Nancy Daoud: Why Women Will 'Take Over' Wealth Management

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Hello and welcome to Barron's The Way Forward. I'm Greg Bartolis, and my guest today is Nancy Daoud, Private Wealth Advisor for Ameriprise Financial. Nancy, you have some strong feelings about the role that women can play in the advisory business. I want to hear about that and first tell us a little about yourself, and thank you for joining.

Well, thank you for having me. Well, I became a financial advisor many decades ago. I don't even want to tell you how many because that makes me very old. But I have watched this industry undergo a tremendous evolution, and it's been very, very exciting. But I would say maybe about 15 years ago, or right around the time of the Great Recession, is when the aha moment came in and said, wow, you know, I could really build an advisory firm here as opposed to the, the average wealth management firm that everybody else has.. And I really was more interested in comprehensive life planning and advice with deeper, stronger relationships with clients that are sticky. And that's what I set out to do. And in doing so, there's been so many extraneous or collateral benefits that I didn't even dream about at the time. So I can't really take credit for the fact that, oh, I planned all this and this is exactly how it turned out. There was just so many outcomes that I didn't even expect. But I have a very, very strong business coach who is all about behavioral science by the name of Doug Lennick. He founded Think to Perform. And he told me 15 years ago that the asset-based or asset management business is going to become commoditized, and it's already on its way to doing that. So if you want to build a comprehensive advice firm, this is your grand opportunity to really, you know, stand out and build something that is unique and different than the rest of the advice world or the wealth management world. And he was absolutely right because fast forward 15 years later, that's pretty much where we are. You know, portfolios are now being— are being managed by algorithms and there's just no value in coming up with an asset allocation anymore. I mean, you could literally get that from Siri on your phone for free. So clearly the advice has become the biggest value. And in fact, actually Vanguard had a very good white paper on that and they outlined it very, very clearly that the biggest part of a relationship with a client is the advice piece. So I was very encouraged and inspired by that and really set out to build an advice firm where we provide comprehensive life planning. So rather than the conversation with clients being, well, how much money do you have and what are your goals, etc., the same, you know, questions that everybody asks, the conversation starts with what do you want your life to look like? And how can we make your money fit that instead of the other way around? So ultimately, the value proposition became to enhance the financial and emotional well-being of the clients and their families, because family is part of all of this through an education process and by improving their behavior in making very important life decisions. It's a whole different conversation than, you know, R-squared and beta and Sharpe and Treynor indices and Morningstar and reports and returns. Totally different world. So now enter the male versus female part. So women do best in this type of scenario. And I'm not saying men don't do a good job. Many men do obviously do a very good job with this. But I really think that the— ultimately, that the financial services industry and the advice business in specific will belong to women because they just— it's a natural tendency for women to think about all aspects of a client's life as opposed to just being focused on one thing and one thing only. We're just naturally multitaskers.. And, you know, and any woman out there who's a mom, she knows exactly what I'm talking about. If you're a mother, you know that you have to multitask umpteen things at the same time. And from one second to another, you're changing completely. And this is the world that the financial advisory business is going to. And in fact, I think it's already here. Uh, the real value now is, do I get good advice on what to do, when to do it, and how to do it versus how do I allocate my money, which is just a side thing. Yes, we of course do that too.

In terms of the gender breakdown for advisors, it's still largely male-dominated. The percentages are changing. They are certainly— women are accounting for more. If what you're saying is accurate in the aggregate, right? You have, I'm sure there obviously are men who are exceptional and women who maybe are not exceptional, right? But let's assume this is the case in the aggregate. How do you prove that stickiness or value? Like you were early in seeing this where the industry was going. However, many others are now deemphasizing investing. It's more holistic, it's life planning. So in a way, there's probably more competition for you. So how do you, prove that value? A lot of times if you get a client, they will see the value. But until they become a client, it's like the unknown, right? So how do you— how does that manifest? How does that play out?

Well, I think the biggest key is the questions that are asked, because repeatedly, almost 100% of the time when I am in front of a prospective client or a referral or even just in a cocktail party, when people ask about what we do, the conversation is completely different. And as I alluded to before, the conversation is all around, well, what do you want your life to look like? What's important to you versus, well, you know, the crypto is the most— is the popular thing or the in-vogue thing today, and you should be investing in that. You know, that's just not the conversation. And so, you know, it's, it's a totally different way of thinking and it's a totally different mental frame of mind. Now, in thinking about the next generation, which is where all that money is going, and I'm thinking about my children, I have 3 children who are adults, 2 of whom actually work with me in my firm. And it's been a very, very fun thing to have. Not without its challenges, but certainly a lot of much more benefits than not. They have really enlightened me on how to think about the next generation and what they will respond to. And we have found that the next generation is, is a little more squeamish about engaging with an advisor because they, they can do everything on their phone. Or so they think. So there's a school of thought where, oh, you know, I'm— I've done really, really well on my own. But now I actually have some real money. And I'm scared. Maybe I'm— maybe I should get some advice. And real money can mean very different things to different people. It could be $50,000, or it could be $500,000. I mean, it just depends on the person. But there's going to be a point where that person actually realizes that, okay, this is bigger than me now and I'm not sure I'm doing the right thing. And I think the factors that come into play here is not just the size of the account, but also the stage in life. So when you're single and you're free and you do what you want when you want, I can, I can do this on your own, on my own. But once you're married, you have a child, you have a mortgage, you have responsibilities. You realize that, well, maybe I need to engage with someone else, even if it's just for a second opinion. So that's one aspect of this. The other aspect is that market research— there was significant market research done on this from Think to Perform, which, which is my coaching firm. And they found— they studied the behavior of different generations on how they seek advice. So, for example, they found that the baby boomers essentially, you know, whatever mom and dad did, they did exactly the opposite. They said, oh, I'm out of here. I'm not doing that. Not so with the next generation. The millennials are exactly the opposite. When they needed financial advice, they tend to go to their parents. And what's really relevant for our industry is not only do they go to their parents for financial advice, but they tend to go to the parents' financial advisor as well. So that was a big light bulb. You know, the minute I heard that, I was like, well, that's a grand opportunity. But I also realized that this is a segment of the population that I probably am not going to be engaged in because it's, you know, I'm beyond all of this. I can't take on that many more. So it became very logical for the next generation of advisors to take on this generation. And they speak the same language. You know, they speak digital. They have the same acronyms that I cannot— I can never understand. And they live in a totally different world than my generation. And they needed that advisor who was going to relate to them, who was going to speak that language. And so that, that was one of the biggest revelations for me and really capitalized on that. And we found that parents are very engaged and they want their children to become educated on the subject matter, obviously, because they are going to be the recipients and the beneficiaries of their own wealth. And they wanted to make sure that it was going to be handled responsibly.

