More advisors give their stories, and an expert weighs in as well.
This monthly series of articles describes the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, more than $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the managing principals in the Garnet office in Bethesda.
Last month we began a discussion of gender and its impact on financial advisory practices from internal operations to the types of clients who are attracted. As we have a firm staffed only by women, we always believed that we attract clients who value our collaborative approach and holistic advice that goes well beyond their investment assets. This belief was recently reinforced when a respected client in his annual review meeting said he was very pleased with our service, but asked if we could be even more parental going forward!
In this column we continue our exploration of the role of gender within a financial advisory practice. Several readers sent us their stories about the effect of gender in their advisory businesses. We'll share some of those anecdotes along with the observations of Olivia Mellan, a psychotherapist who has spent years working in the field of money psychology and studying the differences between men and women as they relate to money.
Stories from Other Advisors
Helen Modly, a NAPFA colleague and fellow Morningstar Advisor columnist wrote in response to our last column:
"We were an all-woman firm, by choice for several years. In January 2007, we hired my stepson from the golf industry (he was a teaching pro in Florida) with the intent to grow him into a CFP and hopefully an owner over time. So far, so good. In 18 months, he has finished the CFP coursework online and will be taking the board exam this November. I'm convinced it is easier to turn a great golfer into a financial advisor rather than the other way around.
We had thought that a younger man would appeal more to the male executive type. Turns out, he is a bigger hit with our older couples, probably due to his military experience and professional demeanor. I will agree that he "moves us along" on our decision making. We share your tendency to evaluate every option before choosing a course of action. I also agree that clients want a firm recommendation rather than a discussion. I think we create anxiety when we dither.
You might also look at age as well as gender. We are all 50-something, with limited responsibilities outside of work (kids grown, etc.) He is 30 with small kids, working wife, the whole nine yards. Even as working women who know all about that struggle, we grow impatient from time to time when he bolts at the end of the day. He will tell you that he feels "over-mothered" from time to time.
All in all, I am happy with the way things are developing. We get to grow a planner that values relationships, both inside the firm as well as with our clients. He gains the experience of seeing how a successful, NAPFA-type firm operates."
Helen's words touched a chord for us as we approach and move into middle age. We are all too aware of the benefit of bringing in younger advisors and believe our practice would be enhanced by the fresh point of view a younger man would bring to our business.
Ellen Siegel, a planner in Miami writes:
"Thank you for starting the conversation. I learned the ropes in a male-dominated insurance agency; I enjoyed the support, encouragement, and joint work opportunities my colleagues offered. I was aware of the handicap my female "be nice at all costs/offer many alternatives" orientation and teacher background created, and overcame that with persistence and lots of diligence.
Then I moved on to a staff planning position with the Enrichment Group, a co-ed firm owned by Kathie Day. Again, the issue of gender had no effect on our staff interactions, but there was a fairly marked difference in comfort level with the "Kleenex" meetings with clients.
And now I own my own firm, exclusively female staff, like you by chance not choice. We are heavy on the estrogen effect--with aromatherapy, new-age music, table fountains, candles and orchids, and chair massages for new clients after long meetings. We do well with couples with good marriages. I think the dynamic is that the wife is comfortable here, and her comfort makes the husband happy. For sure, some of the husbands are DIY types and want to be sure their beloved will be cared for if something happens to him.
Couples with difficult marriages don't select us. And we have very few single men clients. Our niche is boomer women in financial transition. Keep up your good work!"
This is the first time we've heard of an advisor offering aromatherapy and chair massages--amenities that make us wish we were Ellen's clients!
Fern LaRocca, another NAPFA member is a planner and financial coach who wrote to say:
"I started my business with three other male partners in 1983. One left, one was bought out, and the other one stuck with me for five years. I wanted the firm to go totally fee-only and he didn't. He thought that would never work, so I bought him out so he could work elsewhere. It was very difficult to build the business after that. I got blatant sexist remarks like "my wife wouldn't like it if we were working with a woman," to " how will you continue as a woman alone without so and so."
Looking back I have to admit it was a blow to my confidence and my business did suffer for several years. But as the fee-only business model became more popular, I stood out from the crowd and it seemed like people perceived a woman as capable of being more objective than some of the large male-only firms in my area. My business then took off. I will never forget a client who was a young woman who started a tax practice in her home office. A male client was negotiating with her to reduce her fees, reasoning that she had less overhead by working out of her home.
I told her to stick to her fee schedule and ignore that client and concentrate on building a clientele of people who valued her as a professional and her service."
From our own experience, Fern was spot on in advising the younger female professional against discounting her fees. In our conversations with others in the industry, we've heard many stories of advisors who never make the leap to a full-time career in financial planning; others never achieve a comfortable income level within their businesses. Quite often this failure to thrive stems from an inability to negotiate a fair fee--a potentially dangerous result of having too much empathy for one's clients.
