women: not a segment! september 2014. 1 agenda why focus on women? understanding women working with...

Women: Not a Segment!

September 2014

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Agenda

• Why focus on women?

• Understanding women

• Working with female clients

• Questions

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Why focus on women?

Women are a Growing Economic Force

Women are accumulating more of their own

wealth

• Greater workforce participation

• Higher education/earnings

• Increased business ownership

Sources: “Why the $41 Trillion Wealth Transfer Estimate Is Still Valid: A Review of Challenges and Questions,” J. Havens and P. Schervish, Journal of Gift Planning, vol. 7, no. 1, January 2003.Influence: How Women’s Souring Economic Power Will Transform Our World for the Better, by Maddy Dychtwald“Women and Financial Independence Study,” Charles Schwab & Co., Inc., June 2012.

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Why focus on women?

• Women are inheriting from parents and husbands•70% of the $41T that will be transferred over next 40 years

• Women are managing their own wealth•Women control 51% of the private wealth in North America•93% are primary or joint financial decision maker•74% are primary or joint investment decision maker

Sources: “Why the $41 Trillion Wealth Transfer Estimate Is Still Valid: A Review of Challenges and Questions,” J. Havens and P. Schervish, Journal of Gift Planning, vol. 7, no. 1, January 2003.Influence: How Women’s Souring Economic Power Will Transform Our World for the Better, by Maddy Dychtwald“Women and Financial Independence Study,” Charles Schwab & Co., Inc., June 2012.

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Dissatisfaction With Financial Services

Advisors who learn to work successfully with women will have access to this large and growing market

–73% are unhappy with service level–55% feel wealth managers could do better at meeting needs of women–Key complaints:

• Overlooked or ignored• Talked down to• Stereotyped by gender and age• Advisors do not understand women’s needs or have their

best interests in mind

Source: Women Want More, Michael J. Silverstein and Kate Sayre, Boston Consulting Group, 2010.

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Understanding Women

• For women, wealth = security• For men, wealth = freedom or opportunity.

(Barclays Wealth Insights)

• Research shows that women view money and wealth fundamentally differently than do men.

• Women value money as a way to provide for themselves and their families, and for the security it provides.

• Men view money as a measure of success or status.

(It is important to note that research provides us with aggregate data from which we derive broad conclusions; individual women vary in their knowledge and attitudes about money.)

Source: Women Want More, Michael J. Silverstein and Kate Sayre, Boston Consulting Group, 2010.

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Understanding Women

Source: LIMRA Secure Retirement Institute, 2014 (http://www.limra.com/secureretirementinstitute/) .

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Women View Money Differently Than Men

• Big picture thinkers• 88% want an advisor to consider their whole financial

picture, not just the investment portfolio• Long-term planners

• 84% want an advisor to consider their long-term financial needs

• View money as a tool to accomplish goals, not the goal• For women, wealth represents security

• Achieving financial peace of mind is over 7 times more important than accumulating wealth

Sources: “Women and Financial Independence Study,” Charles Schwab & Co., Inc., June 2012.“The Role of Gender in Financial Decision Making and Inheritance Planning,” Barclay’s 2011 Wealth Insights report.

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Women View Money Differently Than Men

• These statistics may sound irrelevant to the more weathy client. Women of wealth should not be concerned with living in poverty.

• Even wealthy women including Lily Tomlin, Shirley MacLaine and Katie Couric admit to having “bag lady syndrome,” a fear of running out of money and ending up destitute.

• These fears can appear to be irrational, but many are based on valid concerns. Transitions such as widowhood and divorce can heighten these fears.

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Why worry?

Women compared to men:

•Lower wages/lifetime earnings

•Shorter working career

•Less prepared for retirement

• Smaller pension balances

• Less likely to have company sponsored retirement

plans

• Lower risk toleranceSources: “Retirement Security: Women Face Challenges in Ensuring Financial Security in Retirement,” U.S. Government Accountability Office, Report to the Ranking Members, Special Committee on Aging, U.S. Senate, October 2007; Women in Canada: A Gender-Based Statistical Report, Statistics Canada 2005.

