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Lynda Cronin, left, an independent public policy consultant with no company-sponsored pension plan, and Sybil Verch, an investment adviser with Raymond James. (CHAD HIPOLITO FOR THE GLOBE AND MAIL)
Lynda Cronin, left, an independent public policy consultant with no company-sponsored pension plan, and Sybil Verch, an investment adviser with Raymond James. (CHAD HIPOLITO FOR THE GLOBE AND MAIL)

Women and wealth: The investment sector’s new – and crucial – frontier Add to ...

Women have long been relegated to the sidelines of the financial services sector, where advisers have traditionally focused on men and their money. Now the tables are turning and wealth managers face an unprecedented transformation as more women outlive their spouses, hold an increasing share of jobs and take greater control over family finances.

The result is an industry scrambling to cater to people like Lynda Cronin, a retired public policy consultant in Victoria.

Ms. Cronin saved diligently throughout her career, but with no company-sponsored pension plan, she worried about whether her money would last. “A lot of my women friends have that same sort of fear. Am I going to be able to do this, and am I going to be okay when I’m 70? And 80?” Ms. Cronin said.

After meeting with two male advisers who either talked more than they listened or pushed her toward greater risk than she was comfortable with, Ms. Cronin found Sybil Verch, an investment adviser at Raymond James. The two clicked immediately and Ms. Cronin, now 65, doesn’t worry about money any more. The relationship worked so well, Ms. Cronin’s husband was enticed to move his investments to Ms. Verch as well.

“Specifically, I like the fact that she listened better,” Ms. Cronin said. “She asked questions about my life that I thought were really relevant. She got me.”

Ms. Cronin is typical of the demographic and cultural changes that are sweeping across the wealth management business. And the industry is racing to keep up, rethinking how they communicate with female clients and who they hire to advise them. There is pressure to get it right. Wealth management growth has become critical to many financial institutions’ bottom lines as other sources of income level off.

Women already control about one-third of all financial assets in North America, according to research from Boston Consulting Group. That translates into an estimated $3.2-trillion in total assets and $1.1-trillion in financial wealth alone when applied to the Canadian environment, based on figures compiled by research group Investor Economics. And those numbers are expected to grow in the next decade.

A lot of that wealth will also soon be in older hands. The first baby boomers hit retirement age in 2011 and as the number of retirees swells, more households will transition from saving to the “payout phase,” which means living off their accumulated assets. Retirees will control nearly $2.6-trillion in financial wealth by 2022, according to a report by Investor Economics. “Nearly $5 out of every $10 held with wealth managers will be owned by senior households,” the report says.

For many retired couples, it will be women who manage family finances. Widowed baby boomers outlive their spouses by an average of 16 years, according to research commissioned by Toronto-Dominion Bank. That’s in part because women outlive men by an average of four years and they tend to marry older men. And researchers say that 90 per cent of Canadian women will have total control over their finances at some point in their lives.

Investment adviser Catherine Laurin is seeing the shift first hand. When an older male client who had chiefly managed family finances experienced health problems, his 85-year-old wife took an active role in managing the couple’s cash. “As he became blind, all of a sudden she became the one engaged. I was so impressed to learn there’s no age [limit] to learn the right thing,” said Ms. Laurin, who works for BMO Nesbitt Burns.

Older Canadians are only part of the story. The next generation of female bread winners is also accumulating significant wealth and looking for financial advice. Female graduates are outnumbering men at most colleges and universities and the number of women in the work force is steadily rising. The employment rate among women soared 16 percentage points to nearly 58 per centbetween 1976 and 2012. There’s also a growing number of female entrepreneurs, and more than one-third of all wives now out-earn their husbands.

All of which is forcing the financial services business to adapt.

“There’s a groundswell in this movement,” said Julie Barker-Merz, head of wealth direct investing at BMO InvestorLine. “I just find that everywhere I turn there’s some ground-breaking work happening around women, and we’re breaking through some of the barriers that have been there for a long time.”

Gender matters

Historically, women have been considered capable of managing the household budget and day-to-day bill paying, but long-term investing was often left to men.

The wealth management industry grew alongside this tradition, with an overwhelmingly male adviser pool typically catering to male clients.

“The old way of doing business, where the adviser would spout off things like ‘standard deviation’ and ‘beta’ and ‘correlation,’ it doesn’t work [for women],” said Raymond James’s Ms. Verch. “And you know what? I don’t think it ever really worked for men either, but I think men were just too embarrassed to say ‘I don’t know what the heck the adviser’s saying.’ ”

When most family portfolios were battered in the financial crisis, many investors surfaced to talk about the stability of their investments and their futures. Coupled with women’s tendency to focus on long-term financial planning, the wealth management industry is learning how better to connect.

