Managing Leadership Transitions: Advice for Advisors Who Work With Women

The landscape of leadership in family businesses is changing. As more young women graduate from college and seek professional work, many are turning to their family’s business as a place where they can develop their careers, assure financial security and sustain the legacy of their family’s business into the next generation.

The Pew Research Economic Mobility Project concluded that in the future women will become a more important part of their families’ financial security and economic mobility, whether by taking a leadership role in the family business, through a wealth transfer or both. With a record $30 trillion slated to pass from boomers to Gen Xers and millennials over the next three decades, the fact that 66 percent of heirs do not retain their benefactors’ advisors presents advisors with lucrative and immediate opportunities.

Qualified and trusted advisors would do well to recognize and capitalize on these trends. While many family business advisors have developed strong and positive relationships with business owners and their sons, the emergence of daughters and other female family members as leaders in family businesses will likely challenge them to rethink their assumptions about how they work with their clients.

For example, if an advisor believes that women's careers are secondary to family responsibilities, working with a young woman in line to become the successor to a long-standing, highly valued client may be unsettling. Family businesses are providing a growing opportunity for women, with 24 percent of family businesses having a female CEO or president and 31.3 percent of firms reporting that their next successor is a female. Additionally, nearly 60 percent of all firms have women in top management team positions.

As another example, advisors may be unprepared to work with a woman who, unlike her parents, values transparency about financial matters and openly shares financial information with employees. Advisors should anticipate and understand generational and gender differences as these can often influence leadership styles and philosophies.

Tips for Family Advisors Working With Female Heirs

Successful advisors know that when it comes to succession or estate planning, good communication across all involved parties is the cornerstone of a healthy and sustained relationship. Despite that fact, only 20 percent of advisors report targeting their clients’ younger family members in an effort to establish to protect the future of the existing relationships they’ve worked diligently to develop.

For financial planners who have an opportunity to assist clients and their heirs with the process of transitioning business leadership or wealth transfer, the following tips can help you:

1) Prepare early

One reason some advisors don’t cultivate a relationship with female heirs is because they lack the opportunity to do so. Often young women do not return to the family business until after college, graduate school, or employment elsewhere. To overcome this challenge, advisors should begin to build and nurture relationships with these women, and if situationally appropriate, as early on in the client acquisition process as possible. Include them in relevant discussions and matters, proactively requesting their opinions and presence during important financial discussions or planning meetings.

2) Build connections

Get to know your client and their younger, successor family members, and express interest in learning about their worlds. You’ll likely have an opportunity to discover new ideas or areas outside of your expertise or even comfort zone. This effort can help you form authentic rapport with the younger female generation who may one day be holding the reigns of the family business.  

3) Advocate their credibility

Though many parents and owners are proud and often relieved that their daughters (and other female relatives) are joining their business, they may be reluctant to permit their influence in and on the business. Even young women who are well educated and prepared for leadership may struggle to develop credibility with old-school family members and employees. For example, one young woman who had worked for several years in the corporate sector returned to her family’s business only to discover that her siblings and cousins who had joined the business right after college found her well-honed business skills overly formal and her advanced degree no real advantage. “It took a lot of reflection… I had to get over my ego,” she said. Yet, because these daughters have worked in other settings, their ideas may be a source of renewal and innovation, despite pushback from older or more tenured family members and employees. Advisors can help support female newcomers’ development by suggesting they be included in meetings on legal and financial matters, highlighting their strengths (particularly when their parents have doubts) and encouraging business owners to be open to their ideas.

4) Collaborate well with others

It is common for family businesses to employ a “team” made up of several financial services professionals to ensure they receive deep expertise across specialized areas of practice. Research on brain differences between men and women tells us women are far more likely than men to pay attention not just to each advisor’s recommendations, but also to the way their advisors work together. As a result, they may be less likely to feel comfortable with an advisor who doesn’t listen to others or disagrees too frequently or aggressively.

5) Communicate effectively

When it comes to communication, advisors should exercise manners and patience. Instead of trying to prove their point or worth or overpowering the conversation, advisors should encourage women to ask questions. Sometimes women, and men too, will have questions and opinions, but hesitate to ask resulting in a one sided discussion. Advisors should also provide plenty of educational information and resources, and make themselves available for follow-up questions. Ask how they would prefer to be contacted, via phone or email or face-to-face meetings. Inquire about their likes and dislikes, ideal outcomes or definition of success. Asking questions like these displays empathy and can help play a role in their development as a leader.

6) View women as prospective clients

Women often seek help first. Because of their sensitivity to relationships, they may realize that their parents are avoiding conversations about succession planning and financial arrangements that are essential to sustaining the business. Your initial response to them when they initiate contact can be crucial and even influence whether or not you’re chosen to be their trusted advisor. As one young female CEO put it: “Don’t make assumptions about how I look, and don’t underestimate my ability, intelligence or dedication. When I was first starting out I had many people talk over me or around me. Just as much as I need to believe and trust in the ability of my advisors, I need them to believe and trust in me.”

Advisors can learn from each other and support each other in their adaptation to the rise of women as leaders. Senior advisors, both male and female, can learn from their younger female colleagues about how to form positive relationships with their female clients. Similarly, young advisors can develop their professional demeanor and inspire confidence in their older clients with guidance and mentoring from more experienced advisors. To the extent that firms create a culture of learning, openness and feedback, all advisors can develop the ability to respond to their clients’ changing needs and interests.

Are you confident in your ability to answer your clients’ comprehensive financial planning questions as they relate to business succession, estate planning and other nuanced, often complex areas like taxation and insurance? Increase your expertise and learn how to cater to the unique needs of women business leaders and other niche investor groups. Read How The ChFC® is a Game Changer in Advancing Your Financial Planning Career to learn more.