The concept of diversity encompasses acceptance and respect. It means understanding that each individual is unique, and recognizing those differences. It is about moving beyond simple tolerance to embrace and celebrate the rich dimensions of diversity contained within each of us. Senior Market Advisor has launched a series about how diverse groups are making inroads in our industry. We start this month with WOMEN ADVISORS, and we welcome your comments. Let us know what you think.
WOMEN IN INSURANCE
by Maria Wood
Why aren't there more women advisors? Women make up 51 percent of the population
and half of the workforce. So why are there still so few women advisors?
Q&A WITH JO ANN FAVIA
by Maria Wood
A successful work/life balance. Jo Ann Favia has been a financial advisor for 25 years
and has never missed one of her children's school events. Read how she does it.
ESTATE PLANNING FOR SENIOR WOMEN
by Ed McCarthy, Greg Betza Illustration
On her own. Estate planning for your single senior women clients requires special care.
Women In Insurance
Women make up 51% of the population and half of the workforce. So...why aren't there more women advisors?
It's a question that has no easy answers and one that is, quite frankly, fraught with sexism (perhaps on the part of both genders). Despite the efforts of large carriers and industry organizations, the insurance and financial advisory business remains a largely male-dominated field. Yes, women have made strides, but the percentage of female affiliated agents hovers around 20 percent (according to LIMRA), the same as it has for the better part of this decade.
Why is that so? Working advisors and recruitment executives paint a picture of an industry that still needs to do a better job of reaching out to women to bring them into the field, as well as training, mentoring and supporting them while they build a career in the industry.
Sarah J. Kaelberer, CFP, CLU, ChFC, vice president at Business & Estate Advisers, Inc., in Wayzata, Minn., says that while she does see more women entering the field, it's not a significant influx. "It is still a male-dominated industry," she declares.
Perhaps it stems from traditional male/female roles of breadwinner and homemaker. Men have always been able to pursue their careers because they had a support system at home, meaning the wife ran the household, Kaelberer points out. A woman with a family may not have the same opportunity. Therefore, their career path may not take a straight-up trajectory, but a more circuitous route.
Add to that equation a job that requires an advisor to sometimes be on call at all hours of the day, and women have an even harder time blending work and family. "In my experience, to be a top advisor in this field, it is not a 9-to-5 job," Kaelberer says. "People need your assistance at other hours. Or you are called upon to do different things at different times, whether that's in the business-building arena, doing networking at various events, or in the service arena dealing with a client who has had a spouse die."
LIMRA tallied the percentage of affiliated female agents in 2004 and 2007 at 37 companies. Women accounted for 23 percent of the total in 2007, up a mere one percentage point from 2004. The organization is currently doing a more current count.
LIMRA further looked at recruitment efforts. In 2010, women affiliated with a carrier made up 28 percent of all recruits, pretty much the same percentage since 2004.
Current female members of the Million Dollar Round Table number roughly 13,500 out of a membership total of nearly 36,000. Percentage-wise, women make up about 38 percent, with U.S. women numbering 1,086. The number has ebbed and flowed in recent years, going from 12,000 in 2007 down to 10,000 in 2009, a drop the organization attributes partly to the recession.
Arthea (Charlie) Reed, Ph.D., CLTC, works as a financial rep for Northwestern Mutual and heads her own company, Long Term Care Insurance Connection, Inc., in Ashville, N.C. She also sits on the board of Women in Insurance & Financial Services (WIFS), an organization dedicated to attracting women to the industry and advancing their careers.
She agrees with Kaelberer that women are not entering the field in any great numbers. "I was just at an industry-wide meeting and looking around, there were no more women there then there were at meetings 10 years ago," Reed says. "It was actually an African-American meeting, so diversity was obviously a major focus, and I would say probably under 20 percent of the participants were female."
Support or special treatment?
So how can the industry as a whole and its companies get more women into the ranks? Several dynamics can foster a workplace where women want to work and where they can grow, say those in the field. Mentorship from management and flexibility were two key attributes.
