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Help Women Business Owners Find Financial Security

As a woman in the financial services industry, I am often struck by how few of us are out there. Yet it wasn’t until recently I realized this underrepresentation extends to female clients and business owners as well.

A 2015 study by Strategy Marketing showed a staggering 87% of women who are in the market for a financial professional can’t find one they can connect with, and men are nearly twice as likely as women to be approached by a financial professional.

The problem goes deeper. As women, we face unique financial challenges. For example, many of us earn less than men do in the same role. This means smaller salaries in the short-term but it also translates into smaller retirement savings and lower Social Security benefits. We also tend to live longer than men. So, not only do we face these income challenges, we often have to make our money last longer.

To make things worse, the Centers for Disease Control and Prevention reports that many women struggle with disabilities later in life, not to mention disability rates among women are rising and disabilities can even further reduce our cash flow. And many of us are caregivers for aging parents, young children or other relatives, putting even more strain on our time and resources. A relationship with a trusted financial advisor would go a long way toward addressing these financial pressures.

These challenges extend to women business owners, who face unique financial pressures of their own. Just as one example, Babson College research shows women have a significantly more difficult time than men do in obtaining start-up funds for business enterprises. And the underrepresentation remains: Only 44% of women in management, executive or ownership positions work with a financial professional.

Building Relationships And Establishing Trust

First and foremost, in working with women business owners, you must establish trust and build a relationship. Hillary Stalker, an Ohio National career agent with Strategic Financial Group in Naperville, Ill., and a mother of two young children, said it well: “As an advisor, your goal should always be to build a relationship first. If your No. 1 goal is to sell something, clients will negatively perceive that right away.”

Stalker makes intentional, genuine efforts to engage with women in her community. Much of her networking happens through connecting with other working moms, women-in-business events through her local chamber of commerce, philanthropic events, and fun activities such as wine nights and lunches.

“By being genuinely interested in knowing and helping others,” Stalker said, “the door to a conversation opens much quicker than being on a mission to collect the most business cards. I genuinely care about what is going on in my clients’ lives. You have to care.”

When working with female clients, an effort to be respectful goes a long way. For Stalker, meaningful conversation is often intertwined with a needs analysis.

“Instead of just asking, ‘What do you do?’ it’s important to ask how she got there,” she said. “For example, start with, ‘Jenny, I see you own a therapy practice, could you tell me more about that?’ That answer is going to be jam-packed with different avenues of how you can connect.”

Serving An Underserved Market

Opportunity abounds for financial professionals — arguably, for female financial professionals in particular — to significantly expand their client base by seeking out more female clients. In particular, women business owners represent an underserved market with an impressive growth potential, according to the 2018 State of Women-Owned Businesses Report, commissioned by American Express.

Advisors have a number of financial product solutions to meet the needs of women business owners.

1. Key person insurance.

Key person life insurance is the Swiss Army knife of business insurance. It can hedge against loss of a key person to create fringe benefits for the key employee, fund a buy-sell agreement, act as leverage for a bank loan or create a capital source for the business.

Keep in mind when working with women business owners, sometimes simple and often inadvertent language choices can be exclusionary. For example, avoiding using phrases like “key man” insurance and opt instead for the more inclusive choice, “key person.”

2. Recruiting, retaining and rewarding key employees.

Many business owners need powerful fringe benefits to retain top talent. Consider two non-qualified fringe benefits that use life insurance:

» Executive bonus plans (162 plans) — An employer makes a potentially tax-deductible bonus to a key employee in the form of life insurance premiums to provide needed coverage. When a permanent product is used, cash accumulation can supplement the employee’s retirement and other lifetime cash needs.

» Split-dollar life insurance — An employer shares the benefits of one life insurance policy with a key employee to provide affordable life insurance protection (and potentially cash accumulation) to that employee while offering the employer the opportunity for cost recovery when the split-dollar ends.

3. Disability planning.

After age 65, women live longer than men, but University of Michigan researchers found women are more likely than men to spend these additional years dealing with disabilities than men, as well as dealing with more disabilities than men have at that age. This makes disability insurance an important consideration for women and women business owners, in particular.

There are several kinds of DI products on the market. For example, individual DI can serve as “paycheck insurance” to protect the insured in the event of a qualifying disability. A business overhead expense policy reimburses essential business expenses (e.g., rent, payroll, etc.) upon the owner’s qualifying disability, and premiums are generally tax-deductible. And a disability buy-sell policy can be used to fund part of the purchase price for a buy-sell agreement triggered upon disability of a business owner.

4. Succession and estate planning.

By planning ahead for the future of her business, a business owner can take steps to see to the success of her enterprise after she leaves the company. There are financial products that can help a business continuation plan succeed, whether it be a funded buy-sell agreement or, in many family businesses, life insurance to equalize inheritances among heirs.

Changing A Traditional Mindset

These product solutions for women business owners are virtually the same as product solutions for their male counterparts, but it certainly seems jarring that 87% of women believe they can’t find a financial professional they can connect with.

By paying greater attention to our habits and working to establish trust, we can initiate respectful dialogue and build relationships with women for their specific financial needs.

Jenna R. Washatka, JD, CLU, ChFC, is an advanced planning consultant for Ohio National Financial Services. Jenna may be contacted at [email protected] [email protected].

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