How to Find a Good Fit for This All-Important Role
In a Boston Consulting Group (BCG) survey of approximately five hundred female investors, more than fifty percent of the respondents said that financial advisors could improve their service to women. Of those dissatisfied, many expressed the opinion that investment professionals either often assume women have a low risk tolerance; offer “dumbed-down” strategies; or act subtly disrespectful and condescending. This dissatisfaction may be why 70% of women fire their financial advisors within a year of their spouse’s death.
If you’re a female investor who has been through a similar life change and can relate to those surveyed, here are a few considerations to think about when looking for a new person to help advise you on fiscal matters, steer you to sound investments, and stay in contact with you in a responsible way. In particular, it’s helpful to pay attention to the five questions we’ve listed before making the decision about whom you select.
What Women Should Seek in a Financial Advisor (Hint: Communication is Key!)
In general, women tend to be highly collaborative and enjoy working with others. If this sounds like a personality trait of yours, you’re likely to have a higher chance of success with a financial advisor who actively works with you to reach your goals. An investment expert who will sit down and have an in-depth conversation about you and your financial situation — your past successes and failures, your hopes and aims for the future — might be preferred over one who offers a solution before they fully understand your needs.
Female investors are also more likely to be driven by broader goals, such as a child’s college fund or a retirement account, than a desire to obtain more money in the future, according to a 2012 poll from RBC Direct Investing.
So make sure your financial advisor isn’t solely focused on your investments, but thoroughly understands your financial goals.
A Checklist for Whoever Advises You on Your Checkbook
Here are a few specific questions that may be especially important to women when interviewing a potential money advisor:
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- What are the asset levels of your typical client? To receive the appropriate level of service for your needs, find a financial advisor who manages portfolios that are of a similar size to yours. If the amount in your account is an anomaly for them, your portfolio may fall into one of two categories: 1) If too big, the advisor may not have the expertise and skill to successfully manage your investments; or 2) If too small, the person may not feel compelled to spend enough time with you.
- What type of ongoing educational opportunities do you provide for clients? Markets change constantly. To keep in tune with current market and investing events, ask the professional if they offer any seminars, newsletters, education groups, or networking events.
- How do you determine investment success for your clients? Success in investing can be measured in multiple ways, and via many different timeframes. Asking this key question helps you understand how the money professional builds client portfolios; how often changes are made in a portfolio; and what types of investments are considered.
- Why do you think you would be a good advisor fit for me? Investment experts need to discuss their services and client expectations for you to determine if it is a good match for your needs.
- What percentage of your clients are women? A high percentage shows that the financial advisor is successfully working with other female clients.
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Making financial advisor changes, especially during times of transition — such as the death of a spouse or a divorce — can be stressful and full of emotion. Asking a professional questions upfront can help ensure that you have the right person working with you, who has taken the time to appreciate your particular needs.
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