LAUREN FOSTER: Hello and a very warm welcome to this episode of Take 15. I'm Lauren Foster, a content director at CFA Institute, and joining me today to talk about unconscious bias in wealth management and how advisors can best serve the woman clients is Adrienne Penta. Adrienne is an estate planning attorney by training, and she is now executive director of the Brown Brothers Harriman Center for Women & Wealth, which is focused on supporting women as they create and manage wealth. And I'm delighted to have her here with me today on International Women's Day.

ADRIENNE PENTA: Thank you for having me.

LAUREN FOSTER: So welcome.

ADRIENNE PENTA: Thank you.

LAUREN FOSTER: Thanks being here. Now your title is executive director, but I think it's fair to say that the center was really your brainchild. You were the driving force behind its creation, and it's been a very personal journey for you. Tell us about why you were so passionate about creating the Center for Women & Wealth.

ADRIENNE PENTA: It's really two parts. One is personal and one's professional. I've been working with clients, in one way or another for the last 15 years and see a lot of the time that women's voices are just missing from those conversations. That creates not good results for families, and so we see bad things happen to families long term, and we see estate plans and other types of plans, investing plans, or whatever it may be, that aren't sustainable. They aren't well produced for the next generation, maybe, when we don't have all of stakeholders at the table. That's certainly one part of it.

The second part of it is personal. My own dad died when I was in college and my mom became a young widow at the age of 52. We went through some pretty significant probate litigation, so I know from personal experience, when all of the decision makers aren't at the table, sometimes you don't have a perfect plan. That leads to bad things happening. But really, it was the aftermath, after he died, and he was sort of-- he liked to invest and he liked to invest in a lot of different things, and so he got a fairly complicated estate. It took my mom the better part of 15 years to sort it all out, to understand how to hire , and then fire sometimes, professional advisors. How to choose them, and who she could work with, and how to make decisions that she felt good about, that she was confident about, and that she could make independently.

This is real life, practical stuff about how we need to have women at the table, we need to have them fully invested and engaged in the conversations with us. We know as an industry, that to the extent that they are not engaged with us that they're likely to stop working with us as advisors after the patriarch or a primary decision maker dies, if that's the case.

LAUREN FOSTER: We know that women continue to control more wealth than ever in the US, and I think the figure I saw most recently was 39% of invest-able assets in the US. We also know that women outlive men by 15 years, and they make or contribute to about 90% of philanthropic decisions in the US. But it seems there's also a big disconnect here, and many report that they are not satisfied with the wealth management industry is actually offering them. Why is that the case and what are the red flags that you see?

ADRIENNE PENTA: So, the data is that 51% of high net worth women, and for this purpose, women with a million dollars or more of assets, feel as if they're not listened to or not understood by their advisor. It's a really big problem for us, as an industry. We know that women control, now a majority, of personal wealth in the United States. If we can actually serve them well, we're missing out on a significant opportunity. But, it also means that more of them don't have advisors, which means that they're under invested. They hold more cash; they hold fewer equities, which connect to a lot of more global systemic issues, like the gender retirement gap, which is fed by lots of things.

We know that we have to serve them better, so why do they feel under-served? I think there are a couple issues; I think that the first is that women are a relatively new client demographic to our business. It's really only in the last 50 years where women have, in mass, become really significant financial decision makers. They're sitting at the table, and have their own wealth that they've created, and are managing. We're still, sort of, catching up with that, and in a lot of ways our model is outdated. The language we use to talk about investing is gendered, it's male. It's a bull market, that's how we talk about finance and investing. So, there's some level of gendered language built into what we already do with clients. And then the other part of it is that we're not a diverse industry yet, we're all working really hard on hiring and promoting more women, more people of all diverse backgrounds. But we're not there yet, like a lot of other industries.

The industry is still 86% male, and that's part of what's holding us back in serving a more diverse client base. It's not just women; it's all types of diversity. We know that our workforce needs to more closely mirror the people that we're serving. In the absence of that, we need to think really intentionally about how we deliver our client service. How we really create a culture, and an environment of inclusion around the meeting table within the client relationship.

LAUREN FOSTER: Now something we've talked about a lot in the past is that there are many stereotypes, or misconceptions, about women as clients, and as investors. Something I've heard many times over is that women are more risk averse than men. What are some of the stereotypes that you encounter a lot, and they true, or are they false?

