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Transcript of WWA LTE 11 2012
A white paper series by and for
professionals on the leading edge
of the fi nancial services industry –
to help you run, grow and protect
your business.
November 2012
Women and Wealth: Niche Market or Gold Rush?
For Broker-Dealer Use Only – Not to Be Distributed to the General Public
[ 2 ]
Women and Wealth: Niche Market or Gold Rush
We may be on the threshold of one of the biggest opportunities our industry has ever been presented.
[ 1 ]
Women and Wealth: Niche Market or Gold Rush?
Executive SummaryBy the end of this decade, American women will be in control of $22 trillion.1 To put that number in perspective, this is roughly
25% more than the national debt, and yet very few firms are well-positioned to capture the women’s wealth market.
The ever-increasing economic power of women is driven by a number of forces:
■■ Baby boomer women stand to inherit wealth twice in the coming years – first from their parents and in-laws and then from
the husbands they statistically outlive. Seven out of 10 currently married American women will become widows, at an average
age of 59.2
■■ At the same time, women’s earnings have increased. Over the past 30 years, the number of working women has doubled.
And women entering the workforce today have achieved economic parity with their brothers and husbands.3
■■ Additionally, women have become increasingly confident about managing their finances and, in the years ahead, will be far less likely
than their mothers and grandmothers to take a backseat when it comes to making financial decisions for their families.
In summary, women have more money now and are more actively managing it than ever before, and this trend is moving only one way.
And yet…
Men are 1.7 times more likely than women to be approached by a financial advisor.4
Chances are good that this isn’t the first time you’ve read about the women’s wealth market. Like many financial services professionals,
you may have attended conferences where this was a topic of discussion or seen magazine and newspaper articles chronicling women’s
dissatisfaction with the financial services industry overall. But this merely serves to outline the enormity of the opportunity for those
advisors who “crack the code” and learn to successfully serve women with substantial financial assets.
In this white paper, Linda Eaton, Senior Vice President and Performance Improvement Specialist for Cannon Financial Institute, and
First Clearing will reveal what investment firms and professionals need to know and do right now to make the most of the women’s
wealth market.
We’ll address:
■■ The Invisible Opportunity
Current and future circumstances that can help a firm be a leader in accommodating the women’s financial services market.
■■ Why Don’t They Like Us?
Information on the differences in perceptions and behaviors between men and women that can improve understanding and
communication.
■■ What Can We Do? Action steps for both firm principals and financial advisors that are designed to help foster stronger women-client relationships.
[ 2 ]
Women and Wealth: Niche Market or Gold Rush?
The Invisible OpportunityWhile many individual advisors and teams have built robust
practices serving women well, as an industry, no fi rm has
emerged as a clear market leader. For most of us, although
the women’s market may be interesting and appealing, it has
yet to become urgent. We’re doing well without giving this
constituency much special focus.
This casual climate is not unlike the story about two fi sh that
developed the ability to understand the English language.
Swimming together in a stream, they heard one fi sherman say to
another, “Nice water today.”
One fi sh turned to the other and said, “What’s water?”
When Benjamin Jay, John Sutton and 22 other entrepreneurs
formed the Stock Exchange Offi ce in 1792, no one even
considered the possibility of women’s involvement. Indeed,
only society’s most powerful and wealthy men had access to
the market at all. A mere 175 years were to pass before Muriel
Seibert was permitted to purchase a seat on the Exchange in
1967. Even today, women advisors compose only 31.2% of the
national advisor population.5
In a world where most clients are still men, most advisors are
still men and most investment fi rm principals are still men,
it’s easy not to notice either the brewing storm or the coming
opportunity. But that world is changing … rapidly.
Perhaps the most alarming statistic of all is that within three years of a husband’s death, 70% of widows choose a different advisor.7
The PresentRight now women control about 33% of the wealth in
North America. According to a 2010 study of affl uent women
conducted by Prudential, 95% of respondents indicated that
they are directly involved in their households’ fi nancial decision
making, and 25% said that they are the primary decision
makers. Eighty-four percent of married women say they are
involved in fi nancial and retirement planning, and of these, 15%
have sole responsibility. Presently, women represent 37%
of high-net-worth investors, a number that is growing every
day. Small and midsized businesses run by women employ
more workers than the entire Fortune 500 – combined.
