. 24/7 also examined the public comments made by the companies about equal opportunity, particularly as it pertains to women.

  • Number of women on board: 1 of 11
  • Number of women named executives: 0 of 5
  • Total employees: 83,600

The largest energy company in the world has just one female board member, Marilyn Carlson Nelson, the chairperson of Carlson Companies. Regarding executives, Exxon's SEC filings list no women and its website -- which notes that the company has 24 senior execs -- doesn't name any women. On the other hand, further research has revealed that only two of the officers are women.

Exxon has stated the company understands "that creating economic opportunities for women is one of the wisest investments [it] can make." It subsequently launched the Women's Economic Opportunity Initiative -- "a global effort that helps women fulfill their economic potential and drive economic and social change in their communities."

  • Number of women on board: 1 of 7
  • Number of women named executives: 0 of 9
  • Total employees: 46,600

While Apple famously encouraged consumers to "Think Different," its boardroom is surprisingly traditional, at least when it comes to the gender mix. Of seven board members, only one is female: Andrea Jung, chairperson and CEO of Avon Products. Meanwhile, Steve Jobs' ten-person management team is entirely composed of men. That might have something to do with Cosmopolitan magazine's decision to rank the Apple Store as one of "the best places to meet a guy." Noting that "More men than ever are stopping by Apple boutiques," the magazine added that "the vibe at the stores is conducive to man meeting."

Number of women on board: 2 of 9

  • Number of women named executives: 2 of 6 (two of whom left after the proxy was filed)
  • Total employees: 90,000

None of Steve Ballmer's senior management is female, but two of the members of the board are: Dina Dublon, the former CFO of JPMorgan and Dr. Maria Klawe, the president of Harvey Mudd College, both hold seats. The company has had a Women Employee Resource Group since 1990, which, in addition to other goals, spearheads diversity initiatives. Microsoft also runs a Graduate Women's Scholarship Program.

  • Number of women on board: 2 of 12
  • Number of women named executives: 1 of 4
  • Total employees: 436,085

One of the world's largest employers and one of America's oldest large companies, IBM sports two women on its board of directors: Joan E. Spero and Shirley Ann Jackson. Spero is a former executive vice president at American Express and the head of the Doris Duke Charitable Foundation, while Jackson is president of Rensselaer Polytechnic Institute. Women are also underrepresented in Big Blue's executive offices, where only two of its 13 execs are women. Still, the company's female representation was impressive enough to net it a sixth place position in the National Association for Female Executives' Top 50 Companies for Executive Women for 2010. This ranking considers the number of women in senior ranks and the policies that support women's advancement.

  • Number of women on board: 1 of 13 (three board members retired)
  • Number of women named executives: zero of six, one of whom retired
  • Total employees: 62,000

When it comes to gender, the make-up of Chevron's board and management are not terribly different from Exxon's. The company's sole female director, Linnet F. Deily, has been on the board since 2006. Before coming to Chevron, she was a Deputy U.S. Trade Representative and U.S. Ambassador to the World Trade Organization.

Chevron's website provides a longer list of management than the one in its SEC filing. The site shows 18 corporate officers. Three of them are women, including the CFO, head of policy and planning, and corporate secretary. In April 2011, the Women's Business Enterprise National Council "recognized Chevron as a top corporation for women's business enterprises" for the 11th time. According to Chevron, "this is the only national award honoring corporations for programs that create level playing fields for women's businesses to compete for corporate contracts."

  • Number of women on board: 2 of 9
  • Number of women named executives: 1 of 7
  • Total employees: 28,768

While Google is famous for its impressive R&D and inventive power, it is a bit less advanced when it comes to hiring women. Out of nine board members, two are women: Princeton President Shirley M. Tilghman and Ann Mather, who is also on the boards of MoneyGram International and Netflix. As far as female executive officers are concerned, things are a bit more confusing: Google's SEC filing suggests that one of its seven named execs is a woman, but the company's website only features six men. On the other hand, Google does encourage success among women through a number of awards, including the Google Anita Borg Memorial Scholarship and the Google India Women in Engineering Award.

