What Wealthy Women Want ... From Their Financial Advisers

women Wall Street
women Wall Street

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.

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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."

%Gallery-131055%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."

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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."