This is the second column in a two-part series on the importance of serving women clients in a compliant and effective manner. This column focuses on the specific issues relating to women clients approaching, or in, their senior years. The first column explored the common mistakes advisors make while serving female clients.

Serving women clients represents a great opportunity for the growth of advisors’ businesses, but also represents unique compliance challenges. Thus, advisors need to become sensitized to some of the issues that they could face when dealing with women clients who are baby boomers and approaching their senior years, or those already in their senior years.

Statistics confirm that women live longer than men. And according to recent research from Lake Forest, Ill.-based Spectrem Group Inc., 70% of women change their advisor within one year of their husband’s death. Therefore, there will be many widowed senior women changing their advisors — and you need to be equipped and understand how you can get those referrals.

Although you may have heard of “the men’s club,” you may not have heard about “the women’s club.” Specifically, women may turn to their friends and daughters — not just their sons anymore — after their husbands pass away to find a new advisor. The challenge for advisors is to determine whether the woman client is:

  1. Experienced and able to deal with her advisor with respect to her money, whether it’s her own, inherited or from insurance proceeds;
  2. inexperienced, but willing and able to learn;
  3. inexperienced and able, but unwilling to learn; or
  4. inexperienced and unable, and unwilling to learn. (Sometimes mental capacity issues can render them unable, but that is not unique to women and not the subject of this column.)

Don’t judge too quickly as it may not be obvious into which category each woman fits. You need to get to know each woman individually and figure this out. This may be easier said than done as the signs may be different for women than they are for men. For example, a woman may be experienced and capable, but she may not present this way.

Generally, men may overemphasize their knowledge while women may do the opposite. Thus, you need to ask probing questions that enable you to gather evidence of whether the woman sitting across from you is experienced, and whether she can learn if you and she put in the effort. Although some women may not have had exposure to financial matters, that doesn’t render these women unable to learn.

Probing questions could include whether they have budgeted for the family expenses; balanced a chequebook; read the newspaper; watched the news on television regularly; and understand the basics associated with stocks and the stock market, and what a mutual fund is. Keep a strong paper trail of what they know and what they don’t know.

For women who have indeed left the financial matters to their husbands but have the ability to understand, they may want an advisor who is patient and teaches them to manage their own financial affairs without the support of anyone else because protecting their privacy might be important to them. However, you will want to ensure you have the paper trail to prove she was able to understand the instructions she gave you as her children, who may have been kept in the dark, may be suspicious and wait to sue you after their, mom’s demise.

If a woman is inexperienced and unwilling to learn, you will need to ask her whether she would like to involve a relative or close friend — someone whom she trusts — to assist her with the decisions she needs to make. If not, perhaps the client has a lawyer or accountant who is prepared to act as her power of attorney.

Of course, the very suggestion that the client is unable to manage her own finances might be offensive to her, but it might also be a relief to her that you are there to help her make this transition and perhaps involve other family members in that process.

By getting to know your client, you will have to navigate this issue carefully to gauge how able and willing she is to understand basic financial issues and products. If she is indeed inexperienced but able and willing, it will take a lot of your time and patience. Of course, you should document all communication to ensure you can later prove that you explained products in a basic manner and that she understood what you said.

Even though this may be very time consuming, it will not be without reward because “the women’s club” is alive and kicking — and referrals will be made to those advisors who win over clients by being patient and understanding.