Pat Brzozowski, national diversity director in agency distribution for Prudential, says that in focus groups with newly hired women, participants cited several factors that led them to take a job with the insurance giant. First, having a manager who supported them and actively worked to help them succeed was important. "They [the managers] were going to be personal mentors and they really bought in to making them successful," she says.Next up was flexibility, especially for those with young children. "They wanted to know if they had to leave the office at three o'clock to pick up their son from school, that they had that flexibility," Brzozowski says.
Brzozowski contends that more women are entering the field and that the number of female agents in Pru's network is on the upswing and closely mirrors the numbers of other large companies in the industry.
As Reed sees it, if the leadership in the agency or company is considerate toward its female employees, they will succeed. In her Northwestern Mutual office, two of the top producers are female (she is one of the two). In fact, 40 percent of the staff is female.
Reed cites managers--whether male or female--for that success. "The difference between the office I'm in and the offices of some of my female colleagues is the leadership and how sensitive it has been to the needs of women," she says. "I see a lot of places where for whatever reason, the leadership, which is largely male and even if it's female, is not terribly sensitive to the needs of women."
Yet there's a thin line between helping women succeed and giving them special treatment. Kaelberer says that the industry as whole should focus on recruiting and training qualified advisors, whether male or female, and developing the tools and processes to make them more efficient so they can spend time on the most important facet of the job--interfacing with clients.
"Nobody gives me any opportunity. I take those opportunities," Kaelberer says. "I have never succumbed to the vision [that] I don't have the same opportunities because I'm a woman or I need special privileges because I'm a woman. Success and advancement are what I choose to make of it, not what somebody else puts out there for me. Now, I'm in an independent broker/dealer so therein lies a potential unique aspect that I have that may not exist in certain companies."
A good field for women
As sexist as this may sound, women are said to possess certain skills and inherent traits that make them a good fit for this profession. They are natural relationship builders, can multi-task and---to echo probably the most time-worn clich?s about women--are sensitive and good listeners. All attributes that a good adviser--male or female--needs.
Kaelberer explains that whereas men tend to stick to a pre-determined script when talking to a client, a woman may pick up on something that is bothering client, such as a troublesome child. "We will stop and listen to that, knowing that our multi-tasking brain is going to bring us back to where we left off," Kaelberer says. "That is something that clients or perspective clients very much tune into, [which] is 'hey, they picked up on that and followed me over here.' In addition, women tend to use many more words. Especially in dealing with seniors, [that] helps them recall and understand why" an advisor is making a recommendation.
Taking care of young children is perhaps the best training for this field, Reed asserts. "You have to be a good listener if you have little kids," she says. "We have absolutely the right traits for what this field needs now, because every single study says that people don't select their financial advisors because of the products that they sell or the companies they represent. They select their financial advisors because they trust them and they have a relationship with them. That is what women bring to this career and the women who have been incredibly successful in it that is exactly how they built it."
Despite their relationship-building capabilities, women may need help in sharpening their networking skills. In February, Allianz kicked off a women's employee resource group within the company. It's already sponsored a number of events, which are open to both men and women.
Mary Currier, vice president of IT relationship management at Allianz in Minneapolis, heads the group, whose goal is to attract and retain qualified women and move them into leadership positions. During meetings, participants expressed a desire to boost their networking skills, Currier recalls. Consequently, the group has held a workshop on how to "build your brand."
"Women don't seem to network as well or as much as they should," she says. "We are really busy with our own personal lives. We seem to be so busy that we don't take the time to continuously network or promote ourselves."
Loom large in LTCI
Anecdotally, all concur that women are more active in the long-term care insurance field. Pin it on their natural caregiver role that gives them first-hand insight into the need for this product.
That's because if an aging parent requires care, it's usually the wife or the daughter who delivers that assistance, Kaelberer says. "So as we talk to clients and prospects about the importance of long-term care it's because we know we're the caregivers. We've done it for our parents or we've watched our mom do it for grandma."
Nevertheless, LTCI can serve as a gateway into other products, Brzozowski says. "You use long-term care as an entryway to build the relationship," she says. "But then you do a holistic fact-finder to find out what is it that my client needs in total and how can I help my client meet all the challenges for a secure financial future."