  • Number of women on board: 3 of 15 members
  • Number of women named executives: 0 of 6, one of whom retired
  • Total employees: 2,100,000

Walmart, the world's biggest private employer, is a mixed bag for women, at least when it comes to corporate governance. Of 15 board members, three are women: Linda S. Wolf, formerly of ad agency Leo Burnett; M. Michele Burns, head of Mercer Human Resource Consulting; and Aida M. Alvarez, a former head of the Small Business Administration. Six of its 37 senior managers are women, but none of its named executives are. And outside the corporate suite, things are also tough for women: While the U.S. Supreme Court rejected this summer's $1.5 million class-action lawsuit alleging gender discrimination, a recent poll conducted by the Organization United for Respect at Walmart found continued and widespread dissatisfaction among women at the retailer.

  • Number of women on board: 2 of 12 members
  • Number of women named executives: 0 of 3
  • Total employees: 260,000

Run by famed investing pair Warren Buffett and Charles Munger, Berkshire-Hathaway only lists three "named" officers, all of whom are men. The board is more diverse, with two female members -- Charlotte Guyman, formerly of Microsoft, and Sue Decker, the former president of Yahoo!. Outside the boardroom, however, women remain rare: the company's five best-known subsidiaries -- Burlington Northern Santa Fe Corp., GEICO Auto Insurance, NetJets, Benjamin Moore & Co., and Johns Manville -- all have male chief executives.

  • Number of women on board: three of 12 members
  • Number of women named executives: zero of five
  • Total employees: 258,870

America's largest fixed-telephone provider has three female directors: Laura D'Andrea Tyson, Joyce M. Roché, and Lynn M. Martin. The trio sports some impressive credentials: Tyson is a professor at the Walter A. Haas School of Business at UC Berkeley, and is also on the board of Eastman Kodak Company; Roché is a former CEO of Girls Incorporated, and Martin is a former U.S. Secretary of Labor and Congresswomen.

Out of 11 senior managers that AT&T lists on its website, there is only one woman: Catherine M. Coughlin, the company's Senior Executive Vice President and Global Marketing Officer. In 2009, the Women's Business Enterprise National Council (WBENC) named AT&T "one of America's Top Corporations for Women's Business Enterprises."

  • Number of women on board: three of ten members
  • Number of women named executives: zero of six
  • Total employees: 129,000

Procter & Gamble, one of the largest consumer products companies in the world, has five women on its 11-person board. Two of these members -- former eBay CEO Margaret Whitman, and University of California Chancellor Susan Desmond -- joined the board within the last two months; the other three include WellPoint CEO Angela F. Braly, Frontier Communications CEO Mary Agnes Wilderotter, and Archer Daniels Midland Company CEO Patricia A. Woertz. Outside of the boardroom, women are notably missing from P&G's executive suites: the company's senior management is entirely male.

Still, Procter & Gamble has been recognized as a leader in gender-balanced governance: in May 2011, Women Corporate Directors awarded it the first ever WCD Visionary Award. According to the company, the award recognizes P&G "as an outstanding top performer with three or more women board members serving as a role model in both corporate leadership and best governance practices."

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Taysha Valez is the founder of myTAY USA Inc., a mobile service provider in New Jersey and Hawaii. She and her husband and she keep separate portfolios, and when it comes to investing, she prefers to be more hands on.

"I take a lead role," Valez said. "My other half, and most of the men in my life, trust their advisers -- legal, financial -- a little more than I do. They allow them to do their jobs, if you will. I micromanage every part of my finances."

Women like Valez want to ask questions, and they want more due diligence, Ettinger said. And 84% of the wealth women Schwab surveyed said in-person meetings are key for establishing trust.

"Women wanted to be understood for their unique life circumstances," Ettinger said. "You can't walk in with same package for male clients and change the font to pink and think the women are going to be fooled."

Wives and Widows

Here's another reason paying proper attention to female clients is essential, Ettinger notes: 70% of widows change advisers after their husbands die.

"More and more widows are voting with their feet," Ettinger said, looking for advisers who care about their whole life picture and current life stage.

"Advisers will win the trust of women investors and build long-term working relationships by understanding as much about what women don't want, as what they do want," said Bernie Clark, executive vice president and head of Schwab Advisor Services. "Woman, like any serious long-term investor, want advice that is intended for their specific financial situation, long-term plans for their desired lifestyle, and accountability in terms of investment performance against goals."

Hathi sees the Schwab study as providing a teachable moment.

"The data opens people's eyes to the fact that [women investors are] not a niche in the marketplace," she said "and if you want to succeed ... you're going to have to serve this population well."
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