Targeting female entrepreneurs

Julie Rusciolelli is what many advisors would call an A-list client. She has the investable assets, owns commercial properties in chi-chi Toronto neighbourhoods and has been running her own communications firm, Maverick Public Relations, since 1999. Last year, at age 44, Rusciolelli was named one of Canada’s top 100 women entrepreneurs by PROFIT magazine.

The growth rate of self-employed women is nearly twice that of their male counterparts, making it an ideal niche market for advisors to target. More than 850,000 women-run businesses exist in Canada, with that number expected to grow to one million by 2010, according to Statistics Canada. Reasons for the rise really depend on the type of women entrepreneur. Karen Hughes, an associate professor at the University of Alberta, finds women entrepreneurs fit into one of four categories:

Bosses: They head larger firms with employees and are motivated by independence, making money and growing their businesses. By far, this is the most lucrative type of entrepreneur — but also the smallest, notes Ruth Bastedo, president of Women Entrepreneurs of Canada.

Business moms: These women run small, home-based businesses and they are the only employee. They are motivated by finding a balance between work and family life and their businesses are more likely to be part-time and have low-growth opportunities.

One-woman shows: These women’s businesses are similar in scope to business moms, but with more of an emphasis on producing meaningful work in a positive environment.

Necessity entrepreneurs: These are the least satisfied women entrepreneurs of the bunch because they tend to struggle financially. They only started businesses because they lost their jobs or lack opportunities.

As advisors, your input is not only needed but appreciated — especially by these bosses. Lori Vooys, first vice-president at Richardson Partners Financial Limited in Calgary, says most entrepreneur bosses initially approach her because they feel overwhelmed managing both their personal finances and their business.

“There aren’t enough hours in the day for them to be all the things they need to be,” she explains. But developing trust is a slow process, so be patient. “It takes a long time and a lot of experience to build credibility with clients who need to depend so heavily on you,” Vooys says.

What’s more, once trust exists, these leaders have few qualms about handing over the financial reins completely. “I’m too busy running my business. PR is what I know,” explains Rusciolelli. “I’m hiring my advisor to manage my money and I trust him to manage my money well. Why buy the dog if you’re going to do the barking?”

Rusciolelli learned her lesson the hard way. She was more than familiar with the technology industry during its late-1990s heyday and found herself opening up a discount brokerage account and buying stocks for a few companies she believed in. She experienced some success flying solo but ultimately lost the equivalent of a big down payment on a downtown condo. “I think I was playing Russian roulette with my money,” she concedes. “I was too heavily into technology stocks because that was my world. I bought what I knew.”

What she didn’t know were the tricks of diversification and proper asset allocation. She didn’t understand there was more to stock picking than glossing through glowing annual reports. But then a commercial mortgage lender with whom she’d previously worked referred her to an advisor who was able to get her to change her thinking. And she still has what she calls her “mad money account” — where she can invest a small percentage of her assets in stocks of her choosing, gain or loss, without it impacting her retirement plan.

So how do you keep the female bosses content with your services? First off, don’t treat them as if they’re different. Just like male entrepreneurs, they’ve built companies and hired, trained and retained employees. And the studies that show females having more risk aversion than men simply don’t apply with female entrepreneur bosses. As Marilyn Trentos, an investment advisor at RBC Dominion Securities in Richmond Hill, Ont., explains, “by starting a business, they are already taking on risk.”

Even balancing work and family doesn’t tend to be a big issue. Trentos notes that female and male roles aren’t particularly traditional at this level, with more men taking on extra familial responsibilities. The only real difference between the sexes is there just aren’t as many female entrepreneur bosses, notes Christina Anthony, a portfolio manager and director with Odlum Brown in Vancouver.

Anthony founded the Forum for Women Entrepreneurs in British Columbia as a way for likeminded women to help support one another. “Historically, there were not as many mentors or educational programs that women felt they had access to,” she explains. “That’s why we wanted to make sure that we’re focused on mentorship but there are men and women involved in helping these entrepreneurs.”

Here are some other tips on how to keep this lucrative market happy:

1. Don’t forget the personal touch.

Yes, they’re busy people but that doesn’t mean they don’t want you to touch base. “If they don’t reach out on a regular basis, we tend to feel somewhat disenfranchised,” says client Leslie Coates, founder of Ottawa-based Manotick Travel & Cruise Centre. “That’s equally as important as the investment performance. And the performance is often not the fault of the advisor; it can just be general economic times. So communication is often a great assistance to make people understand what’s going on.”

Good communication skills can mean the difference between retaining and losing clients. Even though Coates was satisfied with her original advisor, she ultimately moved to investment advisor Sheldon Rice of Canaccord Capital because “he outperformed in the way he kept in touch and kept relationships going. He offered other services and networked.”

And high-end advisors are not immune to making communications mistakes. Rusciolelli notes that her former advisor of four years — a big name at one of Toronto’s largest firms — tended to rely heavily on regular e-mail correspondence even though it wasn’t Rusciolelli’s preference. “I don’t want people hiding behind e-mails,” she says. “I love the phone calls and visits and that’s something [the advisor] didn’t do enough.”

Except when there was a conflict. One Saturday morning in September, while relaxing with her husband and young daughter, Rusciolelli received a frantic phone call from one of her advisor’s associates. The advisor had recently switched dealers, and wanted Rusciolelli to come to the new firm.

Rusciolelli resented the intrusion on a weekend morning and ultimately felt put on the spot. She also didn’t appreciate discussing the issue with a stranger. (She’s not sure why the regular associate she deals with didn’t phone.) “This associate was trying to give me a rationalization about why the other firm was better and she was making a really hard sell,” Rusciolelli says. “It seemed desperate. That was the wrong approach to take with me. I felt a little bullied.”

