Ellevest

Magazine

The Cost of Your “Fine” Financial Advisor

By Sallie Krawcheck

Millions of dollars.

That’s the amount of money that having a “fine” financial advisor cost one woman we consulted with.

No, really.

We hear a lot from people that their financial advisor is “fine.” What that means usually runs along the lines of, “Well, I’ve been with him forever.” Or: “He’s the guy my husband uses, so ...” Or: “He speaks to me in what feels like a foreign language, but he seems confident.”

We always knew there was a cost to this.

We’ve known it can be the cost of not having confidence about how your money is being invested. Of not feeling informed or in control. Of not really knowing whether your money is working hard for you and reflecting your values.

It can be the cost of not having your money invested according to your values. Or of possibly not even having someone who will talk to you about what those values are.

It can be the cost of working with someone who may well be way too opaque about how and how much you compensate them.

It can be the cost of what happens when something changes in your family: 74% of women have a negative surprise about their money when their money comes back to them due to divorce or the death of a partner.

It can be the cost, possibly, of sub-par investment returns. That confident financial advisor, who doesn’t listen because he knows best? Overconfidence leads to overtrading. Women trade 69% less than men do, and so incur lower fees … which in turn can mean better returns.

And it can be the cost of millions because your advisor didn’t guide you when your financial situation changed.

Why do women pay that cost?

Well, rocking the boat can be tough. Many women have been socialized not to be too aggressive. Or we’ve learned that we really don’t know as much about money as others do (even if we ourselves have earned that money).

It can be uncomfortable if we feel like we are hurting someone’s feelings, be it your financial advisor or even a partner. (We hear from some women who are uncomfortable taking too strong a role in the management of their money because they are afraid it might hurt their partner’s feelings and make him feel inadequate.)

So, in one of the most important areas of our lives, our money — which, of course, isn’t just money, but represents our hopes, dreams, our future, our security, our independence — we can settle for “fine.”

In fact, women take the lead in investing in just 16% of US households.

Would you go back to a restaurant that’s just “fine”? Buy pretty much anything that’s just “fine”? Give your children a role model of strength and equality that’s just “fine”?

But in this most important area, we’ve been socialized to settle for “fine.” You deserve more than “fine.”

And you don’t have to wait until something changes or “goes wrong.” (Probably due to that negative surprise, the vast majority of women leave their financial advisor within a year after the death of their spouse.)

You can take action now. Talk to your advisor now and start asking questions. Ask what he knows about your money goals. What goes into the fees he’s charging. Ask about investing to align with your values. Ask about how his firm supports women, for that matter.

You have leverage. You can go elsewhere. It’s estimated that financial services firms are missing at least a $700 billion revenue opportunity each year by not fully meeting the needs of women customers. That’s you.

So have the talk. Or … don’t talk. Find a firm that puts you first — and I guarantee that firm will even take care of the headache of breaking up with your old advisor for you.

And you know what? That’s 100% fine.


Sallie Krawcheck Signature


Disclosures

© 2021 Ellevest, Inc. All Rights Reserved.

Sources of claims of fact: 74% of women have a negative surprise; women trade 69% less than men; men trade too often on overconfidence; only 8% of investors are women; women lead the investing decisions in 16% of households; women leave their advisors;; $700 billion revenue opportunity.

Information was obtained from third-party sources, which we believe to be reliable but not guaranteed for accuracy or completeness.

All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third party’s products or services.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities, and should not be considered specific legal, investment, or tax advice.

The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person.

Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.

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Sallie Krawcheck

Sallie Krawcheck is the Co-Founder & CEO of Ellevest. Her life’s mission is to help women to reach their financial and professional goals.