Right now more women than men are graduating from
American colleges and graduate schools. As of 2009, 60.4% of
master’s degrees and 52% of doctorates were conferred upon
women. In 1982-1983, 26.8% of M.D. degrees were awarded
to women. In 2010-2011, women received 8,396 (48.4%) of
the 17,364 M.D. degrees awarded.6 (see “Percent of All College
Degrees Conferred” on page 3.)
And…
Right now women are exceedingly disappointed with the
fi nancial services industry. In a well-known study conducted
in 2009 by the Boston Consulting Group, 500 women with
investable assets of at least $250,000 expressed a dramatic level
of dissatisfaction with their private banking and investment
experiences. Among the most unhappy were women in the
$1 million to $5 million segment, a sweet spot for many
advisory fi rms.
Perhaps the most alarming statistic of all is that within three
years of a husband’s death, 70% of widows choose a
different advisor.7
[ 3 ]
Women and Wealth: Niche Market or Gold Rush?
Percent of All College Degrees Conferred Female vs. Male, 1971-2017
Source: Department of Eduction
The Future
Baby Boomers, Retirement, and Intergenerational Wealth TransferAs we look at the future of our businesses, we also need to
take into account the change from accumulation to distribution
that the baby boomer generation is beginning to experience and
ask ourselves: “Where will new assets under management
come from?”
Without question, holding onto assets already under
management is a prime consideration. As we’ve already noted,
recent widows are among the most vulnerable of clients.
The fl ip side of that coin, of course, is that they are also a prime
source of new money. Advisors who develop strong relationships
with both spouses are not only more likely to retain accounts
when one spouse passes, they are also better positioned to seek
referrals from high-net-worth women who have been
well-served by their practices.
There is yet another major advantage to cultivating the women’s
wealth market. As wealth passes from one generation to another,
assets often pass from one fi rm to another.
In most families, although it may be Dad who traditionally
deals with the fi nancial advisor, it is usually Mom who holds the
family together.
Sons and daughters inheriting wealth in the 21st century
are less likely to live in the communities where their parents –
and their parents’ fi nancial advisors – resided. In a world where
Skype and FaceTime can let grandparents follow the fi rst steps
of their distant grandchildren, there is no reason why advisors
can’t cultivate face-to-face relationships with their clients’ heirs.
More often than not, the most direct pathway to developing a
relationship with inheritors will be through their mothers.
The women’s wealth market, far from being a niche, is the very
stuff of economic survival.
More often than not, the most direct pathway to developing a relationship with inheritors will be through their mothers.
Male
PercentProjected
Female
64 -
60 -
56 -
52 -
48 -
44 -
40 -
36 -75 80 85 90 05 10 15 2095 00
[ 4 ]
Women and Wealth: Niche Market or Gold Rush?
Why Don’t They Like Us?Client satisfaction surveys throughout the industry indicate
a marked difference in the way male and female clients feel.
Women often report being ignored in a variety of ways.
Anecdotes abound in which couples meet with advisors (both
male and female advisors) who offer business cards and collateral
to only the husband, address most – or sometimes all – of their
questions to the man in the room and fail to answer the woman’s
questions or address her concerns in more than a cursory way.
Many women report being treated with condescension –
an experience related by not only widows who have not
handled fi nancial decisions in the past but also by female
executives and entrepreneurs.
Because of differences (see sidebar on page 5) in the biology of
male and female brains, more women than men report desiring
an ongoing relationship with an advisor who takes the time to
get to know and truly understand their needs. Many (not all)
women are willing to sacrifi ce some points on the performance
side of their portfolios if they can work with an advisor they know
and trust. What they report receiving, instead, frequently is a
“sales pitch.”
Several studies express that women report a lower level of self-
assessed fi nancial acumen than do men.8 Some experts interpret the
gap as indicative of not only the actual level of knowledge but also
an increased willingness on the part of women to admit what they
don’t know. In any case, as a group, women investors dislike the
overuse of fi nancial jargon and seek comprehensive understanding
of their fi nancial position and the options available to them.