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Why worry?

Different experiences in later years:

•Longer life span

•More likely to live alone

•Will spend more years disabled

•Three times as likely to live later years in poverty

Over half of elderly widows living in poverty were not living Over half of elderly widows living in poverty were not living in poverty before their husbands died.in poverty before their husbands died.

Sources: “A Profile of Older Americans: 2012,” Administration on Aging, U.S. Department of Health and Human Services; BMO Wealth Institute.

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Why worry? Widowhood

Women are more likely to experience negative effects of widowhood.•In 2012 there were four times as many widows as widowers among those age 65 and older•Forty percent of older women were widows in 2010

Source: “Retirement Security: Women Still Face Challenges,” United States Government Accountability Office Report to the Chairman, Special Committee on Aging, U.S. Senate, July 2012.

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Why worry? Long-Term Care

The odds of needing care are high

• Greater than 1 in 2 people 65 and older will need care

• 40% of persons needing care are under 65

• Between 45-64, chance of becoming disabled and unable to work is almost 1 in 5

• Women are more likely to enter nursing homes, suffer strokes, and suffer from Alzheimer’s Disease

Sources: Naked in the Nursing Home, Harold L. Lustig, 2011, Blooming Twig Books, New York; Canadian Life and Health Insurance Association Inc.

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• Care giving responsibilities fall disproportionately on women; 72% of care givers are female

• Few appear to be prepared for critical illness or disability• 40% of Canadians have disability insurance

coverage• ~4% of Canadians have critical illness

coverage

Sources: Naked in the Nursing Home, Harold L. Lustig, 2011, Blooming Twig Books, New York; Canadian Life and Health Insurance Association Inc.

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The cost to caregivers is high:•Out of pocket expenses

– Majority spend $6,000 per year; 17% spend between $10,000 and $24,000 per year

•Reduced income, benefits and pension contributions•Increased costs for utilities, supplies and renovations•In-home support•Out-of-home care

.Source: BMO Wealth Institute Feature: “Sandwich Generation,” April 2014.

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Why worry? Divorce

Increased divorce rate in later years•Divorce rate among those age 50+ doubled from 1990-2009•In Canada, the only age group that is seeing a rise in divorce are couples over 50•Percentage of women age 65+ who were divorced tripled between 1980 and 2008Women experience greater declines in income and assets following divorce•43% of Canadian women who have undergone divorce / separation had a substantial decrease in household income, compared to 15% of separated / divorced men

.Sources: “The Gray Divorce Revolution: Rising Divorce among Middle-aged and Older Adults, 1990-2009,” Susan L. Brown and I-Fen Lin, National Center for Family & Marriage Research, Bowling Green University, March 2012; Anne Kingston, “Divorce on the Rise over 50,” Maclean’s, January 29 2007; Statistics Canada National Health Study 2006.

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Why worry? Divorce

.Sources: “The Gray Divorce Revolution: Rising Divorce among Middle-aged and Older Adults, 1990-2009,” Susan L. Brown and I-Fen Lin, National Center for Family & Marriage Research, Bowling Green University, March 2012; Anne Kingston, “Divorce on the Rise over 50,” Maclean’s, January 29 2007; Statistics Canada National Health Study 2006.

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Why worry?

.

Few people seem to have “stress-tested” their financial plans, despite the impact major life

events can have.Source: BMO Wealth Institute survey (Pollara), March 2013

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Historical Perspective

.Source: BMO Wealth Institute survey (Pollara), March 2013

• Not all women are alike

• Historically, women have had different experiences than men• Labour force participation• Educational attainment• Income

• Age cohort may impact relationship with money

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Labour Force Participation Rate (Canada)

.Source: Statistics Canada, Labour Force Survey, published April 2010 (includes percent of Men and Women aged 25 to 64).

