Women: Private Investigators of Finance

by Barbara Stewart, CFA, CFA Institute

I think female advisers have an innate ability to sniff out financial fraud. More so than male advisers.

And I don’t think it’s because of what is dismissively referred to as “women’s intuition.” Instead, I believe it is due to the soft skills women routinely employ — a personal communication style, an interest in and ability to listen to real stories, the capacity to multitask, and a high emotional quotient (EQ), to name a few.

Women advisers understand that stories, narratives, relationships, and family dynamics are central to an adviser–client portfolio discussion.

Charlotte B. Beyer, founder of the Institute for Private Investors (IPI) in New York, affirmed this finding: “The emotional quotient needed to perform the job of an adviser is enormous. Women seem more comfortable having that deeper, more meaningful dialogue.”

To be clear, all advisers are capable of spotting fraud. But based on a couple of recent stories and some interesting statistics, I think women may have a head start.

Let’s begin with some female financial sleuth stories. All client names (with an asterisk) have been changed to protect confidentiality.

Detective Stewart

I’m no Miss Marple, but I do have my moments.

Last summer I received an email from a client asking me to transfer $50,000 from his investment account into his bank account. That sounds pretty standard, but I thought to myself, “How odd.” Bob* and his wife had just been in to see me for their portfolio review. There had been no mention of a need for additional funds.

I wrote back and asked what the money was for and which account we should take it from. The client replied that they needed to help out a relative, and please take it from account number XXX. As this was a tax-sheltered account, I immediately wrote back to confirm that this was what they wanted given the tax implications. He responded that “Yes, we understand and this is what I want to do,” and included bank information for a third party located in Scotland.

Again I thought, “How odd,” because Bob and his wife aren’t very knowledgeable about investment or tax matters and have always deferred to my advice. Also, during many hours of personal conversations over the years, they never mentioned having relatives in Scotland. I sent another note to double check.

His reply contained a strong hint of frustration and words to the effect of: “Hurry up and get it done.” That had never been his tone in any email before. I responded that since it was a third-party funds transfer, I had to verify and confirm his instructions by voice over the telephone.

His next note said he was sick, unable to come to the phone, and that they needed the funds sent right away. I apologized but affirmed that those were the compliance rules. By then I had a very bad feeling, so I placed a call to his home and business numbers. No answer. I left messages, but none were returned.

I called another client who worked with Bob to check if he had a different contact number. He gave me Bob’s mobile phone number and confirmed that Bob and his wife were away.

I left a message on Bob’s mobile to call me, but he didn’t. The emails grew more and more irritable in tone until finally the individual offered to call me.

The caller had a heavy accent, but it was not Bob’s beautiful French Canadian one. Yet he insisted that he was indeed Bob and needed me to send the funds right away. I confronted him and he slammed down the phone. We never heard from him again.

A few weeks later, the “real” Bob finally called and I told him the story. He was quite shocked. Obviously, he and his wife were extremely grateful that this attempted fraud had been thwarted. I was glad that I was so familiar with Bob’s work, his close relationship with his colleague, their family background, and his communication style. But what if our whole portfolio review meeting had been spent discussing only markets and performance numbers? Would the result have been the same?

Detective Richards

Ann Richards is portfolio manager with The Richards Group at CIBC Wood Gundy in Toronto. Here’s her sleuthing story:

“My long-time client Dorothy* called me last week saying, ‘Ann, I need $80,000 right away. My grandson is at the police station and he needs help.’ I immediately thought that Dorothy might be the subject of a scam. I didn’t want to alarm her, so I gently asked her some questions to assess the situation and her state of mind.

“As she calmed down, the story became clear. Dorothy had received a call from someone claiming to be her grandson, asking for money to be sent to an account by the end of the day to get him out of trouble. Dorothy thought Michael* sounded strange but attributed it to stress. She first called her credit card company, but her limit, although high, wasn’t enough to satisfy the request. That was when she called me.

“She said Michael was at a police station in Toronto, so I reassured her that he was safe for now, and asked permission to make a few phone calls on her behalf. I reached Dorothy’s daughter, who also has an account with me, to get Michael’s phone number. I called Michael and he picked up immediately. I introduced myself and explained Dorothy’s concern. He confirmed that he wasn’t in trouble and didn’t need any money, let alone $80,000.

“He offered to call his grandmother to reassure her and to let her know she didn’t have to send any money to anyone on his behalf.

“Dorothy had been the subject of a well-known scam. Con men often target seniors and take advantage of their love for family by asking for money. Even though Dorothy is an alert and savvy woman, easily capable of calling her credit card company and her investment adviser, she experienced a moment of real worry and believed that Michael needed her help.

“She could easily have sent the funds off, but because her money was safeguarded at my firm, she needed my help. Knowing Dorothy and her family situation, I was able to spot a suspicious request and save her from liquidating her investments unnecessarily.”

Women Are Natural Intelligence Agents (aka Spies)

These are just two anecdotes, yet there are more reasons why women advisers are good at financial detective work.

The best spies in the Central Intelligence Agency (CIA) are women. What is it that gives them an advantage in this profession? According to author Maseena Ziegler, women have excellent people skills, street smarts, and nurturing instincts, and are better listeners.

There are more women in the CIA than ever before — 45% of the CIA workforce. “A top British spy claims women, especially mothers, make great spies because of their ability to understand emotions and to multitask.”

I lived in my parents’ home while attending university. Once when they went out of town, I had a wild(ish) party. I was careful to hide all the evidence and thought I was so clever, until I noticed my mum’s eyes flickering around the place on their return. She quickly figured out what had happened based on the fact that some of the sheepskin rugs had been moved by a couple of inches.

Busted by my mum, the detective.

Women Are Natural Compliance Officers 

“Nearly 60% of the Society for Corporate Compliance and Ethics’ (SCCE) members are now women.” A compliance officer is “the guardian of an organization’s good corporate citizenship.” The mandate of a compliance officer “ranges from creating and enforcing guidelines and policies that ensure a company’s integrity, to promoting ethical standards and values that form strong workplace cultures.”

A Zurich-based compliance officer told me, “Women tend to be more detail-oriented, which is necessary for the development of policy, procedure, and regulation.”

According to this compliance source, both men and women are equally committed to such values as justice, fairness, and appropriateness. But she does think that women are especially good at an intuitive understanding of human nature, strong listening skills, and the curiosity to ask the right questions — skills that support effective compliance efforts.

Women Are Good at Assessing Risk

One of the clichés of the investing industry used to be that women were risk averse. Over the past eight years of my Rich Thinking research on women and finance, I have discovered it is more accurate to say “women are not risk averse, but risk aware.” Financial fraud is one of the biggest risks, so it fits that women advisers may be more aware of and better at detecting it.

Women Are Great Private Investigators

Private investigation is traditionally a male-dominated field, and only about 15% of US private investigators (PIs) are women. But those female investigators have a number of advantages over their male counterparts. In addition to multitasking and listening, women are also great at using non-conventional tools, such as social media, to solve mysteries.

Advisers Beware

As advisers, we all need to be on the lookout for financial scams and fraud. Both male and female advisers should tap into their “feminine sides” and hone their detective skills — communication, effective listening, and EQ — to better serve their clients.

I would love to hear your stories about female advisers as private investigators. Feel free to leave a comment below, or contact me at barbara@barbarastewart.ca.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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