Above all, today’s target female client is a member of the
“sandwich” generation. Famously juggling career, children, and
aging parents, many high-net-worth women regard time as a
precious and limited asset. On the other hand, they vehemently
dislike feeling pushed into making decisions. The advisor who
can strike the balance when it comes to meeting a client’s needs
and not wasting her time should have fewer problems retaining
women in his or her practice.
Source: Cannon Financial Institute
Because women and men have different neural pathways – literally traveling down different roads – the genders actually do think differently.
Men and Women Are Di� erent It’s not theory – it’s science
Many of us are products of the politically correct ‘60s, ‘70s, and ‘80s – decades during which differences in gender were denied in the name of fairness and equal opportunity. The positive impact of this “gender blindness” is indisputable – doors were opened to women that will change the world forever. But the fact is that men and women are as different neurologically as they are reproductively.
The 1990s saw a veritable revolution in the neurobiology fi eld. For the fi rst time in human history, nanotechnology enabled scientists to study the human brain in action. Prior to these technological advances, hands-on study of the brain could only be conducted surgically, on either cadavers or sedated patients. The invention of tools like FMRI (functional magnetic resonance imaging) has enabled researchers to observe fi rst-hand what happens when subjects weigh alternatives, how emotions affect fi nancial decision making, how our thinking changes when we’re under stress, and the incontrovertible fact that men and women aren’t using the same equipment to process information.
One signifi cant difference in the brains of men and women is the corpus callosum, a sort of tunnel of tissue that connects the left and right lobes of the brain. The left lobe is the seat of sequential, mathematical, linear thinking. The right lobe is where emotion and creativity make their homes. While both genders are graced with both lobes, the corpus callosum (the connecting tunnel) is typically wider in women than in men. For this reason, women can connect, for example, logic and emotion or words and feelings with a speed and facility that have famously baffl ed men since the beginning of time. Conversely, this tunnel is to blame for why women through the ages have bemoaned men’s inability (often misconstrued as unwillingness) to “share their feelings.”
Because women and men have different neural pathways – literally traveling down different roads – the genders actually do think differently.
[ 5 ]
Women and Wealth: Niche Market or Gold Rush?
[ 6 ]
Women and Wealth: Niche Market or Gold Rush?
What Does This Mean to Us? Because they recognize today’s burgeoning women’s market,
most of the major banks and wirehouses have established an
advertising presence that courts the affl uent and high-net-worth
woman with elegantly designed magazine spreads, web pages,
and brochures. When a woman responds to the advertising,
however, she typically fi nds the same service problems that
caused her to look elsewhere to begin with.
Attracting and maintaining women clients means more than just
changing advertising campaigns — and those changes
must come from the top.
At its heart, the failure of most fi rms to capitalize on the
women’s wealth market is a leadership issue.
For all of the conversations about advisors being entrepreneurial,
the fact is that they are, and have chosen to be, employees. As
such, they look to the leaders of their fi rms for guidance, both
consciously and subliminally. If principals are not focused on
the women’s wealth market, it is unlikely that most of the fi rm’s
advisors will be.
At its heart, the failure of most fi rms to capitalize on the women’s wealth market is a leadership issue.
Opportunities in DifferencesToday, both neurobiological and marketing research can provide
insights into fi rms’ success in the crucial areas of:
■■ Attracting Clients
■■ Engaging in Discovery
■■ Presenting Solutions
■■ Closing Business
■■ Caring for Clients
Attracting ClientsThe single most important factor in attracting and retaining
women as clients is the relationship with the advisor or
advisory team. This means that advisors must be alert to
the opportunities and risks, prepared to serve the market
effectively, and committed to making the changes that will
make their practices appealing to profi table clients of both
genders. While individual advisors or teams may take the
necessary steps on their own, most will need and benefi t from
the guidance and support of the leaders of their fi rms.
To tap the women’s wealth market effectively, it is imperative
to provide excellent service. Women are referral machines.
A woman speaks 30% more words per day than a man.9
When she is pleased with a product or service, the likelihood
that she will tell people is greater than that of a similarly pleased
man. It is well-known in the industry that the most successful
practices are fueled by referrals.
