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Should Women Use Female Financial Advisers?

Geoff Williams

If you're a woman, should you be working with a female financial adviser?

The question and very idea, at first glance, sounds like reverse sexism. After all, if any man seriously suggested men should seek out male financial advisers, he would be pilloried in the press and on Facebook, the 21st-century version of being run out of town on the rails. But then again, women haven't exactly had a grip of power in the same way men have throughout history: George Washington was inaugurated 224 years ago, and the United States still hasn't had a female president. More on topic, only 1 in 3 financial advisers in America are women, according to the Insured Retirement Institute.

In any case, female investors and advisers have been asking this question for some time now, most recently in a book coming out in June, "Finerman's Rules: Secrets I'd Only Tell My Daughters About Business and Life," by Karen Finerman, a panelist on the CNBC show "Fast Money," as well as co-founder and president of Metropolitan Capital Advisors, Inc., in New York City.

"You wouldn't let a man tell you where to live, how to vote, or what to wear," writes Finerman. "Then tell me why 80 percent of women have a man in charge of their money?"

So if you're a female investor and you are wondering if you should actively seek out a female financial adviser, here are some things to consider.

You may find a female adviser less intimidating. Or not. Investors like Finerman aren't suggesting women promptly fire their male financial advisers or never work with one again. "If you have a financial adviser you're comfortable with, and your goals are being achieved and your needs are being met, stick with who you've got," Finerman says.

[Read: 5 Topics to Discuss With Your Financial Adviser.]

But she would like to see women putting more critical thought into who they're hiring to give them financial advice.

Finerman says she has encountered many married investors, and the scenario is often painfully similar. "The men do all the talking, and if the woman hasn't made the money, she's less inclined to feel that she is an equal partner in the conversation, and so she is hesitant to ask questions," Finerman says.

Theresa Harezlak, a financial adviser at Savant Capital Management, a wealth management firm headquartered in Rockford, Ill., concurs. "I cringe when I hear someone say to a female client, 'Don't worry, I'll take care of you.' I have heard advisers say that to women," Harezlak says. "While it is true that some women like the idea of someone taking care of them, it is irresponsible to not help empower and educate women to make good decisions for themselves."

Finerman cites the analogy of breast cancer: If a woman was talking with a male oncologist and her husband, it's challenging to imagine a woman saying, "I can't understand any of this. You guys decide what I should do."

Finerman stresses that she isn't comparing having cancer to managing income, but both are examples of important personal issues that anyone should have a handle on. Women are quick to learn everything they can about their own health, Finerman says, but content to remain ignorant about the health of their own finances. Finerman wants to change the conversation. "Women often think it's impolite or unromantic to talk about their finances," she says. "Honestly, they would rather talk about sex than money."

Women think differently than men. This always comes up in the discussion, with the main point being that women assess risk differently than men. "Women are more risk-averse and have less ego," Finerman says. "If they invest in something that isn't working out, they'll say, 'I'm not comfortable with this, I was wrong, let's get out.' That's an important thing, to not have your ego as your guiding principle in your investments."

Finerman says the most dramatic story she has heard relating to this is of an American investor who put all of his and his wife's money in a Chinese pig farm. "He had no experience in investing in China, or in pig farms, but why not? Well, he lost all of their money. I can't see a woman taking such a big swing with so much risk," says Finerman, who adds that the couple later divorced and the debacle can't be blamed completely on the husband. The wife was also at fault for "burying her head in the sand," she says.

But there are other subtle differences that sometimes help a woman fare better with a female adviser. "I think some women are more comfortable because of issues related to trust and communication, rightly or wrongly," says Laura Lindsey, a former financial adviser and finance associate professor at the W. P. Carey School of Business at Arizona State University.

[Read: Why Women Should Think Differently About Retirement.]

Of course, there are presumably plenty of male financial advisers who disagree that women have a better handle on building relationships with clients. But if you're a male investor who sides with the female advisers on this point, you might want to consider using a female financial adviser yourself, suggests Mary Ellen Garrett, a senior vice president of investments at Merrill Lynch and the managing partner of the Garrett Group, a team of financial advisers in Atlanta.

"Whether they're men or women, advisers build one-on-one relationships that are founded on trust," Garrett says. But she concedes that women seem to have a better grasp on communication skills in discussing money. "Sometimes it's an ego thing, where if you've made a mistake in your financial life, it can be easier for a male to open up about that with a female," Garrett says.

Be pragmatic. Kimberly Clouse, a wealth adviser for 20 years based in Boston, points out that it isn't realistic for every female investor to have a female financial adviser. "Women control over half the wealth in the country, but women don't compromise half of the advisers, so only women working with women, it isn't feasible," Clouse says.

And while Finerman and other financial advisers are probably right - some women would be better off seeking out a female financial adviser - other considerations should come into play when choosing someone to manage your finances rather than whether a professional has a Y chromosome or not.

[See: 50 Smart Money Moves]

"Rather than gender, I would be interested in whether or not the adviser works with other clients like me," Clouse says, citing examples such as whether you're an entrepreneur or if you inherited your wealth.

In fact, she says, "Women working only with women can create a 'pink ghetto,' of sorts, separate but not equal."

In a perfect world, Clouse says, an investor will expose herself or himself to a lot of different viewpoints from both genders.

And sometimes women seek out men to be their financial advisers, not because they feel more comfortable having a man making the decisions for them, but for completely different reasons. "I know of a couple women who are in the process of getting a divorce, and they made it clear they specifically wanted a financial adviser who was a man," says Clouse. "They said they wanted to work with a male - so they could tell him what to do."

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