ADRIENNE PENTA: I think the biggest one that we hear, because I think everybody who's sat on my side of the table has been to meetings where women are just not there. They're physically not there; it's the patriarch of the family in a traditional situation making decisions. Or, they are physically there, but they are silent. They're not actually participating fully in the meeting. So, I think that the assumptions that we draw from that, is that these women just aren't that interested in investing. They're not that interested in making financial decisions. I think that's a little bit of a misnomer.

So, number one, I think that we need to be structuring conversations around wealth to be truly holistic, for both men and women. But I think that beyond that, women are interested, it could be the way that we're structuring the meeting, or creating an environment where maybe they don't feel fully included. I mean we've all walked into client meetings where, very well intentioned, I've said this before, and many of my colleagues have, Mr. So-and-so, how are you doing? How's the hedge funds market? What's new, what's going on in your business? Then we turn to Mrs. Smith and we say how are your children? How's everybody, is college going well?

We've set a table, we've set the table right there, for potentially, an inequitable conversation. We've assumed that he wants to talk about business, and she wants to talk about family, or kids, or home front. We're just not creating a truly inclusive environment sometimes, when we enter a meeting, and through the best of intentions, sort of set the stage in that way.

LAUREN FOSTER: Let's talk a little bit about women and financial literacy. So first off, what do surveys tell us about this? And then secondly, you've said one of the goals of the center is to close the confidence gap for women around wealth management. How you doing this?

ADRIENNE PENTA: The data shows us that in the United States there's really no gap in financial literacy, or financial competence. Our male clients and our female clients, generally, on the whole, have just about the same level of understanding of financial markets and economic decision making, and planning. For most clients, that stuff is foreign, and it's not what they do every day. They don't sit around and think about the markets, they don't think about tax planning strategies. That's our job as advisors, is to advise them, and they pay us for advice.

Where there is a gap between men and women is confidence. Women underestimate to a greater extent than men, how much they know about investing and financial decision making. They walk into a meeting and say, "You know what, this is not my area, I just don't know." Whereas, men sit at the table and they think maybe they have a pretty good understanding. So, the issue here is to make women independent, perfectly competent about the decisions that they're making. It's not that they have to know the minutiae of how to invest in the emerging markets, or how to structure a complicated tax strategy. They don't have to know that, neither do our male clients. What they have to do, is to be able to make good decisions for themselves, and their families, with the help of good advisors. That doesn't mean that we need to give our clients the investing 101 boot-camp, we certainly can if they wanted, it that's going to help them become more confident. But what we really need to do is create a relationship, and serve our clients in a way that enables them to feel good about the decisions that they're making. That's based on relationship, and how we speak to clients, how we communicate with them, and how we make them feel included in the conversation.

One of the other things we're doing within the Center for Women & Wealth is women love to have a cohort, a tribe of other women that feel the same way, or have some of the same concerns that they do. So oftentimes we'll bring together large and small groups of women to talk about certain issues that they may be having. We did a great dinner last year, and we brought a whole group of women CEOs together to talk about some of the common issues that they face in their businesses, or that they face in their own planning. To know that others have the same questions, concerns, problems, or thinking the same things as they lie in bed at night, that's hugely comforting. And as women, we want that tribe; we want that type of connection. So, that's one of the things we really try to do a lot of.

LAUREN FOSTER: Can you talk a bit about unconscious bias training? We know that doesn't work, so what does work?

ADRIENNE PENTA: What we're talking about, we already talked about the fact that we're at a little bit of a disadvantage, as an industry. Because, we're not diverse ourselves, we're working on that, it's just not happening soon enough. And women are relatively new clients. So, how do we really serve them well? It has to be about being intentional, about how we structure client relationships, and we're calling it conscious inclusion. Which is a little bit of the opposite of unconscious bias.

We really think it's a three pronged process, and any one part doesn't really stand alone to get the results that you want. I think we need to start, with unconscious bias training. We need to make everybody aware that we have bias. And bias isn't necessarily a bad thing; it stops you from stepping in front of a moving car. That's a good thing, that you should be on the sidewalk, and you should wait until you see the walking man flash on the other side of the street. We're not consciously thinking about that, but that's just something that we do automatically. We have an implicit association that we need to stand on the sidewalk until we see the sign.

So bias isn't bad, but sometimes it gets in the way of creating a relationship. Especially with folks that just don't look like us, or don't act like us, or don't have the same interests. We just need to know, that we all have those automatic assumptions. And that's what bias is. It's just making assumptions about the people around you, the world around you. It allows our brains to work efficiently, and allows us to get through the day with all of this information coming at us. It's only negative when we make the wrong assumptions.