For starters, the industry has learned that women tend to veer toward preservation of their assets, rather than the acceleration of wealth, said BMO Nesbitt Burn’s Ms. Laurin. “Women want to secure their future and they’re always, for some reason, worried if they’re going to be okay. It’s like they’re little squirrels. They save more and more and more to make sure they’re okay.”

Women are also generally less tolerant of being overloaded by industry jargon, added Sandy Cimoroni, chief operating officer at TD Wealth. “Women will say ‘I don’t just want to talk to you about dollars and cents, I want to talk to you about the whole relationship – all of my life goals – my entire family,’ ” she said.

In a recent research session made up of men and women, Ms. Cimoroni said participants were asked to create a collage of their investment goals using images. “The women came out with pictures of family, beaches, life experiences and aspirational views. The men had things like the hot car, graphs and dollar signs, the phrase ‘show me the money.’ ”

Women’s financial needs are also shaped by their desire to balance family with career. Many take time off or work part-time when they start a family, weakening their financial position. Even when women choose to focus on a career, they often face a wage gap compared to their male counterparts. “It’s very worrying because they live longer so they need more money than men to fulfill their retirement plan, yet the amount of earning they’ve had during their saving years has been less on average than men,” Ms. Verch said.

A study by Canadian insurer Sun Life Financial Inc. found that men are contributing significantly more to their employer-sponsored savings plans than women. The average annual contribution by men was $5,610, where females contributed only $3,775, the study found. The answer, Sun Life says, is to encourage women to maximize employer matching in their plans whenever possible, and leave no money on the table.

Those conversations aren’t always easy. “People bring a lot of hang-ups about money to the table,” said Melanie Adams, an investment adviser with Sun Life. “They take cues from how their parents dealt with money, how their friends deal with money. And quite frankly, people have a lot of shame about how they’ve spent in the past, or that they haven’t saved enough.”

Whatever the gender differences, some financial institutions are trying to steer clear of lumping prospective and existing clients into one homogeneous group called “women.”

“We often talk about the woman ‘segment,’ but hang on a second; women are 50 per cent of the population. We’re not a segment,” BMO’s Ms. Barker-Merz said. To combat this issue, the bank is trying to divide the female category into groups of unique needs and reach out to them by attending industry events and asking questions. These subsegments include business leaders, retirees and millennials just beginning to invest. The bank is also looking at key life events that can effect wealth, such as divorce, death of spouse and maternity leave.

Reaching out to those various groups is a challenge. To attract and retain more female clients, wealth management companies are taking a hard look at how they communicate, said TD’s Ms. Cimoroni, who also sits on the bank’s Women in Leadership Council. For TD, that meant educating its predominantly male advisers on what they could gain by connecting with women more effectively.

“Forget about all the moral reasons why you should – when we talk to our advisers, we’ve got to give them the business reason of why they want to focus on women,” Ms. Cimoroni said.

One big reason: When wealth is transferred from one spouse to another, whether due to death or divorce, it’s prone to slip through the asset managers’ fingers. About 70 per cent of women change advisers within one year of their partner dying, according to financial research firm Spectrem Group.

Many women switch because they have become disconnected from the adviser or find the service unsatisfactory. Nearly three-quarters of women highlighted financial services as the industry they were most dissatisfied with in terms of both products and service, an Investor Economics report found.

One reason for that is women often feel excluded from conversations about their family’s wealth, Ms. Cimoroni said. “It’s directed to the dominant male counterpart, or women infer that advisers are just talking to the man,” she said. TD teaches advisers to check in with all parties in the conversation to make sure everyone’s on the same page. There’s a renewed focus on big-picture planning and jargon-free explanations of investing strategies that research shows women respond to better.

The fight for females

Three years ago, TD launched a training program geared toward educating advisers on how to deal with the unique needs of women. The bank also began running a series of free workshops to educate and empower women about financial planning and money management. So far it seems to be working: Total investable assets among women have grown by 33 per cent since early 2012.

Advisers are also seeing the value. “I have two grandmothers and a variety pack of aunts who have suddenly become a member of the nine out of 10 women who will be in charge of their finances at some point,” said Daryl Burd, an Edmonton investment adviser who has worked in the industry for nearly 30 years and recently joined TD. “A couple were widowed, a couple divorced, and I could see that they weren’t prepared for it, and [that] things didn’t go wonderfully. So, to me this is important.”