Build a support network
At the most basic level, if women want to succeed in this very competitive field, they need to build their own support network and frankly, ask for help, Kaelberer says.
"For me, one of the biggest hurdles was hiring a housekeeper because that meant I just couldn't do it all," she says. "I don't even like housekeeping. So what difference did that make if it saved me four hours a week that I could now dedicate to my children or for that evening that I had to help a client whose spouse had died? Women cannot be afraid to ask for help in this industry. Men always did and got very successful. As soon as we learned to ask for that help and build that support network we now are seeing ourselves enjoy that same level of success."
Even in light of all the efforts Prudential makes to attract more women, Brzozowski says the industry should be doing more. For its part, Prudential encourages its field managers to build alliances with local and national women's organizations, such as the National Association of Women MBAs, so more women will become aware of the company as well as financial services as a career option.
"When you consider that women make up 51 percent of the population and almost 50 percent of the workforce, yet in our industry, on the agency side, women are only 20 percent," Brzozowski says. "That is something we really need to put a lot of effort on."
What makes a woman successful in the financial services and insurance industry? Women in Insurance & Financial Services (WIFS), an advocacy group for women in the field, wants to know. It's undertaking a study to discover what characteristics high-achieving women have that makes them thrive in financial services, according to Arthea (Charlie) Reed, Ph.D., CLTC, a board member of WIFS. She is also a financial rep for Northwestern Mutual and head of her own company, Long Term Care Insurance Connection, Inc., in Ashville, N.C.
"We're hoping we can find some things that we will be able to provide to those insurers and corporations that are hiring, training, developing and promoting women to get more [women] into the business and have them stay and flourish," she says.
Meanwhile, Prudential looked at one of its branches in the Chicago area where five of the top 10 agents are women. It found that one of factors for that success was a women's study group that allowed the female agents to bounce ideas off of each other. "If I'm a new woman in the industry and I might be having a challenge, I can go to a woman who has been in the industry for five or 10 years and ask, how did you did you overcome this challenge with your family or this challenge on the marketing side," says Pat Brzozowski, national diversity director in agency distribution for Prudential. "That study group is very important."
Q&A with Jo Ann Favia
A work/life balance
Jo Ann Favia has been a financial advisor for 25 years and has never missed one of her children's school events. Here's how she does it.
Jo Ann E. Favia, CLU, ChFC, AIF(R), started in the financial planning business 25 years ago--a time when there were so few women in the field that meeting venues switched the ladies lounges to men's rooms because there were so few women in attendance at industry conferences.
Fortunately, the business world has evolved since then, and so has Favia. She began her career at a small carrier, "Sitting down with individuals across the kitchen table, doing full insurance and investment planning," she recalls.
But in 2002, she went independent and is now president and owner of the Favia Group in Villa Park, Ill. Currently, she has $82 million under management, splitting her time between advising companies on their 401(k) plans and working with individual clients on personal wealth management and retirement planning. About 60 percent of her clients are seniors, a group she enjoys working with. "They are closer to retirement," she says. "They do have an interest in what's going on, and they still want to learn about it. They realize that because their investments are going to have to provide them their paycheck, they're taking it a bit more seriously."
Favia takes her profession very seriously as well. A 22-year member of the Million Dollar Round Table, she has garnered two Top of the Table and four Court of the Table qualifications. In addition, she currently serves on the board of the Society of Financial Services Professionals (FSP).
Outside the office, Favia has raised two children as a single mom. (She founded and acts as president of the A-Parently One Foundation, an organization that aids children from single-parent households.) In fact, Senior Market Advisor caught up with her after she had just dropped her children, ages 19 and 18, off to college. Here's what she had to say.
SMA: Are you seeing more women entering the financial services field?
