Be a female-friendly advisor: Help clients’ kids be finance-savvy

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Fifth in a series on how global finance culture is changing as financial institutions realize that wealthy women represent a lucrative business opportunity. Indeed, they are today’s largest and most under-served target market.

Family life is central for many women. This provides an avenue for financial advisors to help them set up their children for success. Obviously, not all women have kids (including me), so this column isn’t applicable to all.

Great advisors should know how to help women investors provide their children with the best possible financial futures.

This is the fifth in a five-part series in which I share my research findings for advisors who want to become more female-friendly. I spent the last 13 years conducting more than 1,200 qualitative interviews with highly accomplished women around the world in diverse industries and professions.

In this article, I look at how advisors can provide another level of service to their female clients by guiding their children’s thoughts and attitudes toward money, acting as a mentor to them and providing some basic “Investing 101” advice.

Here are three tips from my research findings.

Finding #1: Help kids build financial confidence

I’m now in my 15th year of doing research around the world, and I always ask interviewees how they learned about money when they were growing up. Most people have strong recollections of pivotal conversations in their childhoods, often with parents or grandparents or family friends. But, interestingly, sometimes the pivotal moments the women experienced were conversations with the family investment advisor.

One advisor based in Paris explains her approach:

• “Talk about lifestyle. Rather than asking kids the proverbial ‘What do you want to be when you grow up?’ try moving beyond that and broaden the discussion. Link the questions to lifestyle, such as, ‘Where do you think you will want to live?’ ‘How much money do you think you will need to live there?’ ‘What type of job will enable you to earn that much money?’ and ‘What type of people do you want to work with — bright, sick, old or young?’ This conversation will help kids to focus on a specific future that appeals to them.”

Another great idea: Tell kids they are smart. From my research, many successful people never questioned their own ability to handle money because they were told early on and over and over that they were capable and smart. They felt respected for their intellects at a young age, and quickly believed that they could do whatever they wanted in life.

Ask your client’s kids for their input on why they like a certain product so much. From there you can talk about the possible link between them liking a product and how that successful product might be the spark for a stock price to go up. This approach can have a big effect on a child’s confidence level.

Finding #2: Act as mentor

While many investment firms offer investment courses for the next generation, advisors can differentiate themselves further by acting as mentors via a one-on-one relationship. Find ways to get kids interested and find a way of interacting with them at their speed and in a digital way.

One European CEO I interviewed shared her experience:

• “My advisor has a 24/7 service mentality, and she was particularly excellent when dealing with my 18-year-old son. She helped him develop a mindset of taking responsibility for his assets, and at 18 he was treated as both a private client and as an adult. No information was channeled through the parents. This was very smart because it created an interest, and now at 21 my son tells me that he lives off the performance returns from his investments.”

A Canadian advisor invests a substantial amount of his time acting as mentor:

• “One unique thing I have done is offer to mentor the children of my clients normally when they are in the final year of their undergraduate program. I find that universities tend to do a great job of teaching their students how to prepare a cover letter and resume, but they don’t provide recent graduates with many of the soft skills that they will require. For example, as you know, networking is a skill that is required to be either a successful executive or business owner, and I find most students graduate from university without a networking plan or the skills to implement it. I offer to meet with the recent graduate two or three times a year with a focus on helping them to develop a networking plan that will allow them to not only grow their network but will also support their learning more about the industry that they are interested in working in full time. I have been fortunate enough to be able to use my own network to support the development of these recent graduates, which is something I really enjoy and over time has become something that is greatly appreciated by my clients as well.”

Finding #3: Provide customized education

Make it easy for your clients. Ask them what exactly they would like their kids to learn more about. The history of stock markets, perhaps, or how bonds work. What are all the ratios about? How can they get started trading online? Perhaps they would like a short “Investing 101” class for their kids.

Here’s what two working mothers in the Nordics told me:

• “Introduce young people to the basics of finance. They need to learn about the simple things like credit debt risk, how to balance cash inflows and outflows, compound interest, and why you should own part of your home in marriage or cohabitation. Host an event regarding ‘Everything you need to know about moving away from home.’ This will help young people buying their first apartment, figuring out how to pay bills, learning how much to save for their retirement, and learning what they need to know about taxes.”
• “In an ideal world my investment firm would invite my 15-year-old daughter to a crash course in finance. As parents we are always perceived as wrong or nagging. Invite our kids for pizza and an interactive presentation – they would feel important that they are customers of the firm. Use real-life examples such as taking a look at their mother’s salary and monthly expenses. Show that there are spending limits and how all of the pieces fit into the puzzle. For me as a mother who has 80-90% of the responsibility for my daughter this would be a dream come true!”

More articles from this series:

• To be a female-friendly advisor, make the ‘G’ in ESG stand for gender
• ‘Friending’ clients: Unprofessional, or a way to deepen ties and boost confidence?
• Be a female-friendly investment advisor: Communicate in her language
• How to be a female-friendly advisor: Get the risk right

Writer Barbara Stewart is a Chartered Financial Analyst (CFA) with 30 years of investment industry experience. She spent five years as a foreign currency trader, more than two decades as a portfolio manager for high-net-worth entrepreneurs, and for the past six years she has been performing interview-driven research for financial institutions around the world.  Barbara is a keynote speaker for CFA Societies, banks, stock exchanges and industry conferences globally, and she is a columnist for CFA Institute and Canadian Money Saver magazine. She is on the advisory board of Kensington Capital Partners and also is the Ambassador for the Kensington Women’s Forum. In addition, 13 years ago Barbara saw a need to challenge outdated financial industry stereotypes and share positive messages about women and money. Today, Barbara is recognized worldwide as one of the leading researchers in women and finance. Her Rich Thinking® global research papers quote smart women and men of all ages, professions and countries and are released annually on International Women’s Day, March 8. To find out more about Barbara’s research, visit www.barbarastewart.ca.

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