Women Aren't Afraid to Ask

By Jean Chatzky Sunday, May 19, 2002
    • Women stop to ask directions. Men study the map. And those gender tendencies apply to personal finance as well as to road trips. According to the Money Magazine/OppenheimerFunds Women and Investing survey, released last week, about a quarter of men get most of their advice from financial advisers — the same amount who seek guidance mainly from magazines, newspapers and newsletters.

    Women, however, want the personal touch. For financial advice, about 10% go first to friends and relatives; another 10%, to their spouse. And nearly 40% depend on financial advisers.


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    Why? Carrie Schwab Pomerantz, a vice president at Charles Schwab (and the founder's daughter), says women dislike the results they have been getting on their own, lack the time to manage their investments and prefer having a coach or partner to keep them on track.

    But choosing a financial adviser has become harder over the past few years as all kinds of professionals — insurance agents, accountants, estate-planning attorneys and brokers — have jumped into the advice business, and the ways in which advisers are compensated have multiplied. If you're checking out advisers, here are the key questions to ask:

    --HOW DO THEY OPERATE?
    Steer clear of planners beholden to the products of any one financial institution. Understand that no planner is going to be terrific at everything. Most work with a group of lawyers and accountants. Get their names and check them out along with the planner.

    --HOW ARE THEY PAID?
    According to Forrester Research, about 1 in 5 investors surveyed said they didn't know how they paid their financial adviser. That's a big mistake. Some planners are paid commissions by the sellers of mutual funds, annuities and other products. Others earn fees, either hourly or by the plan. Still others take a percentage of assets under management. And some combine several of these approaches. Fee-based planners have the fewest conflicts because they have no incentive to steer you to any particular product or service. But even those planners use insurance agents and others who receive commissions. What's crucial is making sure all fees are fully disclosed so that you know how much you're paying to whom and for what.

    --HOW LONG HAVE THEY BEEN IN BUSINESS?
    Look for a minimum of five years of experience as a registered investment adviser. If you're going with a wealth manager, seek one with years of experience and at least $50 million under management. You also want to see solid credentials. Any financial planner with a C.F.P. (certified financial planner) designation is going to have a minimum of three years of experience; that's required for the credential, as are 30 hours of continuing education every two years. Planners with a P.F.S. (personal financial specialist) credential are certified public accountants who have 1,200 hours of financial-planning experience. Chartered life underwriters and chartered financial consultants are generally insurance agents first and planners second.

    --HOW IS THE CHEMISTRY?
    Do you feel comfortable with a particular planner? Is she giving you the respect you deserve by answering all your questions and returning your phone calls without being condescending? Most important, does the planner understand your financial goals and your tolerance for risk? If it just doesn't feel right, get out of there. If your small town has only a few planners, it's worth looking elsewhere. "I have more clients in Chicago than I do in Minneapolis," says Ross Levin, a financial adviser based in Minneapolis, Minn. "We e-mail and talk on the phone."

    For more on women and investing, check out the June issue of MONEY magazine. You can e-mail Jean, a Money magazine columnist, at money talk@moneymail.com