So, she decided not to immediately follow her advisor. Instead, she wanted to meet the incoming advisor, and ended up staying put. A better approach, she notes, would have been for the associate to phone during a weekday and simply say: “Hi Julie, this is Cynthia, I work with your advisor. I just wanted to let you know that your advisor has left the firm to go to a competitor and she will be in touch with you over the next couple of weeks.”

2. Respect their time constraints.

Want to meet with your entrepreneur client for a few hours? Good luck. Make that 30 minutes. Or better yet, a 15-minute conference call. Coates is always time-pressed and hates being inundated with written information. “I have trouble keeping up with my own industry let alone the financial stuff,” she says. “That’s what the experts are for. All I ask for is a 10-minute phone conversation letting me know how I’m doing.”

Trentos will manage money on a discretionary basis for most of her entrepreneur clients going forward. And, when she meets with them, she makes herself available during unconventional times. “If I’m having tea on a Sunday morning at someone’s kitchen table because that’s all they have time for, then that’s what I have to do,” she explains.

3. Think beyond investments.

Rusciolelli is still amazed that her former advisor never brought up any non-investment options for her business. Meanwhile, her new advisor mentioned the prospect of an individual pension plan during their second meeting. “That was an A-ha moment for me because I learned something new,” she says. “That management fee isn’t just for getting me some great performance on my portfolio. It’s for telling me something that I don’t know and that will make my life easier.”

Since they are so focused on the business, entrepreneurs often neglect the obvious safety nets like insurance. “They believe the business is their pension plan and in a perfect world, it will be,” says Vooys. “But while everyone pictures their retirement, almost no one pictures themselves to be alive and unwell, or alive and having to step back from a business they’re not ready to sell.” That’s why she recommends disability and critical illness insurance in almost all cases.

Other insurance solutions can help with tax savings. If the firm owns life insurance on the entrepreneur, for instance, the insurance company pays out the amount to the firm. Then the CRA allows a tax-free distribution on net proceeds through the company’s capital dividend account, which can pass directly to a spouse or other family member, Vooys explains.

Then there’s the matter of succession planning for the business. While many entrepreneurs view their businesses as a tool to fund their retirements, few have thought about the tax liabilities of selling that business or how to pass it to the next generation and then derive income, she adds.

Explains Vooys: “They haven’t explored the hows. They haven’t thought through issues like equitable solutions for the two kids who want the business and the one who doesn’t.” Coates is an exception. Her full-service travel agency employed seven people and her succession plan was all mapped out: Her daughter, Kelly, would buy her out. Rice had worked for months ironing out all the details.

But then Kelly decided not to proceed with that strategy. Turned out the travel agency wasn’t Kelly’s calling; she wanted to open a wedding planning business instead. Thankfully, one of Coates’s long-term employees was interested in buying her business and the deal closed in October. Coates left the president’s chair and is now serving as vice-president during the changeover. “I’m staying on for a minimum of a year to help with the transition and I’m going back to being a commission salesperson for the business,” she says.

4. Offer networking opportunities.

Rice has specialized in serving female business owner clients for four years. To establish synergies and rapport with his client base, he started monthly ideas exchange (IDEX) meetings for them. On a rotating basis, a dozen clients or prospects gather to hear a guest speaker relevant to small business. Rice serves food and wine and since it’s such an intimate gathering, the women have no difficulties mingling, sharing and learning from one another. Vooys and partner Greg Stevenson take a different approach to entrepreneur networking. Assuming the clients agree, they bring clients facing similar situations together to share financial experiences and knowledge. Says Vooys: “From every entrepreneur that we work with, we learn more about how to do things and mistakes to avoid.”

5. Prospecting for the female bosses? Don’t be a vulture; make sure you have a connection.

After receiving the PROFIT magazine honour, Rusciollelli answered dozens of phone calls and opened congratulatory cards from several financial professionals. “They are worse than the telcos,” she says of these well-meaning advisors. So these gestures didn’t exactly entice her. “If you want my business, then you better know somebody who knows me and can make a pedigreed introduction.” That said, since she’s satisfied with her current advisor, she’s not interested in being prospected. “Advisors should really leave the happy clients alone and go after low-hanging fruit.”

Rice didn’t have a connection to meet Leslie Coates when he did; he had more pressing matters. In 2004, he had wanted to surprise his soon-to-be wife with an amazing honeymoon and after hearing about Coates’s win as Ottawa Businesswoman of the Year for her cruise and travel business, he thought, who better to call? Rice and his wife accompanied Coates and other couples on a president’s Mediterranean cruise. He and his wife were so blown away by the experience that they continued to travel on future excursions organized by Coates. Only after getting to know her did Rice invite her to one of his IDEX meetings.

6. Educate their entourages.

It’s not uncommon for a prospective entrepreneur client to bring her company’s accountant or CFO with her to an initial meeting. “Sometimes you need to get your investment philosophy to pass muster with that gatekeeper,” Trentos explains. “If you can take the time to educate that individual, they in turn will help you to educate the entrepreneur.”

7. Provide one-stop shopping.

Recognize what you don’t know, says Vooys, and have all the needed services, such as business valuation experts, lawyers who can draft buy/sell agreements, accountants and insurance specialists, available at your fingertips. It’s an added bonus if your centres of influence are just down the hall.

If not, Vooys says be prepared to bring all the relevant parties to the table—a busy entrepreneur just doesn’t have time to shortlist the appropriate professionals or run around to different offices. Really, entrepreneurs aren’t that different from financial advisors. As Rusciolelli puts it, “We got people to believe in our vision and that’s critical to our success. The same holds true for advisors. If they don’t have [their clients] buying into their vision, they can’t build their businesses.”