Men

Women

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Educational Attainment (US)

.Source: Extracted from Women in America: Indicators of Social and Economic Well-Being, prepared for the White House Council of Women and Girls, March 2011.

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Gender Income Gap

.Sources: Conference Board of Canada, based on Statistics Canada, Income in Canada 2010 (accessed November 1, 2012) and Statistics Canada, Earnings and Incomes of Canadians Over the Past Quarter Century, 2006 Census (accessed August 31, 2009).

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Cohort Effects

.Sources: Understanding the Gender Gap: An Economic History of American Women, Claudia Goldin, Oxford University Press, 1990. https://en.wikipedia.org/wiki/Generations#List_of_generations

Greatest Generation—born 1901-1924 (age 89

and up)

•WWII brides

•Traditional family roles

•Very low labour force participation

•Less than high school education on average

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Cohort Effects


Silent Generation—born 1925-1945 (age 68-89)

•Impacted in childhood by Great Depression and WWII

•Housewives of 1950’s and 1960’s

•Traditional family roles predominant

•Desire for both career and family

•Significant increases in labour force participation

beginning in 1950’s (but still low overall)

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Cohort Effects


Baby Boomers—born 1946-1964 (age 49-68)

•Change agents

•Significantly increased labour force participation

•Changing family roles

•Fought workplace discrimination

•Narrowed gender wage gap

•Retirement readiness impacted by Great Recession

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Cohort Effects


Generation X—born 1965-1985 (age 28 - 49)

•More highly educated than previous cohorts

•Dual-earner households the norm

•Balancing work and family responsibilities –

“time-crunched”

•More adept at using technology

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Working With Female Clients

.Sources: How to Give Financial Advice to Women: Attracting & Retaining High-Net-Worth Female Clients , Kathleen Burns Kingsbury, McGraw Hill, 2013; “Best Practices for Attracting and Retaining Female Clients,” LPL Financial WomenInvest White Paper.

Common characteristics of female

clients:

•Value relationships over returns

•Connect by talking and sharing personal

stories

•Have multiple demands on their time

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Take longer to process and decide

• Gather information from many sources

• Consult with friends and family

• Ask questions

• Take time to evaluate options

Reject typical sales approaches

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To be successful working with women:

Focus on the relationship

• Face-to-face meetings are important for building

trust

• Make it personal – talk about life and family

• Listen more than you talk

• Make her feel comfortable

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Communicate clearly and frequently

• Use lay language

• Respond promptly to her

communications

• Be reliable (follow through)

Be patient

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To be successful working with women:

•Recognize her need for safety and security

•Identify and seek to understand her concerns

•Model / “stress-test” her areas of focus

• Retirement strategy

• Death/disability

• Long term care expenses

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• Provide education

• Allow adequate meeting time

• (Respectfully) challenge her risk tolerance

and expectations

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When working with women in couples:

•Identify financial roles and responsibilities

•Be aware that partners might not be on the same page

•Meet with both partners together about shared

investments

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Give each opportunity to share their views

• Talk to her as much as him

• Don’t misinterpret her silence

• Consider an initial meeting with each

partner separately to determine goals and

concerns

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Benefits of Working With Female Clients


• Women are loyal

• Women give more referrals

• Women live longer than men

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Recognition that women view money and wealth very differently

Goal is not to accumulate money.

Interest is not in playing with money

(not always looking for new investment vehicles)

Do not have a great interest in money itself. Money is a way to:

care for themselves and their familiesimprove their lives

ensure security

“They want advisors and services that recognize their need for short-term simplicity and long-term stability.” Source: Women Want More, p. 186.

What do women want?

Women: Not a Segment!

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The opinions expressed here reflect our judgment at this date and are subject to change. Information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. This publication is prepared for general information only. This material does not constitute investment advice. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investment involves risk. Market conditions and trends will fluctuate. The value of an investment as well as income associated with investments may rise or fall. Accordingly, investors may receive back less than originally invested.

® Registered trade-mark of Bank of Montreal, used under licence.

Disclosures

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