are swarming around women and trying to perfect their
advisers want women clients, and consultants are busy
suggesting ways to woo them. Firms ranging from Fidelity
to BlackRock are researching women’s attitudes, and
advisers are inviting women to all-female seminars.
After refreshments, the advisers frequently imply that
someone in a dress will be the most attentive to women’s
makes sense for advisers to do this. More women than men
now go to college and complete college, and their pay is
rising. And since women tend to live longer than men,
widows of wealthy husbands or women with nice divorce
settlements make lucrative financial advice prospects.
Broker conferences often highlight a Boston College
estimate of $59 trillion in wealth passing to the next
generation by 2052. Women are expected to be the major
the lure of women demographics for advisers, the
financial services industry has a reason to be hungry
for new clients. Their business has come under pressure
from Internet services such as Betterment or WealthFront,
which sell basic financial help cheaply to an audience
happy with no-frills.
advisers try to distinguish themselves by selling the
personal touch. That can be appealing to women who are
insecure about their ability to invest money. A survey
by the American Psychological Association shows
insecurities run so deep that 40 percent of women feel
uncomfortable even talking about money.
the combination of overhungry brokers and naive clients
can turn out badly.
could be preyed upon," said Annamaria Lusardi, a
George Washington University professor who studies
financial literacy and has found women far less
knowledgeable on personal finance than men on average.
means that women may not realize that a person they
think is advising them well isn’t really catering to
your best interests. Brokers who call themselves
financial consultants may push investments and insurance
that pay them high fees and commissions, while they
never mention cheaper products that might even be
study by the White House Council of Economic Advisers
recently found that individuals are losing $17 billion a
year in their retirement accounts because financial
advisers are choosing investments that pay them higher
fees and commissions.
an individual level, consider a person who enjoys low
costs of just 0.18 percent in mutual funds rather than
the 2 percent in fees and commissions a financial
adviser might prefer. If the woman invests $10,000 and
earns 10 percent a year on the investments in the
low-cost fund, in 35 years she will have about $264,000.
But if she pays 2 percent and the investments earn 10
percent, she will end up with just $138,500.
about Americans running out of money in retirement, the
federal government is considering rules intended to make
brokers put the clients’ interest ahead of theirs.
That supposedly would keep brokers from selling
high-commission funds and annuities when cheaper ones
would work better.
brokers, who you may think are giving you untainted
advice, have been fighting this feverishly. Brokers are
paid to sell, not necessarily to give you the best
advice despite titles like consultant. They are
different than registered investment advisers, who are
fiduciaries and must put your interests first.
means you must be on your toes now. If you are invited
to a women’s seminar, go and learn. But before turning
over money, ask whether the adviser is paid by fees,
commissions or both, and whether she picks funds from a
restricted recommended list (maybe high-fee favorites).
Your adviser should be free to pick low-cost funds, with
fees closer to 0.18 percent than 1 percent. Ask the
adviser to assume your investments will earn an amount,
maybe 7 percent a year, and have her estimate in dollars
what you will lose in fees that year compared with a
"comparable index fund." If she balks, find
another adviser at http://www.plannersearch.org/Pages/Home.aspx.
adviser may say the higher cost fund is worth it. Test
the assertion: Ask the adviser to find a Morningstar
report and point to the return, or earnings, from the
fund she’s selling. Then, in the report, ask her to
show you what the comparable index earned last year,
over five years and 10 years. If the index — a cheap,
simple investment — earned more than her favorite, you
have to ask why she’s selling the expensive fund.