Women and
financial issues

Many women need to be remainded of the financial basis of their personal indepencence. But once they understand, they do not trust easily in mainstream promises of the financial industry.

Interview with Heide Härtel-Herrmann, financial advisor and founder of Frauenfinanzdienst, financial and brokerage agency specialized in female customers (

Could you please describe us your work?

Our slogan is that "we give financial advice to women and nice men“. About 75% of our customers are women. I started this business more than 25 years ago and today our office (which is located in the city centre of Cologne) employs six women.I’m both advisor and broker.  That is, in connection with giving advice I offer financial products which I assess to fit as accurately as possible with the individual needs of the customer. As a broker I am independent from any bank or insurance company which is a precondition for making tailor-made recommendations.

The core objective of our business is to support women with regard to their financial independence and self-reliance. This applies primarily to financial investment for old-age pensions and savings for other purposes. The motives of our customers seeking advice are manifold. Some of them are self-employed, or want to start a business, and ask for insurance against incapacity to work and other forms of financial precautions. Others have received an inheritance or are about to divorce and are looking for sensible ways of investment of what they can claim from their husband. Basically it is all about the wide array of financial precautions for the needs as defined, or found out after the process of advice and discussion, of the respective individual.

What does it mean to be specialized in female customers?

Female customers of financial services are, on average, particularly demanding. They have many questions, and they need a long time before taking decisions. Basically, many women do not like to bother with their personal financial issues. They hesitate and find excuses over and over again. The other side of the same coin is that they do not trust easily in mainstream promises of the financial industry, which I think is fully justified. They need, and want, sound information. In the latter sense they have been pioneers for many years, as all over the 1990s and the 2000s until the current financial crisis the male dominated mainstream attitude vis-à-vis financial products was far from asking questions with respect to long-term reliability, soundness, and sustainability. This approach has lost much of its credibility by the current crisis. More and more men are seeking the kind of advice and brokerage we offer. Many of our both female and male customers are disappointed from the financial advice given to them by their bank. Our individual and tailor-made approach is very much appreciated and I think it is no coincidence that you can practice such an approach best if you are focused on female customers. But still, many women continue to need particular encouragement for taking responsibility for their own financial interests. They need to be reminded of the financial basis for their personal independence. And they need to overcome their trust in the authority of male advisors simply because they are men. But once they look for new orientation, I think it is easier for a woman than for a man to provide this kind of individual and tailor-made advice, based on both personal experience and financial expertise.

Do you sell the same products to everybody and then analyze the behaviour of male and female, or do you offer specific financial products to women?

We do not believe in specific products for women. In fact, we denounce this concept as a marketing gag. When it comes to financial products women have particular preferences and needs, of course. The major usual suspect here is flexibility of contributions for old-age pensions, due to discontinuous careers and earnings over the life course. However, over the past 10 years or so, the insurance companies learned to take this need on board. In Germany, the option of flexible contributions to old-age pensions has become a standard scheme. Moreover, more and more men, too, tend to ask for this kind of contract option.

What type of customers do you work with? What level of financial literacy do female customers have in average? Do women know better or lesser than men financial products and the financial system?

Most of my customers are either employees or self-employed. In case of career breaks, they are determined to carry on with their occupation as soon as possible. They are what we call in German “occupation oriented”. There is a generation effect, of course. Some of my customers beyond the age of, say, sixty used to be housewives and are now looking for greater financial independence as they have divorced or their husband has died. As to literacy, information on financial issues varies amongst women as much as it does amongst men. The only major difference is the readiness to take on the challenge. When it comes to their own money, women have less self-reliance than men and do not like to take the decisions necessary. They may have gathered less information on details of financial products simply because they have avoided to look for them so far.

In your experience, what are the differences between women and men towards liquidity and risk?

There used to be marked differences before the crisis. Today, however, men are seeking security as much as women do. Today, everybody knows that liquidity entails low interest rates. And substantially more people than before the crisis accept the idea that high interest rates come along with higher risk. Thus, safety first has become a widely shared approach. This is why many people, both men and women, are interested in real estate investment. In many cases, however, this is not a realistic option due to the extremely cautious lending policy of German banks. As to gender specifics, one aspect worth mentioning is that women tend to be interested to a greater extent than men in what we call sustainable investment. They want to know what exactly their money is used for and whether or not the investment strategy of the respective fund complies with ethical or ecological criteria.

What are the main reasons for women's investments? Do they invest for their retirement, for their children's future or other reasons? And does the destination of the investment influence their attitude towards risk?

The single most important reason is saving for the old-age pension. In the case of self-employed this is a must as there is no public scheme whatsoever. In the case of employees it is an add-on to the public pay-as-you-go pension which has been deteriorated substantially by successive “pension reforms” since the 1990s. The second most important motive for financial investment is saving for purchasing real estate property. And no, the destination of investment does not influence the readiness to take on risk. Today, most people try to avoid risk whatever they save for.

Banks in Italy tend to discriminate against female entrepreneurs by giving them less loans and asking for more securities. Have you ever observed in Germany similar attitudes? If yes, what are in your opinion the possible reasons?

Our business is not involved with this particular issue but my friends who work as consultants tell me that this kind of discrimination has largely vanished. In case one of their customers encounters such discrimination she would choose a different bank. There was a different situation some 20 years ago, of course. We have had a continuous debate, for example, on the obligation of providing the signature of the husband in case a female self-employed asked for a bank loan. But today we can say that this debate has led to a success.

What is your position on the critics about financial speculation? And, what do you believe can be done to avoid the excesses of finance?

I believe in the stance taken by critical economists who state that if it was political action which opened the doors for financial speculation over the past 20 years (and for the redistribution of income needed for this speculation in the first place), these doors can be closed again by bold political action. What I do not believe in, however, is the idea put forward by some fellow feminists that more women in leading positions would help for that matter. In this case I agree with Bill Clinton’s slightly rephrased statement that, “it’s financial capitalism, stupid”. We all know that female fund managers have been engaged with high risk investment as much as their male counterparts. Maybe if there were substantially more women in leading positions, that is beyond the critical mass needed for changing leadership culture, plus reflection and critical attitude vis-à-vis the financial industry, it would help. But ultimately the critical attitude must be forced upon the industry by politics.