Special Feature

2012 RRSP Special

From the Mid-November 2012 issue of Investment Executive newspaper. Treading carefully in RRSPs; moving nervous clients out of cash; women investors; grey divorce; mortgages; seg funds; and much more.

By Clare O'Hara | Mid-November 2012

One-third of all wealth in North America now is controlled by women. And that percentage is increasing by 8% annually, according to a recent study conducted by Bank of Montreal (BMO). But when it comes to retirement planning, the BMO survey also found, women are less likely to be as prepared as their male counterparts. This opens a door of opportunity for financial advisors.

"There is definitely a shift occurring right now, and women are going to be playing a much larger role when it comes to the financial decisions being made," says Hatice Pakdil, vice president, investment advisor at TD Waterhouse Private Investment Advice, a division of TD Waterhouse Canada Inc. "Unfortunately, I'd say that up until now, it seems like a lot of women are not really participating in these conversations about their savings, investments or their financial future."

To help with this new shift in wealth, advisors need to start engaging their women clients sooner rather than later. Pakdil, who manages $200 million for 180 clients, says she has seen an increase in women clients due to widowhood and divorce. Pakdil now also sees more business owners who are women - four out of five new business owners are women.

"Twenty years ago, everyone was talking about the shift in demographics and when women will inherit the earth," says Alison Keene, senior vice president and managing director with Toronto-based BMO Nesbitt Burns Inc. "Well, it's happening now, so we have to take action and offer this segment of investors what they are looking for. We don't have time to think about it."

The BMO survey found that a number of factors can affect a woman's investment plan for retirement, such as lower earnings, intermittent work history and longer lifespan. And while 82% of women are either the primary decision-maker or have equal responsibility for household financial decisions, says Keene, women investors still are not as confident as men when it comes to handling the family wallet.

Keene, along with her team, manages $385 million. She says many women, even those with high net-worth, still have a fear of destitution and are more likely to keep large amounts of cash sitting in low-interest bank accounts.

"They have a fear of getting sick or losing their job," says Keene. "They need that safety net of liquidity to be able to sleep at night. So, it's our job to show them how to do that in a much more efficient way."

Running a client meeting for a woman investor can vary from doing the same for a man, says Susan Misner, co-founder and head of sales, monetization and business development for www.goldengirls.ca, a financial website aimed at women. Men tend to focus more on spreadsheets, graphs and returns, while women tend to focus more on the planning involved and understanding what they are buying. On the website, Misner, along with co-founder Laura McDonald, make an effort to communicate with women in language more geared toward their priorities.

Says McDonald: "We try to focus on goals and dreams and a legacy because that is what really resonates with women."

Maintaining a strong relationship with women is essential when it comes to life-changing events. These frequently can result in the loss of your relationship with a woman client if the right approach is not taken. The family dynamic of the male breadwinner and female homemaker may seem like something from days gone by, but for many women currently in retirement, it was considered the norm, and most of the family's financial affairs were left in the hands of their husband.

The numbers tell the story. According to Statistics Canada, the average age of widowhood today is 56. About 80% of widowed women change advisors within 18 months of losing their husband.

"Women will reach out to their social circle, the group of women whom they rely on, who they trust and share their most intimate secrets and fears with," says Misner. "Women will ask their peers who they should be trusting, and if the [original] advisor hasn't invested the time or the energy into building a strong relationship, then they are at risk of losing that client."

So, advisors need to start engaging women clients earlier on, especially if the husband is the one making all the financial decisions. Keene, at the beginning of her career, did see clients walk away after losing their husband. Over the past 25 years, Keene has taken measures to try to prevent that scenario, including: when setting up an initial meeting with a new married client, Keene always invites both spouses to attend. She encourages each spouse to discuss their financial goals, retirement dreams and responsibilities for children and parents. She ensures both spouses are comfortable with her as an advisor. She makes it clear that either party can contact her directly.

In addition, Keene takes the time to talk to each spouse about what his or her wishes are in case the other passes away.

And Keene often has an individual meeting with women in case they want to talk about individual concerns or fears about the future: "These are very difficult conversations to have with clients but they have to happen." IE

© 2012 Investment Executive. All rights reserved.