The Financial Services Industry has “got religion” – they’re hiring women in order to target their marketing efforts to increase their market share of female investors.
- • Merrill Lynch & Co. created a Women’s Business Development unit and has conducted surveys of how women’s investment patterns are different from those of men, including their greater reliance on financial advisors
• American Express offers seminars on “Strong Women, Powerful Financial Strategy” and has long focused on women owned businesses through it’s OPEN Small Business Network.
• Charles Schwab created a personal financial relationship service that will also focus on women clients.
• Lehman Brothers set up Women’s Partnership – a membership-only wealth management service where femal executives can exchange views and network professionally.
• J.P. Morgan Chase & Co. is collaborating with Financial Women’s Association through Morgan’s managing director, Kelly Mathieson who is also president of FWA, to promote financial advices and services to the female marketplace.
• Citigroup has had a long-standing program, Women & Co., headed up by Lisa Caputo, offering financial services to women for a $125 annual membership fee for access to Smith Barney financial advisors.
• PNC Financial Service Group Inc.’s PNC Advisors targets high-net worth female cleints via its Women’s Financial Services network.
• Prudential Financial did a survey in 2004 and learned that women were a significant source of sole/joint responsibility for family finances and retirement resources.
• Investment Company Institute did a similar survey of women investors.
• Phoenix Wealth Management, insurance and wealth management products/services, has produced a number of ads focusing on women.
2. Look at the top to determine the number of women on boards of the firms that are increasing their marketing to women.
See if the companies are “just talking the talk” or if their management development strategies also “walk the new walk” and recognize that women consitute a viable market as investors, consumers, employees – but ALSO as leaders, executives, and board members.
Let’s look at the “stats” of these same firms – what is the individual and overall performance of these companies in terms of women on their boards of directors? And how does it compare to other top comparable firms?
|Company||Women out of Total||Pct.|
|Merrill Lynch||3 out of 11 directors||27.3%|
|American Express||2 out of 12 directors||16.7%|
|Charles Schwab||2 out of 10 directors||20.0%|
|Lehman Brothers||2 out of 10 directors||20.0%|
|J.P. Morgan||1 out of 17 directors||5.9%|
|Citigroup||3 out of 17 directors||17.7%|
|PNC Financial Services Group||2 out of 15 directors||13.3%|
|Prudential Financial||2 out of 12 directors||16.7%|
|Investment Company Institute||3 out of 19 directors||15.8%|
|Phoenix Wealth Management||4 out of 13 directors||30.8%|
Overall, these 10 firms averaged 17.6% of their board of director seats occupied by women. This is above the national average of Fortune 500 firms at 13.6%. [Source: Catalyst]
The average size of their boards of directors is larger than the average Fortune 500 firm – almost 14 directors vs. 11 directors for the average F500 firm. Some researchers suggest that large firms would rather add a seat to their board in order to bring women in rather than replace an existing male board member and keep the board size the same.
Over 60% of the firms have only 1 or 2 women – still considered “tokenism” by most researchers. The remainder have 3 or 4 women on their boards -- progress.
3. Look at where they put their money.
Evaluate the motivations underlying their “new” targeting strategy by examining the content of their surveys and research, both from the company and from their organizational representatives.
The real question is whether these securities investment firms are targeting women because they perceive them to be sources of market growth and product insight or because they see women as an “easy target” for their more aggressive marketing efforts.
The National Association of Securities Dealers (NASD) established an Investor Education Foundation in 2003 with $10 Million that was collected from fines realting to Treasury auction market violations involving Soloman Bros. The first 11 grants for 2004 totaled $1.1 Million of which $425,7000 went to three universities for research focused on women-investors:
- $202,700 went to Iowa State University, to personal-finance specialist Tahira Hira to survey why there exists a gender difference in attitudes and emotions about finance.
- $73,000 went to Rutgers University for Maureen Morrin, associate professor of marketing to study whether a wide variety of mutual funds in a 401(k) plan has a negative impact on investor choices (especially women) and
- $150,000 went to Boston College to Steve Sass’ Center for Retirement Research to develop a computer game to help women aged 45 to 60 year with at least $75,000 in assets better address their retirement income needs.
The NASD’s grants to major universities will “study women’s investment behavior, part of its first efforts to steer money collected from fines [for securities violations] into investor-education programs”.
According to the WSJ article, “NASD Announces Three Grants To Study Investment Gender Gap”, by Colleen DeBaise [WSJ, 4-27-05, D2],
- “Women face particular challenges because they live longer, step out of the work force to raise children, and often make less money than men, said Steve Sass, an associate director at [Boston College’s] Center for Retirement Research.
“Women tend to be often less focused on long-term financial issues, . . They are the major pocket of poverty in our retirement system – older widows in particular, and older, single women.”
According to Elisse Walter, NASD executive vice president, “We try to look at areas that we think are underserved,” adding that “A 2003 survey conducted by the NASD identified women, the elderly and novice investors as the best targets for education initiatives.”
The real question, now, is whether these universities will use the grant money to actually HELP women improve their effectiveness and intelligence as financial participants, or whether the information will be used by securities investment firms to HELP women separate themselves from their newly-acquired wealth.
Additional sources of information: National Association of Securities Dealersand the National Endowment for Financial Education