Jo Ann Favia: Absolutely. I'm very involved with MDRT and going to the meetings 25 years ago, they shut down all the girls' bathrooms and made them boys' bathrooms because it was literally 10 to one in regards to men versus women. Nowadays, there are definitely more women. However, with MDRT a lot of them are international, not necessarily American women in attendance at the meetings. But I do see a bit more women. I'm a board member of the Society of Financial Services Professionals (FSP) and at [its past] meetings, typically I was one of the few women and now we are seeing at least 10 to 20 at each of the meetings. It's a great profession for women. I've been a single mom for 17 years. I just sent both my kids off the college, and so it allowed me the freedom to be a mom first and also have my business. So it provided me a lot of flexibility and I'm trying to encourage my daughter to get into the business.
SMA: You say there are more women now than 25 years ago. But do you still consider it a male dominated field?
Favia: I do. But I do think that's changing just because we're trying to get more women [into the profession]. Through FSP we've contacted more colleges to try to get more mentors and I'm actually the chair this year of the mentoring committee for the Million Dollar Round Table. So we are reaching out to, trying to put mentors together with mentees so we can bring more younger people into the business. I don't want to be biased, but I think women have a bit more attention to detail and it's kind of the mothering instinct. They want to take care of people. So I think it's just a perfect field for women to get into. But I do think it's still primarily dominated by men because finance typically is.
SMA: What can organizations like MDRT do to get more women in the industry? And what can the industry as a whole do to bring more women into the field and help them succeed?
Favia: It's a personal discovery. I do some individual recruiting that if I find a woman that I feel would be very good in this business, yes, I'm going to talk to her and I think many more people on an individual basis are doing that. I don't see the recruiting efforts that [companies] are doing. I think it's more of word of mouth, a personal meeting versus anything else. At colleges, there are more degrees focused on financial planning and getting a CFP right out of college, so I would hope its stems from college or their educational years. It's a career where you can choose when you want to work, which is really nice. That's why I ended up getting into the 401(k) marketplace, because I needed a daytime activity. I wanted to work from 8 a.m. to 3 p.m. when the kids were at school. I didn't want to work a night. I wanted to be home with the kids.
SMA: Why is this field well suited for women?
Favia: I think they are very intuitive and very sensitive to emotions. This is a very emotional business just with the market volatility. I think they take a different approach of more hand-holding. I know for me it's definitely not a transaction-based business, it's more a relationship-based business. I can sit and talk to [my clients] for literally an hour about kids, about life, about their vacations and boil down the business to 15 minutes. I think women bond a bit more and just have more of a motherly instinct. They want to help and they are willing to talk and not do business. I think there are certain individuals that automatically turn to the more nurturing nature of a woman to handle some things. And I think it's a very emotional business--going into retirement and the uncertainty of retirement. Also, I'm finding that women are living longer, so I have several widows that never handled the finances, the man always did. I think we are willing to spend a little bit more time with them so they understand it. I'm a firm believer in educating somebody. I don't want to handle somebody's money without them understanding why we're doing it and understanding the strategies and I think we tend to be a bit more patient in explaining things.
SMA: Are there advantages for women to work in this field in terms of professional advancement and blending work and family? You mentioned the flexibility.
Favia: Absolutely, the flexibility. Honestly, you create your own schedule. You work when you want to work and that's what's so wonderful about it. When my kids went to school, I went to school. That's when I got my designations. So you can tailor-make your schedule around when you can and can't work. I never missed a sporting event or a school event because of work. I truly believe that you can design your schedule and your work hours around your family. That's exactly what I did. Doctors have specific office hours and we can do the same thing.
SMA: But being an advisor is not always a 9 to 5 job. How do you handle seeing a client after hours?
Favia: Honestly, then, they just may not be my client. It's just as important for them to choose you as you need to choose your client. You make doctor appointments and doctors typically don't have evening hours. Well, you find one that does. It's the same thing. We're advisors, we're professionals and if I choose to work 8 o'clock to 3 o'clock, then that's when my clients need to see me. There are some days that I'll make [exceptions], if it's a long-term client and it's an emergency. But I think it's something that you can absolutely design how you want to work and when you want to work.
SMA: Do you do see more women buying and selling LTCI? Why?
