As wealth advisors there is one particular kind of client who can be counted on – almost without exception – to keep us very much on our toes.
Well-prepared, strategic in terms of investment goals, even-tempered and – above all – rational, this is the kind of client many advisors ought to be working hard to attract into their practice. Not necessarily because they’re asset rich, but because they’re the future.
We’re referring to what demographers call millennial women, the under 35 year old female whose financial interests – it has to be acknowledged – many of us in the still male-dominated world of wealth advisors have tended to overlook and ignore.
This is a mistake that, fortunately we have not committed. As far back as 1994, Debra Wooding has been keenly focused on educating and reaching out to women with a workshop series entitled “Women and Wealth”. When we saw a recent article in The Globe and Mail (Kathy Kerr, May 22, 2017) about the increasingly decisive influence millennial women are having on the management of family finances, we felt both vindicated and intrigued!
2015 Statistics Canada study
A 2015 Statistics Canada study found that, unlike older women, university educated women under 35 years of age have the same level of financial competency as their male counterparts. Nothing surprising here; we knew that. Then we saw the following quote from Dave Nugent, chief investment officer at Wealthsimple, an online investment management company aimed directly at millennials:
‘Women are actually better investors than men, predominately because of their demeanour and composure relative to men. Men tend to be overconfident in their own abilities and tend to make those emotional mistakes much more frequently than women.’
Mr. Nugent went on: ‘I would say more and more women are the ones that are CFO of the house, not just for investment but the sheer budgeting standpoint. More women are taking that role in the relationship.’
Millennial women armed with research
This point-of-view was reinforced, though with a slightly different spin, by Tyler Pfeiffer, an advisor at First Foundation mortgage and insurance brokers in Edmonton, who observed that younger women come to his office well armed with research they have done before seeking financial help. Said Mr. Pfeiffer:
‘I think they’re still looking for that guidance but they might be more skeptical while previous generations were more trusting in what the advisor told them to do. They’re asking more questions and pushing back against what people are saying to make sure it backs up the research they’ve done.’
One of the people interviewed by Kathy Kerr for her story in The Globe and Mail was millennial investor Stacey Cann, an independent art advisor (she performs contract work, largely) from Edmonton. She is one of those skeptical clients who want more of a say in her investments and an advisor who listens to her concerns. And she would like to see more transparency about management fees. Ms. Cann bought a house in her 20s. Now her investments are made with an eye to retirement. Says Ms. Cann:
‘CPP (Canada Pension Plan) isn’t exactly going strong either. I doubt there’ll be anything left in it.’ She adds: ‘More and more jobs are going the way of the short- or medium-term contracts so you don’t get any benefits. I do keep a cash reserve in case there are in-between times in contracts. And as far as the house thing …yes that’s great but if I didn’t have to have a roommate to pay the mortgage, that would be even better.’
A sound strategy
Ms. Cann’s strategy is sound. Set goals, such as buying a house. Establish timelines to reach the goals. Create a rainy day fund. And start saving in a retirement account, taking 10% of income as a target. Ms. Cann says she is probably mid-range in terms of risk among millennials. She graduated from university in 2008, the year the market took a major dive. That year looms large in millennials’ minds.
Our challenge is to ensure that our millennial clients embrace the opportunity to further their education on the value of saving, to understand what they own and why they own it, and an incredibly important aspect: that time is a precious commodity. At the Wooding Group we treat every client on a unique, person-by-person basis. We’re interested in establishing the connection, having a conversation about goals, objectives and what our millennial clients wish to accomplish. Setting those foundations with a personal financial plan and building the proper portfolio to achieve their goals is the starting point!
Socially responsible investing
We like tax-free savings accounts for millennials, which are flexible and can work in many stages of life as a foundation for an investment strategy. And we note that our millennial clients are also interested in environmental and socially responsible investing (RI), an area in the investment world that has experienced explosive growth in the past decade.
Since 2006, when the RI industry stood at $460 billion in assets under management, participation skyrocketed to $1.5 trillion by the end of 2015, according to the latest data available from the Responsible Investment Association (RIA).
At the Wooding Group we like growth. Cultivating the interests and growing the assets of our millennial clients is of importance to us in our wealth advisory practice.
The Wooding Group at CIBC Wood Gundy, 780 498-5047