Women & Money
Professor Mary Quist-Newins holds an endowed chair and is the Director of the State Farm Center for Women and Financial Services at The American College. She has been in financial services for 22 years as a field producer and corporate leader. In 2011 she was named “Woman of the Year” by Women in Insurance and Financial Services. We spoke with Quist-Newins about her research on financial issues affecting women business owners.
L&HA: Tell us about your work at The State Farm Center for Women and Financial Services and your mission.
MQN: Our vision is that we are the nation’s leading authority on the economic issues facing women both as consumers and as women in financial services. There are three strategic pillars to our mission: research, financial education and awareness building. When I came to The College four years ago we began by collecting and cataloguing the research done by others, creating a data bank we believe is the most robust anywhere. We’ve collected well over 3,000 data points (maybe 4,000 by now) or statistics. It became clear that women business owners were an underserved but clearly identifiable and marketable segment that presents opportunities for financial advisors and financial organizations.
L&HA: You have moved into primary research with your recently published study on the financial well-being of women business owners.
MQN: To be the thought leader we have to do primary research. With the support of State Farm we have completed and published the first major consumer-focused, quantitative study The American College has ever done. From this first major initiative we recently published “Financial Goals, Concerns, and Actions of Women Business Owners.” Dr. Jill McCullough partnered with me on this project.
L&HA: This publication is enabling you to get the word out.
MQN: Building awareness is central to our mission, so we are writing, speaking and giving interviews to let people know what we are finding and what it means to them. Education is also part of our mission, and we support the mission of The American College to advance the professionalism of practitioners in the industry. I wrote the textbook Women and Money: Matters of Trust in 2010. We offer a course called Marketing Financial Services to Women that is very research-focused. It’s based on best practices and how to be more effective when marketing to female prospects and clients. We are very engaged in encouraging female students to matriculate, register, and complete their designations through The College. We’ve started a Women’s Leadership Academy to increase the representation of females in leadership across the industry.
L&HA: You mention that business owners are competent and confident and yet they are deficient in thinking about retirement. Tell us more.
MQN: We found that business owners are comfortable with risk. However, they are also so hyper-focused on the here and now that it’s hard for them to think about strategies for retirement. I should note that we screened for business owners who had been in the business for at least three years and had going concerns with at least $50,000 in annual revenue. The majority had annual revenues of $100,000 – $250,000, mid-market, and some ranged to over $1 million.
While business owners report that they are concerned about retirement, about one-third of them have not estimated what income they will need in retirement. To me this is mind-blowing because the average age was just over 50 for both female and male respondents. The other one-third, fully half of that remaining group, had just done a simple calculation online or had scratched something on a piece of paper. Only one third had met with a financial advisor.
L&HA: You have referred to these research results “alarming.”
MQN: Inaction and the poor quality of action that has been taken are staggering. Just one in four of our respondents felt their retirement planning needs were complex, yet I can’t think of anything more complex than being a business owner planning for retirement. This gross oversimplification and this hyper-focus on the here and now are formidable obstacles for business owners and those that advise them. The challenge is to help prospects and clients realize this is not a do-it-yourself exercise.
L&HA: Do these women consider their businesses to be important retirement assets?
MQN: Again, here’s another disconnect. One in ten women is a business owner so this is a big opportunity, especially for female advisors. It’s a growing market and there’s a lack of qualified advisors.
L&HA: How quickly can an advisor turn this into action?
MQN: If agents are already working in the small business market, they can take another look at the niches where they are focused. Like the National Association for Women Business Owners, there are organizations for women in real estate, construction, and many trades. Be strategic; it’s helpful to understand what makes this market tick. You can download a copy of our report at www.TheAmericanCollege.edu/WBORetirementStudy to learn what women business owners’ concerns are. Create some questions that address the disconnects. It might seem like “hurt and rescue,” but that’s too crass a term. You are really helping people prepare and develop a plan.
L&HA: Your wide-ranging study included protection planning, insurance, investments, and financial position. What else is critical for women business owners?
MQN: Retirement Planning is the first of four reports. The second in the series, our Disability Report, will be published this summer. We found that just one in four female business owners in our study had disability insurance. That is shocking when we know that women have higher risk for disability than men. Disability underwriting has become more challenging, but that’s all the more reason we should focus on it. We found in our disability study that women were much less likely than were men to be talked to by financial advisors about the risk of disability. This is an underserved market that presents an opportunity. If business owners are not aware or concerned they are not prepared, and we are letting people bear tremendous risks unintentionally.