[ 7 ]
Women and Wealth: Niche Market or Gold Rush?
Engaging in DiscoveryWomen seek relationships. They want and expect an advisor
to be interested in their lives as well as their fi nancial goals.
To be sure, it is important to male clients that we understand
their needs and issues, but as a group, men tend to see the
advisor-client relationship as business-based and not necessarily
personal. A male client, for example, is much more likely to
work with multiple advisors than a female client. Women tend
to gravitate to advisors who see their fi nances as part of a bigger
life picture. Part of this is driven by neurobiology.
Presenting SolutionsThe male brain shows a marked tendency to think in a sequential,
linear fashion (see Comparison Chart below). Women think
synthetically, processing input from a variety of areas simultaneously.
While the majority of men — using the linear left lobe — focus
on the relative performance of an investment vehicle, for example,
women — using the whole brain synthetically — are generally
more motivated by long-term results.
Comparison Chart
Source: Cannon Financial Institute
Closing BusinessWe’ve all had sales training. A feature of the customary
“objections clinics” that fi nancial professionals have
experienced or conducted have historically concluded that
the phrase, “I need to think about this,” indicates that we,
as salespeople, have failed to uncover some roadblock
that the client has to taking action. “Time to think”
means “this sale is going nowhere.”
However, women, using multiple areas of the brain
simultaneously and being focused as much on synthesis as
investment performance, frequently require more time to
think. So when a female client says, “I need time to think,”
it isn’t a dodge, it’s a reality.
Caring for Clients
Mental Accounting
In addition to providing us with greater insight into the brain
differences between men and women, modern science and
technology has offered fascinating and useful information about
how human beings of both genders make fi nancial decisions.
The entire fi eld of neuroeconomics has blossomed.
One common tendency is what the behavioral fi nance experts
call “mental accounting.”
In general, people seem to have a propensity to intellectually
separate fi nances into retirement money, education money,
“play the market” money, and so on, when, in fact, it’s all
coming out of the same pot. Any advisor who has tried to
counsel a client about the advantages of consolidating his or her
assets has learned how stubborn this tendency can be. Because
women think with both sides of the brain at the same time, they
can often conceptualize the interrelationships between their
assets more easily than men. On the surface, this would seem to
make it easier to deal with most female clients.
continued on page 8
Men WomenLinear Holistic
Fast Thorough
Seek Action Seek Completion
Immediate Gain Benefi t Over Time
Achievement Protection
Domination Collaboration
Fight or Flight Tend and Befriend
Direct Indirect
Goal-Oriented Relationship-Oriented
Information Connections
Credentials Values
[ 8 ]
Women and Wealth: Niche Market or Gold Rush?
What happens, in many situations, however, is that advisors
(again, both male and female advisors) can become frustrated
when their high-net-worth women clients want to delve deeply
into how any change affects the whole portfolio. What can
look or feel like stalling — or worse yet, can be perceived as
questioning the advisor’s expertise — is often simply thinking
something through from more angles.
So when a female client says, “I need time to think,” it isn’t a dodge, it’s a reality.
Stress Response
We’ve all heard about the “fi ght or fl ight” stress response.
First noted by Dr. Hans Selye in the 1930s, the stress response
explains how and why we might respond to a dip in the equities
market exactly the same way we might react to an attack by a
wild animal – fi ght or fl ight – fueled by a surge of adrenaline.
Recent research has indicated that adrenaline reacts with
testosterone in a different way than estrogen. The newly
discovered female stress response, unlike fi ght or fl ight, is often
labeled “tend and befriend.”
When women are confronted by a threat, they are more likely
than men to want to pause and marshal resources than they
are driven to take speedy action. For advisors, the message can
be useful – talk your male clients off the ledge, for sure, but
make certain that you’re touching base with the women in your
practice. Just picking up the phone can mean the difference
between cementing a relationship and putting it at risk.
What Can Leaders Do? 1. Educate your advisors.