You may note that we've only shared letters from female advisors in this article. With the exception of David Lewis, whose story we shared last month, not one of our male colleagues has written to share a story on this topic. (When we didn't hear from any other male advisors last month we contacted a couple of friends and asked them about their predominantly male practices to provide some balance to our article.) We're not sure whether this is because our readers are primarily women or if it's yet another difference between the sexes. Maybe men in male-dominated firms don't see any noteworthy affects from their firms' gender imbalance.
Getting an Expert's View
Olivia Mellan is a Washington, D.C.,-based psychotherapist and writer specializing in money therapy and is a frequent speaker at financial planning conferences. When we interviewed her earlier this month Olivia cited recent research on differences between the genders, particularly the work of linguist Deborah Tannen and psychologist Leonard Sax. Those who have heard her speak know that Olivia peppers her talks with humorous comments and cartoons--so it's no great surprise that she also quoted a long running comedy act called Defending the Caveman, which captures gender differences in a pointedly accurate and comical light. (Coincidentally, Veena had just seen the show and was in complete agreement with Olivia's assertions.)
Olivia provided a list of significant dissimilarities--many physiological--between the genders that she believes lead men and women to relate to money and to other people very differently:
* Hearing--research that shows that from childhood on boys don't hear as well as girls. Men over 40 often have a major drop-off in hearing. We surmised that this may be one reason that male clients relate better to male planners who have louder and deeper voices relative to their female colleagues.
* Body language--Women like eye contact and will often choose to sit opposite from the planner to make eye contact. Women generally prefer to talk about their feelings and goals and the process before turning to graphs and charts. Men like to sit next to the planner, to look at handouts and avoid eye contact.
* It's cellular! -- Boys tend to have more M cells receptors relative to rods; girls more P cells receptors relative to cones. What this means is: boys see movement and direction; girls see the color and nature and texture of objects. This explains why when investing in a security men might focus whether the price is going up and down while women are interested in the nature of the underlying companies, e.g. whether it is managed in a socially responsible manner or has women on the board.
* Risk/Aggression preferences go back to childhood--girls are taught to cooperate and therefore grow up not knowing how to compete and assertively negotiate. Boys are trained to win especially through participation in sports, so they can compete against friends and still maintain a friendship when the game is over. Boys view a video game with crashing cars as fun; girls see it as painful and scary. Leonard Sax has identified differences in the nervous systems of boys and girls that may explain why boys find risk thrilling while girls see it as painful and frightening.
* Mom's to blame--psychotherapy shows us that at adolescence boys separate from mother more rigidly than girls. As adults many men like to maintain rigid boundaries and women more flexible boundaries. As a result, men often resist accepting advice and make major financial decisions without consulting their spouse or partner. Women often find this behavior hurtful and seek greater teamwork in their relationships.
* Education versus evaluation--Women crave a trust relationship with a planner who answers their questions without making them feel stupid; men look for bottom line results that they can evaluate as acceptable or not.
* Using Myers Briggs indicators, more men are thinkers who value analysis and credentials; women tend to be feelers seeking the harmony of the whole; they seek a trust relationship with a caring, ethical advisor.
* Women tend to avoid decision-making related to finances. Her interactions with a Mount Holyoke investment club taught Olivia that women don't consider themselves to be experts on a subject until they know everything about it. Hence women are less likely to wing it or act on a hunch as men often can and do (with mixed results).
Of course none of these differences are black and white. Men frequently exhibit traditionally female traits and vice versa. For example, in her work Olivia has seen that many men (although they will usually not express it) deep down want and seek trust relationships with their advisors.
We don't think we've uncovered anything earth-shattering in our investigation of gender differences--men and women have been baffling each other with their behavior since the beginning of time, and it's not likely to change. Raising our awareness and sensitivity to the differences between ourselves and others can help us get along a little better and perhaps be a more successful in what we do.
Next month, we'll talk with an authority on communications and leadership. Her research and practice focus on understanding differences in communication, management and learning styles and using that knowledge to work more effectively in all areas of our lives.
Veena A. Kutler, MBA, CFA, and Annette F. Simon, MBA, CFP, are founders and principals of Garnet Group, LLC -- www.garnetgroup.com, a fee-only wealth management firm with offices in Bethesda, MD and Boston MA. Both are NAPFA Registered Financial Advisors with more than 30 years of financial planning and portfolio management experience between them. Garnet serves the needs of high net worth individuals and families in the Boston and Washington, D.C. areas
Get practice-building tips and information from our team of experts delivered to your e-mail inbox every Thursday. Sign up for our free Practice Builder e-newsletter.