Finance

To Women Money is a Pond; it is not a River

Karla Rossetti Pippins, founder and president of Riverside Wealth Management, says that women tend to view money as a pond, while men see it as a river. Most ponds don’t have an inlet or outlet, and if they do, they generally don’t have a strong, quick flow associated with them. Rivers, on the other hand, run fast and there is constantly some new action entering the current from other streams flowing in.

“It has been said, and I think this is a great analogy, women see money as a finite resource, treating it as all they have” Pippins said. “And men see it a renewable resource, which can always be replenished.”

This psychological divide is where Pippins targets the work of her firm. Drawing on her background as a strategic consultant for Fortune 500 executives, Pippins provides comprehensive and individualized financial consultation and planning for her clients. 

“I work best with successful women and what I call ‘loving couples,’” Pippins said. “What I mean by ‘loving couples’ is that the husband or significant other recognizes the reality that he is probably going to predecease his wife, and he wants a financial relationship in place today for both of them and to ensure she has a trusted advisor to talk with who is not just full of financial jargon and will take care of her financial needs when he no longer can.”

Pippins states that approximately 70 percent of widows replace the family investment advisor after the husband dies because the previously chosen advisor either won’t “speak English” to them about financial matters or is incredibly condescending in regard to her needs.

That’s why Pippins opts to actively engage wives and the female significant others served by the firm.  “As women, we don’t think we are smart enough.  Even successful women in non-financial domains tend to be investment phobic when it comes to their financial life.  These are highly successful, competent women, they sit on corporate and philanthropic boards.” Pippins continues, “but when it comes to what I call the ‘big money decisions’ they lack confidence and are therefore afraid to make decisions. They feel like they have to be a financial expert to make choices, so they don’t. This leads to making no decision, which is even worse.”

Pippins’ solution is to engage and educate her female clients. She wants to empower women with professional guidance, so they are confident in their decision-making because they truly comprehend the principles at work behind those decisions.

Most women don’t like to take risks with their money, which runs counter to the fact that to beat inflation, some risk tolerance is necessary. “And yes, women have an enormous amount of learned emotions attached to money that men simply do not share” Pippins adds.

That’s not necessarily a bad thing; it just is something that a financial advisor needs to recognize and respect and then provide a work-around solution. Part of that solution can be stories.
“Women learn best from stories,” Pippins said. “When there is an issue they need to take action on, I often use a story to get the concept across. When they can learn vicariously through someone else’s experience as told in a story, they are much more ready to take action, because they feel as if it could have happened to them directly and they say, ‘Wow, I need to get this taken care of.’”

Pippins prepares clients for the future by using her own version of a “financial fire drill.”  She asks a series of  “what if” questions to help clients determine a response to a variety of scenarios.  This assures decisions have been made logically and not during a time of heightened emotions or a time of grieving.  She insists on having a plan in place – written, agreed upon and finished off with signatures for each advisory relationship.

This approach also helps with day-to-day financial issues.  Pointing to a 2014 study conducted by Money Magazine indicating that 70 percent of a couple’s fighting is due to financial matters, Pippins said that, with her clients, the comprehensive plan approach prevents much of that from happening.

“In that 70 percent, the bulk is not fighting about the ‘big money decisions’ such as how to save for retirement or how to invest assets or how the trust and estate documents should flow,” Pippins states. “Most of it is about routine spending and household budgeting. We set up a spending plan and to take away those frivolous arguments. I take the worry out of finances for my clients by having a comprehensive written plan in place to help them feel in control of their financial life.”

For more information visit: www.riversidewm.com

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