The neurological differences between men and women
are, at this point, very well-known, as are the differences
in client care and prospecting that appeal to the high-
net-worth women investor. Most advisors don’t need a
complete overhaul – but most do need guidance. Providing
training for your advisors to equip them to question more
broadly, to read buying signals more accurately (different
in women), and to provide the kind of service that paves
the way to long-term, intergenerational asset retention will
have an added bonus for your fi rm. The very skills that will
solidify your advisors’ relationships with their female clients
will also help them work more effectively with the men in
their practices. We believe it is truly a win-win.
2. Ask the right questions.
Asking the right questions can help you position your
advisors to take advantage of the tremendous opportunity
afforded by the women’s wealth market. It is well-known
that whatever can be measured has a tendency to fl ourish.
■■ What is your average client age? Most practices are weighted toward the baby boomer
generation. The larger the portion of your client
population that falls into this category, the higher the
likelihood that you will have “silent spouses” – wives
whose husbands have taken the lead in dealing with
fi nancial decisions and are at the highest risk for
moving their assets if widowed.
■■ Who are your advisors meeting with and speaking to? Help your advisors analyze their practices with an eye
toward possibly underserved spouses. Help them craft
plans to get to know the clients in their books of
business who may be invisible to them at present.
[ 9 ]
Women and Wealth: Niche Market or Gold Rush?
■■ Who has walked out the door? Although it is somewhat painful to track lost
relationships, clients who have left your fi rm can be an
excellent source of useful information. Contact clients
who have taken their assets elsewhere. Look for
patterns within advisory practices.
■■ Who has walked in? Knowing where referrals come from can also be highly
instructive. As noted previously, women clients who
have been recipients of excellent service tend to be rich
referral sources.
■■ What makes your fi rm appealing to women? Examine your promotional materials. Are they
weighted toward courting the male investor? How are
women treated when they visit your offi ces? What
kind of client appreciation and educational events do
your advisors host? (Hint: There’s a big world beyond
golf and duck hunting.) Help your advisors attract
high-net-worth women with educational events
that appeal to their needs and are friendly to
their schedules.
3. Above all, focus.
Keep the spotlight on the initiative to forge and maintain
relationships with the affl uent women in your community.
Focus
[ 10 ]
Women and Wealth: Niche Market or Gold Rush?
What Can Advisors Do? Advisors can take a fi ve-step approach to tapping into the
opportunity presented by the women’s market:
1. Commit
2. Contact
3. Connect
4. Care
5. Cultivate
1. CommitSimply by making the very conscious decision to serve
affl uent and high-net-worth women as a valued client base,
you will begin to discover additional opportunities. As
Christopher Chabris and Daniel Simon of Harvard have
cited in their excellent book, The Invisible Gorilla, people
don’t notice what’s right in front of them – they see what
they’re looking for. The best place to begin the search is
within your current practice. How many relationships are
there in which a husband is the primary contact? Those
wives could be poised for fl ight to a new advisor. What
opportunities might there be to do business with the
mothers, daughters, and sisters of existing clients?
2. ContactIf you have conducted a relationship primarily, or
exclusively, with one spouse (frequently the husband), how
can you gracefully reach out to the wife? It requires care,
planning, and skill. Women who have not had a great deal
of experience managing fi nancial matters can benefi t from a
simple meeting to review “Top 10 Questions Every Woman
Needs to Answer” (see page 11).
3. ConnectAs noted above, women tend to value relationships, think
holistically, and appreciate advisors who see their needs as
part of a whole, rather than as discreet fi nancial decisions.
In addition to taking plenty of time for discovery, it’s
important you keep good records. Being able to recall
details of a client relationship and to reference previous
discussions creates a strong connection to the female client.
4. CareYou can establish good relationships with women clients by
asking pertinent questions, avoiding jargon, and focusing
on holistic advice. But you also need to take steps to make
sure you can retain those clients long-term. Design client
appreciation events that don’t necessarily center around golf
or duck hunting. While many women enjoy both pastimes,
the advisor who also hosts educational and cultural events
can broaden the appeal to high-net-worth women.
5. CultivateIn addition to hosting events that attract women, advisors
may want to think about strategic campaigns to seek
referrals and introductions from women who have expressed
satisfaction with the service they receive. Additionally,
creating an area of expertise – the needs of entrepreneurs,
for example (remember, women-owned businesses employ
35% more people than the Fortune 500 combined), or
fi nancial issues related to divorce – can help propel a
practice to the next level.
