She Says she Knows What Women Want

Financial guru Suze Orman believes women bring a different mindset to the fiscal table. She argues that there's a sharp difference in how men and women invest for the future.

“The most frequent question a woman will ask is, ‘How do I pay for my kid’s education?’ A man will ask, ‘What stocks are good to invest in?’” Orman told “Advisors Magazine” during a recent interview that covered women in finance, how to save, and more.

Orman, 66, the former host of The Suze Orman Show on CNBC — described by “The Washington Post” as “TV’s only sane space in a money crazed world” — and a long-time motivational speaker about all things money might not hit the airwaves every night with financial advice, but still commands large audiences for her in-person events, frequently is seen in financial media, and recently published a children’s book, “The Adventures of Billy & Penny,” about the value of money. Nine of Orman’s previous books consecutively made the New York Times Bestsellers list, and several topped it.

Orman also has remained active via social media, and in a recent LinkedIn post described the financial services industry as tone-deaf to women.

“Wall Street and the broader financial industry pretty much, well … suck at working with women,” Orman wrote last March in the characteristically blunt post.
But Wall Street needs to connect with women, for its own sake.

Women outlive men — 81.2 years to 76.4, according to the Centers for Disease Control and Prevention’s latest statistics — and, increasingly, younger women out-earn their husbands. Recent data reported by NPR earlier this year showed that 38 percent of wives earn more than their husbands. And finally, there are estimates that by 2030 women will be the primary decision-makers for more than two-thirds of the wealth in the U.S. If the financial industry continues to flounder with women, it might find itself floundering with profits in the coming decades as well.

So what’s a financial advisor to do? Here’s what Orman had to say.

Cautious investors

Women make cautious investors, something Orman pins on the desire for greater financial security, not returns. Financial advisors must take that need into account, she said.

“A woman’s nature is to nurture, she has the ability to give birth … She spends her entire life caring more about her spouse, her parents, her brother, her sister, her employers, her employees, her pets, and her plants more than she cares about herself,” Orman said.

Male advisors tend to be ignorant of the “fear component” that drives many women’s financial decisions. Women often attach strong emotions to financial security, which can lead to fear and anxiety around investing in products where the returns are not guaranteed. Single mothers can be especially hesitant to commit their money to an investment product, Orman said.

Women who do invest often hesitate, however, to leave an advisor who “isn’t doing anything for them,” once a personal relationship is established, Orman said. Often, she sees female investors who believe their advisor is performing well because he took them to lunch, sent a birthday card, or otherwise engaged them on a personal level, but that has little to do with whether their money is being taken care of. Ease and security also can keep women invested in lackluster products as well — Orman previous had a deal with TD Ameritrade to contribute an additional $100 to women’s savings accounts based on 12 monthly, consecutive $50 deposits, but when TD Ameritrade reduced interest rates on those accounts during the 2008 financial crisis, Orman encouraged women to put their money elsewhere. None of the 150,000 women who signed up made the switch, however, she said, adding that she believes comfort outweighed the potential financial benefits of moving elsewhere.

“Men need to understand how a woman needs to remove her emotional block that keeps from being more, and having more, in order to be seriously successful with her financial wellbeing,” Orman said.

Women who overcome that “emotional block,” however, tend to become effective investors, Orman said. Orman drew a contrast between many male investors — “financial fakers” being her term for most of them — and women who eventually enter the market, describing the latter as more willing to ask questions and admit when they don’t understand what an advisor is saying.

Orman once conducted an experiment, putting several men in a room and then providing a stream of nonsensical advice. None of the men asked any questions when the presentation finished. At that point, the men when were asked to explain the presentation to their wives, who were in on the joke. As expected, none of the men knew what to say, because none of them had understood a word.

“That’s how Bernie Madoff was able to become Bernie Madoff,” Orman said. “Everybody wanted to be part of a lie.”

The seminar experience highlighted the key difference between the sexes, she added.

“Women will ask, men just act,” Orman said. “Women become very great investors, once you get them over the fear component.”

Now is the time to learn

Women often control household finances, but traditional gender roles tend to prevail when it comes to investing, with husbands being responsible for the majority of retirement funds. Widows, then, often are left in a difficult position when their spouse dies; both coping with grief and coming to grips with a financial situation they were excluded from. Women going through divorce encounter similar problems, often grappling with unclear financial pictures and feeling uncomfortable speaking to a financial advisor who had a better relationship with their now ex-spouse.

Women need to be proactive in developing financial literacy and an understanding of what their husband has done with their money, before problems force them to.

“The time to learn about their money is not when they’ve suffered a divorce,” Orman said.

Building relationships with (male) clients’ spouses likely would do financial advisors some good. Many women working through the loss of a husband or divorce often begin talking to the “family” financial advisor — who really only had a relationship with the now out-of-the-picture man — and find themselves feeling alienated, or simply unsatisfied.

“Survey after survey shows that women tend to be seriously dissatisfied with their financial advisor ...” Orman wrote in March. “It is absolutely no surprise to me that one survey found that within one year of being widowed, [most] women fire their (male) advisor.”
Orman’s advice to new widows and divorcees? Sit tight and keep your money safe for at least six months, preferably 12.

“The time to learn about finances is not when you’ve suffered the loss,” Orman said.

“That’s the time women are the most vulnerable because they know nothing, and when many financial advisors will seek them out.”

And women aren’t the only ones who need to learn; advisors need to meet them half-way as well. Many financial advisors, accustomed to speaking in jargon or prioritizing clients’ more selfish financial goals — owning a boat or retiring early for example — can fail to connect with women by misunderstanding the values that drive them to invest.

“They will care about everybody before themselves, so when speaking and dealing with women you have got to understand the emotional component that goes along with being a woman,” Orman said. “It’s not simply do this with your money, do that with your money, buy this, sell that.”