We have to start with an understanding of that, second, we have to train ourselves, and the people that work with us, to do it right every time. We have to make sure we understand the best practices in relationship management and client communication. I think a lot of times people in this industry are really talented relationship people, and a lot of times they're able to fall back, I've done this a lot, on the rapport you can create while you're in the room with somebody, because, we like people. I think everybody in this industry likes people, and so, we fall back on that rapport without thinking really intentionally about, how am I going to create relationships and trust?

I think we have to be more intentional with those things as our client base becomes more diverse and, perhaps, looks less like us. But you can't stop at training, because we know all these corporate trainings don't really work. We forget 90% of what we've learned after we leave the room, before we get back to our desk. So, in order to institutionalize that, we really have to create process and design around service. This comes from a lot of the work on behavioral design, and a lot of it's been applied to the hiring and promotion context in corporate America. How do we hire people so that our own biases about where they went to school, or what they look like, or what neighborhood they grew up in don't affect how we make those decisions?

Same thing in client service, should I be emailing just Mr Smith to set the meeting for next Tuesday at 9:00? Then say, "Oh, do you want to bring your wife with you?" No, we start in a hole if we're doing that kind of behavior. So what's the gentle nudge that we can give everybody we work with, everybody in our business, to make sure that we're being inclusive in how we communicate? Some of this gets back to checklists, and you can read a lot about this in a number of books that focus on this, including The Checklist Manifesto. How do we use checklists, and just reminders about how we should be working with people? It can really be that simple.

LAUREN FOSTER: So the $64,000 question, what do women want, and how can firms do a better job of serving women clients?

ADRIENNE PENTA: What do women want? Maybe an unexciting answer, women want the same thing men want. They want really good service, and customized advice. We all want the same thing, we want advisors that get us, and speak to our needs, and serve us really well. Unfortunately, historically, they just haven't gotten that in a lot of situations. So, what can we do to change that? I think we need to start this conversation. And I don't think anything that we've talked about today is really rocket science. We can all do it, if we want to.

It starts with awareness, and wanting to make sure that we're creating an environment that's welcoming, and really inclusive for all of our clients. And so, some of this training, and some of the dialogue, you can just start with getting a group, whether it be internal to your firm, or a group of advisors across industries, together to talk about what are the best practices we see? What do we hear our client's saying? Let's talk to our clients, let's have a focus group with our clients. Let's survey our clients about how they feel, and then we have to analyze where there are gaps.

Is it, "You know I'm probably pretty good at working with women, maybe I don't relate as well to men." So, in my client base maybe it's the men that are pretty dissatisfied, I don't know. We will know if we collect the data on that. So, if we see where the gaps are, and once we know where the gaps are in our service, or where the gaps are in our client satisfaction, then we can actually create design to help close those gaps.

LAUREN FOSTER: I read that about 44% of women in the US don't have a financial advisor. So it seems there is a huge opportunity here. In closing, what message do you have for advisors, or firms, who, to date have not made this a priority?

ADRIENNE PENTA: I think it's going to be critical for all wealth management firms, not only to think about women. Women are 51% of population, so it's obviously the biggest part of the potential client base, but all types of clients that maybe we haven't served in the past. If we're just going to serve clients that are like us, that look like us, and act like us, and are members at the same clubs, or went to the same schools, then we're really limiting our business and the potential that we have to help all kinds of people.

I think it's a business imperative. I also think that it's really important for the financial health of our communities, of families, to think about how all types of clients are investing. That women don't have advisors at the same rate as men, 30% of high net worth women don't have an advisor, you have a million dollars or more that's potentially sitting around un-invested. This has adverse impact on them, on their future health of their retirement, on their children, and potentially on, certainly on our industry.

There's a huge opportunity here, and I think certainly the story of my career is going to be, wealth is going to become diverse, and the firms that are going to win, are the firms that learn to serve diverse populations well.

LAUREN FOSTER: Adrienne, it's been a pleasure talking to you. Thanks for joining us today,

ADRIENNE PENTA: Thank you, Lauren.

LAUREN FOSTER: And thank you for watching.

ANNOUNCER: Copyright 2017. CFA Institute. All rights reserved. This program is designed to give accurate and authoritative information in regards to the subject matter covered. It is distributed with the understanding that CFA Institute is not engaged in rendering legal, accounting, tax, investment, or other expert advice it legal advice or other expert assistance is required, The services of a competent professional should be sought.