Favia: I do. A lot of the women I'm in business with, it's definitely something that they talk about. Once again, it's because of the caregiving nature of a woman, and the odds of them outliving their spouses. Who's going to be left to take care of them? My father has Parkinson's and he's confined to a wheelchair. He's had it for 28 years, so we are dealing with it firsthand. We have a full-time caregiver living [with him]. My stepmother knows she'll eventually be on her own so we definitely have long term-care insurance on her. I talk to every client about it, but I think the women definitely are more open to purchasing it because I think the men believe the women are going to take care of them anyway. But long term, I think the women know that their kids are busy, they don't want to be a burden on their kids, so they are definitely more open to looking at that.
SMA: How can women become more active in other products like annuities and life insurance?
Favia: I'm a full financial planner so we look at everything. If you are going to be comprehensive, every area has to be addressed: income solutions, investment strategies, long-term care. You don't want to outlive your assets so you have to look at all of it.
Estate Planning for Senior Women
On Her Own
Estate planning for senior women requires special care. Here's what you can do to help your single female clients plan for the future.
Single, divorced or widowed--at some point your senior female clients are likely to be on their own if they're not already. It can be a challenging stage of life that requires sensitive attention to estate planning needs. We asked several leading advisors for strategies that can help these clients.
Create a gift annuity for spendthrift heirs
The scenario: Your client is afraid that her only child will burn through his inheritance. Kathleen Rehl, Ph.D., CFP(R) with Rehl Financial Advisors in Tampa, Fla. and author of "Moving Forward on Your Own: A Financial Guidebook for Widows," faced this problem with a client who had a $500,000 IRA and a spendthrift son.
The client had strong interests in several charitable organizations so Rehl worked with her and the local community foundation to create what she calls a birthday gift annuity. Here's how it works: The client wrote a letter of instruction with the community foundation, naming them to administer her plan and filed an IRA beneficiary change form, naming the foundation. After the client's death, her son receives a check from the annuity every year on his birthday. The payout rate will depend on his age when the annuity starts.
For example, at age 55, under current rates he would receive 4.4 percent of the IRA balance. That's $22,000 a year. If he lives to age 80, his birthday checks will total $550,000 over his lifetime. The client's estate will earn a partial estate tax deduction for the contribution. After the son's death, any money remaining in the annuity goes to the charities the client selected.
Review beneficiary designations
Beneficiary designations take precedence over the client's will and can thwart estate distribution plans if they're not handled properly. Mary Ellen Hancock, CFP, a financial planner at Brinton Eaton, a wealth advisory firm in Madison, N.J., points out that these designations are found with numerous accounts:
- IRAs: traditional and Roth
- 401(k) plans
- Deferred compensation plans
- Equity-based compensation plans: restricted stock, stock options, performance awards
- Life insurance policies
- Annuity contracts
- Health Savings Accounts (HSAs)
Neglecting to review and make appropriate changes to these account's beneficiary designations can cause clients to unintentionally disinherit their heirs, Hancock points out via email. Her solution: When she reviews clients' estate plans, she asks for a copy of the assets' beneficiary designations. She takes that information and prepares a beneficiary designation schedule for review with clients. Once the schedule is established, she says, it's easy to examine with the client annually and also provides the client with one document outlining their beneficiary designations.
Consider a family trust
For widows whose husbands handled the family finances, taking on the role of money manager can be daunting. Add the problem of age-related diminished capacities and it's a recipe for financial disaster. Establishing a family trust can help resolve these complications, according to Kevin M. Reardon, CFP(R) with Shakespeare Wealth Management, Inc. in Pewaukee, Wis. These trusts can be set up while both spouses are living, says Reardon. "The typical scenario is the surviving spouse is the sole trustee, so they do have access to principal," says Reardon. "There are instances where you name co-trustees or outside trustees for the surviving spouse."
The co-trustee can step in if the surviving spouse becomes incapacitated or loses interest in managing the trust. "Someone who may have the interest and the aptitude at age 70 may not have the interest or aptitude at 85 or 90 or 95," says Reardon. "One way to handle that is to put in a co-trustee. That person could be an adult child; it could be a trusted family friend or an attorney. It could also be a third-party trust company."