In terms of advisors bringing more women into wealth management, are you optimistic, pessimistic, something in the middle?

Well, I'm very optimistic, but I am kind of disappointed that it's not moving faster. And I think we all have a responsibility in this. I'm certainly going to do my part. We have 4 female financial advisors in my firm, and I'm— I've got 2 more on the way to becoming, you know, they're becoming credentialed and moving up that tier. And I think that there needs to be more education on that process. But more importantly is the perception. The perception needs to change. These young women, up and coming, maybe even from high school level, they should know that this is a grand opportunity for them to not only have a very successful and lucrative career, but also one that they can manage and balance a personal life with as well, because they will be the driver of it. As opposed to being, you know, going up the corporate ladder and being subjected to what some boss decides that they're going to do.

Right. I think a lot of these people are not even aware that this is an option, right? They think of traditional vocations and whatnot. But right, just making them aware, like, hey, this is something you possibly could do.

Well, I remember something that really got my attention when my children were in high school. I was— I always made a point of being involved in, uh, they had like career day at the high schools and I always went in to talk about the financial advisory career. And the first thing I noted was, although I didn't offer donuts and things like the other careers did to lure people in, I always had a packed room. I mean packed where people were actually standing in the back of the room. Um, but What was really disappointing to me, it was predominantly boys. They were predominantly young men, very like maybe less than a handful of girls were in that room. And that really left an impression. So I think it's, it's a perception. We have to change the perception and what this career looks like, what this, what the business looks like, and how, how much independence young women can have, up-and-coming, in order to manage their— and manage and balance their personal life and having children and being able to run a business successfully. I think they all see that as a very daunting task. And having been a pioneer in this, you know, it was not easy. I have to admit, it was not easy raising 3 children as a single mother. And running a successful business had to pay a very big price sometimes.

I can imagine. The profession is arguably a bit of a branding— well, I don't know if a problem might be too strong a word, but people look at it as an end in and of itself. Finance, it's money, it's white guys in suits, maybe a little stuffy, boring, et cetera. Really, money can be a tool, a means to an end to live the life you want. And it's not inherently good or bad. It can be put to any purpose. And if you see that we're all in our way asset managers for, we have our own assets, liabilities, we all manage our money, right? So if you can help other people do that, help send a kid to college, realize your dreams, travel across the world, et cetera, it can be a very noble profession and empowering for all involved. One aspect I find quite interesting is the interpersonal dimension. So you can have, I think, before someone would want to take on an advisor, they would, of course, want them to be— the advisor to be skilled, accomplished, et cetera. But there needs to be that comfort on a personal level. There needs to be that feeling of trust. And without that, they're not going to bring the advisor on, regardless how intelligent or accomplished that person might be.

Yeah, you are so absolutely right. I mean, I always talk about the credentials and the degree and the licensing. All of that is the baseline. That's like zero. You can't even enter this arena without having that. But now what actually makes a successful advisor is something completely different. It's kind of interesting. And you're so correct about the whole interpersonal thing. And in fact, I actually verbalize this to a prospective client. I always tell them, I said, listen, you're not gonna make your decision based on how much expertise I have or what I've been able to do and what even what other people say. You're going to have what you're going to base your decision on something completely unscientific. And that's your gut feeling. Yeah. And it really comes down to answering the question within your own heart. Is this person someone who will have my best interest at heart? And if the answer to that question is yes, from deep down in your heart, then we're good to go. And if it isn't, there isn't anything that I can say or do that will make that change.

And it's different for everybody. Exactly, exactly. And it seems such a, in a way, self-evident, and yet so many people don't check off that box. They're focused on razzle-dazzle and impressing you with this and that. And it's like, well, there's no trust really yet. So we're unfortunately about out of time. I know time flies when you're having fun. I hope you're having fun.

Wow, that went by fast.

I know it did, right? Are there any, any final takeaways and actionable ideas, something that you'd like to leave the listeners with?

Yeah, I think that, you know, you brought up something interesting and I think you're onto something here. And that is that the image of a financial advisor is white men dressed up in very expensive suits and looking really important and smart. And I think that I would love to see an image of a woman with a different, completely different image of the profession. And I think that that's what younger women will look to and maybe pursue. And we just don't have that. And it has to be created. And once we create that image, I think we'll have much more participation. I was surprised that it was announced today that women only still make up 18% of the financial advisor population. I would've thought it would much more than that. So I'm going to do my part, but I hope everybody else does too.

Excellent. Well, well, thank you so much for joining and for sharing all this information. Thank you for having me. Thank you. It's my pleasure. My guest was Nancy Daoud. For more advisor-specific podcasts, please check out barons.com/podcast. For The Way Forward, I'm Greg Bartolis.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.