Now he’s teaching his own seminars that are introducing women to investing and he has adapted his speaking style to accommodate women’s focus on the future when it comes to their goals. “That meshes well with my approach to planning, which is long term and goals based,” he said. The talks have become so popular that he now has men asking to attend.

There is such as thing as too much emphasis on women, however. Wealth managers risk undermining their outreach efforts with tacky, stereotypical advertising. “One of my observations just generally in the industry is that often people talk about talking to women investors, but they paint it pink and it becomes marketing,” Ms. Cimoroni said. That’s why TD is trying to change its culture from the inside out – arming its advisers with training programs and research – rather than creating a big branding effort. “The reality is putting a pink ribbon around it isn’t really solving the problem, because it doesn’t appeal to women.”

Raymond James’s Ms. Verch has taken the approach of narrowing her focus.

After about 20 years in the wealth management industry catering to a range of people, Ms. Verch has zeroed in on high-net-worth women who are often executives. “Some advisers try to be all things to all people and maybe they don’t do as good a job as they could if they were focusing on a niche,” Ms. Verch said. She has built up Verch Group at Raymond James, which includes a small team of female financial specialists, and now has $85-million in assets under management.

Ms. Verch’s move was driven in part by first-hand experience with the challenges women face in male-dominated industries. Men still dominate the investment industry, with the majority of financial advisers being male. A hard industry average is difficult to come by, but many banks and wealth management firms say men make up between 80 to 85 per cent of their adviser force.

The industry knows this has to change, not only to be more representative of their growing female client base, but also because many women reportedly respond better to female advisers.

Last month, BMO Nesbitt Burns launched a website aimed at recruiting female investment advisers to boost its business. Currently, 15 per cent of the bank’s advisers are women, and that percentage has increased by just one point since 2012.

Fine-tuning the message

Amid all of these changes for women, Canada’s six major banks are becoming more aggressive when it comes to the wealth management sector. This is seen as one of the key growth areas for the banks, and each is devoting enormous resources to try to get ahead of the pack.

Canadian Imperial Bank of Commerce, for example, recently appointed long-time wealth management executive Victor Dodig as its new president and chief executive officer. And the other major lenders have built up their businesses by introducing new investment products and in some cases acquiring wealth management firms.

Some of the non-bank players have also been increasing their efforts. Canada’s largest life insurers are building their wealth management operations at home and abroad, in part to boost their businesses at a time when low interest rates are putting pressure on traditional insurance products. Their share of mutual fund sales has grown in recent years and like the banks, they have acquired some smaller businesses. They also offer investment products with guaranteed returns, which may appeal to risk-sensitive investors.

“I think as an industry we realize that with that transition of wealth – with that huge control shift of assets going to women – to ignore that fact would be crazy,” Sun Life’s Ms. Adams said.

This dynamic has led to major changes in the battle for women’s investment dollars. But the transition is not without potential hurdles.

There is a risk of alienating male clients, many of whom have spent years with the same adviser. As Ms. Barker-Merz of BMO puts it: “How do we become the bank for women in a way where women will notice, and men won’t?”

She and roughly 20 other BMO wealth management employees meet monthly to discuss how the bank can meet women’s needs. But it can be an uphill battle to get others on board, amid concerns about ruffling the feathers of the banks’ existing client base.

“That’s why I think the banks have shied away from really taking a strong position in this is because people feel like it’s touchy,” she said. “But we have to be different. Men and women are different, so we have to be bolder in how we treat women. There are things we’re going to be doing that will be relevant to women and men won’t even notice it.”

The other big challenge is maintaining the urgency for change that has developed over the past couple of years. For Ms. Barker-Merz, that risk was highlighted when she came across notes from a conference on women in business from 1997. Some of the issues and initiatives on the agenda were the same as the ones the industry faces now.

It can be tricky to maintain momentum. “Everybody has dabbled, people change rolls ... and the return on investment isn’t instant,” Ms. Barker-Merz said. The answer to that problem is a leadership team dedicated to the issue, she said.

The pain of the recession may encourage more banks to adopt what the industry calls a “holistic” approach to wealth management, meaning solutions that address economic and emotional needs. “After the financial crisis, so many people got hurt, they just wanted people to listen,” BMO Nesbitt Burns’ Ms. Laurin said. “Conservativeness had become, all of a sudden, attractive.”

Industry insiders acknowledge that there’s still much work to be done in overhauling the industry’s male-focused communication style. Some advisers compare their work to a trip to the dentist – it creates anxiety but people know it’s important. To prevent a financial cavity down the road, it’s imperative that women understand their financial situation and where the opportunities are. Ready or not, Canada’s wealth is shifting their way.

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