Debra Tarleton's first experience with a securities broker was fraught with frustration. After giving him her retirement savings to manage, the 41-year-old maternity and children's supply retailer from Charlotte, N.C., didn't hear from him for a year. She finally prevailed on his secretary to send her a statement for the mutual fund he dumped her money into. "It was a communications problem," she says. "I couldn't get satisfactory answers to any questions I had."
Luckily, Tarleton didn't give up. Lorraine Fiorillo, a Prudential Securities financial planner recommended by Tarleton's partner, spent an hour going over the mutual-fund statements with her--and helped her set up an individual retirement account and a self-employment pension plan for her business. The first broker "made me feel that I didn't have enough money to do anything with," Tarleton recalls. "Lorraine didn't. Her philosophy is, you have to start somewhere and do what you can."
As the financial-services industry has been discovering, Tarleton's experience is not unusual. Surveys show that women often get short shrift from brokers, and although women--like men--come to investing with various levels of savvy, they tend to want more individual attention and information than they have traditionally received.
MISCONCEPTIONS. Brokers and banks have a vested interest in catering to female customers. Women make up 40% of the population with assets of at least $500,000, according to the Internal Revenue Service. They're almost 50% of the workforce, and they own 30% of the businesses. Meanwhile, many women today are grappling with the need to be self-sufficient; they can no longer count on a husband's income or pension to see them through.
Investment firms from Smith Barney to Chase Manhattan are responding by sponsoring regular seminars in which women are encouraged to express their concerns and ask financial questions--no matter how basic. "Everyone who comes to us thinks they don't have enough money for us to be interested in them," says Ann Benson, who runs Merrill Lynch's women's investing seminars. "It's up to me to show them we're listening and responsive." Other programs offer booklets and videotapes that outline how to get your finances organized, what the investment options are, and how to evaluate them.
Traditionally men have received more training in money management than women, but both groups have a lot to learn. A 1992 study by the mutual-fund firm Oppenheimer Management found that 89% of the women surveyed (vs. 69% of the men) had no idea what the level of the Dow Jones industrial average was; 77% (vs. 65%) didn't understand the relationship between interest rates and bonds; and 69% (vs. 53%) didn't know that stocks historically outperform bonds, certificates of deposit, and money-market funds.
Investment advisers find women often have a different approach to finances. "Women want to know that the broker is more interested in the person than just the money," says Alexandra Armstrong, a financial planner at Armstrong, Welch & MacIntyre in Washington, D.C. "They don't like being sold individual investment products. They're more comfortable being asked what their financial goals and concerns are and buying investments in that context."
They are also less likely to invest on the basis of a hot tip. "Women want to think through investment decisions more carefully and get a good grasp of what they're buying," says Lee Scott, a Prudential broker, who is part of a father-daughter team that gives investment seminars to women. Even when his female clients are stockpickers, he says, they tend to ask more about the company.
TIME PRESSURES. Unfortunately many brokers don't have the time or inclination to sit down and answer lots of questions. And perhaps because male brokers vastly outnumber female brokers, they routinely solicit male clients more aggressively than women. A woman in one of Oppenheimer's focus groups complained that brokers still called her house asking for her husband, even though he had been dead for six years.
Studies also find that women are more risk-averse than men. When asked what they would do with a $25,000 windfall, 37% of the women respondents (vs. 27% of the men) said they would put the money in a CD, according to SRI International, an independent research firm in Menlo Park, Calif.
Lack of female experience with investing stems from American cultural tradition. Older women typically delegate investment decisions to their husbands, who earn the money, says Vickie Thomas, who runs focus groups for women over 50 for financial institutions. Many of these women face their financial initiation when they are most vulnerable--after divorce or the death of a husband. Younger women are often preoccupied juggling job and family. "A popular myth is career women are more involved in finance," says Alexandra Armstrong. "Particularly for a married woman with a family, if her husband offers to do the finances, it's one less chore."
But the need for women to become savvy investors is pressing. They outlive men by an average of five to seven years, yet they still earn and save less, drop in and out of the workforce more, and suffer more financially from divorce. Over 70% of the elderly poor are women.
Probably the easiest way to get a grip on financial matters is to find an adviser you trust. Ask friends whom they use and seek recommendations from women's organizations and local brokerages. If the person talks down to you or isn't clear in answering your questions, go to someone else. Be wary of advisers who are just interested in selling you products. And be sure to look for a financial plan that takes your individual needs--rather than a boilerplate formula--into account.
Another route is to start or join an investment group with friends or colleagues, in which each of you researches companies and invests small amounts of money at a time. Clubs such as The Beardstown Ladies in southern Illinois, whose members range in age from 41 to 82, regularly outperform the stock market. A good resource is the National Association of Investors.
Whether you choose an adviser, join an investment club, or simply want to go it alone, it's wise to study financial-planning and investment books on your own time. The Beardstown Ladies' Common Sense Investment Guide (Hyperion, $19.95) and its companion video spell out the club's investing strategy and how it was set up. Joel Lerner's Financial Planning for the Utterly Confused (McGraw-Hill, $9.95) has a section devoted to women. Other helpful books are Jane Bryant Quinn's Making the Most of Your Money (Simon & Schuster, $27.50) and Burton Malkiel's A Random Walk Down Wall Street (Norton, $14.95).
SOUND STRATEGIES. Take advantage of special programs. Oppenheimer sets up hundreds of investment seminars around the country. Because the company educates independent financial planners about working with women, its representatives can also make referrals. Merrill Lynch also sponsors nationwide seminars that feature panels of experts on subjects such as global investing. The National Center for Women & Retirement Research at Long Island University has numerous tapes and workbooks focusing on everything from budgeting to long-term health care.
Much of the material covers similar bases: determining your assets and liabilities; figuring out your financial goals and how much you will need to achieve them; evaluating risk; understanding what investment options exist and how to choose among them. They're issues that lead to sound money management--regardless of what gender you are.
How Advisers Are Reaching Out
PRUDENTIAL SECURITIES Major branches offer free educational seminars aimed at women, then follow up with a quarterly newsletter. Contact your local office.
OPPENHEIMER MANAGEMENT Fund company organizes hundreds of seminars each year and advises financial planners on needs of women; can recommend independent financial planners. For free brochure, Women and Investing, call 800 892-4442.
MERRILL LYNCH Up to 30 seminars around the country feature panels of Merrill experts on topics such as global investing moderated by Ann Benson, investor information specialist. Call 800 637-7455.
CHASE MANHATTAN Runs seminars in N.Y.C. area demystifying financial terminology; makes referrals to advisers sensitive to women. Call 800 272-4273.
NATIONAL CENTER FOR WOMEN & RETIREMENT RESEARCH Sponsors regular nonproduct seminars and publishes five booklets, including worksheets (about $12 each), and two videotapes ($20 to $30) on women and finances. Call 800 426-7386.