Review powers of attorney
"When they've done the conference with the attorney and gone through the signing and finished their estate planning, lots of people think they're finished for a lifetime," says Linda Patchett, CFP with Woodward Financial Advisors Inc. in Chapel Hill, N.C. "(But) the landscape changes pretty radically as we age and our kids age. Documents you've created 10 or 15 years ago may not be serving you well at the current time."
This is particularly true for durable powers of attorney and health-care powers of attorney. Patchett's firm reviews these documents regularly with clients to ensure the information is up-to-date. They also stress that the persons named as attorney on either form have copies of the documents or know where to find them. Having ready access to those forms is vital in a crisis, Patchett says. "If you happen to be someone's named agent under a health-care power of attorney and you show up in the emergency room with that piece of paper in your back pocket, they don't have to ask any questions," she says. "They know you are the named agent and in power to make decisions."
Transfer the home to a QPRT
Gifting assets to reduce an estate's size is a standard planning technique. The qualified personal residence trust (QPRT) uses that strategy and allows the homeowner to give away her home while retaining the right to occupy it for life. W. Bailey Smith, an attorney with Tredway Lumsdaine & Doyle in Long Beach, Calif., says the QPRT holds no assets other than a personal residence. It's qualified with the IRS for special tax breaks and Smith believes that QPRTs are the best tax shelters because they are easy, safe and guaranteed.
"When you give your home to a QPRT, you're making a gift to your children but you're holding something back--your right to occupy the home for a period of time," he says. "The QPRT is a tax bargain because you, the donor, will get a discount in computing the taxable gift, the value that you retain. If you die before the end of the QPRT, the QPRT terminates and the home reverts back to your estate. If you survive the term, the entire value of your home, including all the appreciation, is out of your estate."
Survivorship life insurance: Providing survival for charities
By William J. Peverill
The current economic crisis has brought about what may be the most severe reduction in charitable giving since the Great Depression, creating the dual challenge of rising demand for services and declining revenues. Even for those non-profits whose donors have continued their giving, the gifts are smaller. Moreover, those givers who had once hoped to make a truly significant gift that would make a significant impact on behalf of a favorite cause have deferred if not abandoned their objective.
Survivorship life insurance
Survivorship life insurance, especially when used with a life insurance trust, is one of the most beneficial vehicles in estate planning. Owing to its low cost, more robust utilization of this funding method can rescue charities, especially when combined with donation splitting, which provides a powerful leverage aspect to donors' legacy gifts. Donation splitting calls for two donors who share a mutual charitable interest to split the premium while their chosen charitable organization becomes the owner and beneficiary of the survivorship policy.
The insurance contract is a guaranteed no-lapse policy, for which premiums are commonly paid for one year (single premium) but for no more than five years. This method of combining a low-cost policy with shared and tax-deductible premiums to create endowment funds can lead to a new and significant donor base. It combines relatively modest funding with notable endowment results. A plan's joint givers (insureds) can be two unrelated individuals with a common charitable cause. Participation in these endowment opportunities can be utilized by the charitable organization to encourage special bonds between benefactors.
When balancing the pursuit of long-term funding with short-term budgets, charitable entities have a tendency to overlook or underestimate gifts of insurance in their fundraising efforts. But it is wise to consider the following:
- Survivorship plans allow for one of the applicants to be uninsurable; thereby enlisting an otherwise excluded giver. Moreover, this makes it easier to split the gift without concern for each donor's insurability.
- Contributions show up as cash values quite early on (instantly in the case of single premium funding). Those values are available as policy loans at surprisingly low interest rates and can be used to fund immediate or urgent projects while still maintaining the long-term endowment. It may be most valuable to think of this highly efficient leveraged-giving method as providing charities both "a bird in the hand and two in the bush."
- This strategy enables deferring philanthropists to revisit their charitable objectives and make them happen.
William J. Peverill is a principal in Peverill Wealth Concepts in Des Moines, Iowa. He is a life member of the Million Dollar Round Table and a specialist in the use of charitable life insurance gifting.