Wall Street has left women behind by systematically excluding or flat-out ignoring them for decades. A nationwide public opinion poll from Tiller, LLC, and WorthFM* revealed just how negatively women view the financial services industry: Only 10 percent of respondents believe the industry pays equal attention to men and women. More than 90 percent feel sold to rather than educated by financial services companies. And 71 percent believe that Wall Street is not in touch with women’s financial needs and concerns.
“It’s not that the industry is evil and taking advantage of women, and it’s also not that women lack intelligence when it comes to finance,” says Kathleen Burns Kingsbury, wealth psychology expert and author of How to Give Financial Advice to Women. “But there is a disconnect.”
So how did Wall Street get things so wrong, and what needs to happen in order for the system to improve?
Disband the Boys’ Club
The financial services industry was created and has historically been dominated by men, and it’s still steeped in a masculine culture (exhibit A: The Wolf of Wall Street, where practically the only women portrayed are trophy wives, gold diggers, and sex workers). Although women make up nearly half of the U.S. workforce, only 23 percent of certified financial planners (CFPs) and 31 percent of financial advisors are female, according to a CFP Board white paper. When it comes to leadership roles in the financial industry, the numbers are even worse: A PricewaterhouseCoopers white paper found that women hold a mere 19 percent of senior positions, 14 percent of board seats, and 2 percent of CEO roles.
That’s due in part to blatant bias against women within the financial services community: That same CFP Board white paper reported that when executives at financial services firms were asked which gender is more likely to have the characteristics of a successful planner, just 7 percent voted for women, while 41 percent voted for men (the rest said they were equal). That’s in spite of the fact that those same execs agreed that women were more likely than men to be highly ethical and to have received adequate training from educational programs.
And 37 percent of executives polled by the CFP Board admitted that their firms are reluctant to hire women because they’re concerned they’ll start a family, and only 39 percent believe that female CFPs receive strong support from their colleagues. A paltry 29 percent of women polled agree that the office culture in financial firms makes female planners feel welcome and respected.
“It’s hard to make a substantial shift in the way female clients are approached unless you have both men and women at the leadership level,” Kingsbury said. “Having more women in charge will have a trickle-down effect throughout the industry, and help serve all clients better.”
Close the Communication Gap
Financial services exclude women by design. “[Financial services] came along at the turn of the century, when men were the ones earning the wealth and managing money,” Kingsbury says. “As a result, all the sales techniques were developed for men.”
Women are now the breadwinners in 40 percent of households with children under the age of 18. And according to the Tiller/WorthFM poll, 84 percent of women were, are, or expect to be solely responsible for managing their finances. Yet they are still overlooked by advisors.
“When advisors meet with couples, there is a tendency to talk to the perceived decision maker, and there is a lack of awareness about women’s authority,” says Eleanor Blayney, consumer advocate for the CFP Board and author of Women’s Worth: Finding Your Financial Confidence.
Aside from lingering old-school assumptions about domestic dynamics that simply don’t line up with the data, there’s also a communication gap. In her experience working with male and female couples, Blayney has noticed that men usually ask the first question. As a result, the conversation naturally focuses on him. “It doesn’t mean that women are sitting back, but rather that they prefer to think things over and hear what others have to say before weighing in,” Blayney says. Advisors could misinterpret this reserve as a lack of power and may not invite them into the conversation.
This isn’t just anecdotal: Research backs up a different communication style between men and women. Deborah Tannen, professor of linguistics at Georgetown University, found that women often use “rapport talk” — language used to build relationships and connect to others — whereas men trend toward “report talk,” which is used to pass along information (this is not necessarily due to an inherent difference, but instead to how we teach men and women to communicate). One example: Wanting to just vent about an issue, when whomever you're talking to can’t stop offering solutions. You just want to be heard, not fixed. Sound familiar?
Financial advisors encounter a similar dissonance. “The assumption that advisors need to solve a woman’s financial issues is fundamentally flawed,” Blayney says. “All we need to do is understand her.” Indeed, a study by the Center for Talent Innovation shows that most women want to work with an advisor they trust, who cares about more than their bottom-line assets, and who has an established a relationship with them.
With that in mind, advisors need to overhaul their usual cut-to-the-chase approach if they want to connect with women. “Women make decisions differently than men. It has been shown that women use both sides of their brain, particularly for verbal processing, whereas men use one side,” Blayney explains. “Men tend to be bottom-line oriented, while women want to understand the method along the way to the outcome.”
In addition, because women tend to care more about developing a connection with their financial planner, the process tends to take longer than with men. Blayney notes that when she talks to advisors about how to better reach women, they inevitably ask her how long it takes to close business. “That’s precisely the problem: Many investors are under pressure to sell and move onto the next sale,” she says. “Women sense this, and it’s a turnoff.”
Focus on Everyday Life
Several years ago, Blayney met with a couple to go through the drill of looking at their quarterly portfolio performance. The language of winning and losing indexes (whether they’ve beaten the benchmark, how their current stats compare to last year’s) clicked with the husband. But when he stepped out of the room, his wife turned to her and said, “Eleanor, what does it mean?”
“She wasn’t asking for meaning as it is measured in base points; she had a very different way of looking at financial security,” Blayney says. “She was asking how the results might impact their plans to buy a second home for retirement, the college their kids will be able to attend, and whether they could afford to send their children to camp that year.”
In both Blayney and Kingsbury’s experience, male clients generally measure their value in terms of metrics. But women want their financial progress translated into qualitative terms that speak to their hopes and needs. The emphasis on figures and insidery jargon (throwing around terms like “caps,” “ETFs,” and “annuities”) may explain why nearly two-thirds of women in the Tiller/WorthFM poll believe that investing is confusing.
Instead of firing off stats, advisors need to take the time to grasp what really matters to clients, and explain how investment choices can affect their future. “Finance is about security for themselves and their family,” Kingsbury says.
She suggests that in order to make a review resonate for men and women alike, advisors have to uncover each person’s motivations and values and explain how any investment decision will affect their goals, from funding their kids’ schooling to an aging parent’s health care.
“A lot of the value that financial planners offer boils down to investing for retirement and growing assets to be accessed at some later time,” Blayney says. “Still, CFPs should also address day-to-day money management.”
Wall Street must take these important steps to include and respect women rather than alienate and dismiss them. Considering the major ways in which women are growing the economy, anything less would be foolish.
*DailyWorth and WorthFM are affiliated companies. Worth Financial Management LLC (WorthFM) is a registered investment advisor with the U.S. Securities and Exchange Commission ("SEC").