[ 11 ]
Women and Wealth: Niche Market or Gold Rush?
ConclusionAs time goes on, this so-called “invisible opportunity” continues
to gain ground. Firms and advisors who pay attention now to
the burgeoning women’s market – or even focus on it – should
be well-positioned for growth.
Footnotes1 “The Female Economy,” Harvard Business Review, Sept. 2009.
2 U. S. Department of Health and Human Services,
Administration on Aging.
3 U.S. Department of Labor.
4 “Leveling the Playing Field; Upgrading the Wealth
Management Experience for Women,” Boston Consulting
Group, July 2010.
5 U.S. Department of Labor Statistics, 2011.
6 U.S. Council of Graduate Schools, 2010.
7 “Financial Experience & Behaviors Among Women,”
Prudential, 2012.
8 “Financial Experience and Behaviors Among Women,”
Prudential Research Study, 2010-2011; “Women and Wealth,”
RBC Wealth Management, 2012; and “Many Americans Don’t
Fully Read Retirement Plan Disclosures” and “Few Know
What Retirement Plan Fees They Pay,” LIMRA, Aug. 27, 2012.
9 Tanner, Debora, You Just Don’t Understand: Women and
Men in Conversation, Ballantine Books, 1990.
Top 10 Questions Every Woman Needs to Answer1. Where is your money?
2. How can you access it?
3. Is it allocated in alignment with your needs and goals for the next fi ve years? 10 years? Beyond that?
4. Are you aware of and comfortable with the level of risk you are currently assuming?
5. What happens if one or both of you is incapacitated?
6. What is your debt structure?
7. What professional do you consider your primary fi nancial advisor?
8. How well do you know that person?
9. How well does that person know you?
10. What would have happened to your standard of living if your spouse had passed away yesterday?
BONUS QUESTION:
Knowing what you know right now, what is your next step?
[ 12 ]
Women and Wealth: Niche Market or Gold Rush?
About First Clearing Headquartered in St. Louis,
First Clearing Correspondent
Services (First Clearing)
provides a comprehensive
suite of solutions to help
full-service and independent
retail broker-dealers run
more effi ciently, grow more confi dently, and protect their fi rms
more effectively.
The fi rm offers a unique professional-development and growth-
consulting program, helping advisors take their businesses to the
next level; access through affi liates to a full range of investment,
advisory, and banking products and services, including industry
leading research, alternative investments, fi xed income, lending,
retirement, and trust; and risk-management and compliance
tools and support. Our relationship management is grounded in
a culture of caring, attention to service quality, and continuous
improvement.
Additional services include advisory workstation technology,
leading workfl ow tools, trade execution and clearance, securities
settlement, record-keeping, and client statements. Because
of First Clearing’s long heritage in the full-service brokerage
business, we provide industry insight coupled with the deep
resources and brand strength of Wells Fargo & Company,
one of the nation’s strongest fi nancial services companies.
First Clearing is a member of the New York Stock Exchange,
NASDAQ, and other major exchanges.
fi rstclearing.com
About Cannon Financial InstituteCannon is the premier provider of professional development
solutions for the world’s top fi nancial organizations. Our
instructors and consultants have earned a reputation for
delivering comprehensive solutions that are focused, relevant,
and strategically invaluable. Our clients consistently – and
immediately – see dramatic results and improved productivity
from students who have experienced our professional
development solutions. As a result, hundreds of fi nancial
services companies have chosen Cannon as their long-term
strategic partner for increasing market share, maximizing
profi tability, and reducing liability.
We work only in the fi nancial services industry, so we know the
industry. We come from the industry. We know the challenges
you face. We know what works.
Our strength and reputation rest in our ability to create
high-impact professional development solutions delivered
by individuals who have specifi c knowledge, experience, and
demonstrated success in their respective area of expertise.
Because our professionals are on the line and in the fi eld with
clients on a daily basis, we remain at the forefront of trends,
changes, and best practices shaping the fi nancial
services industry.
cannonfi nancial.com
[ 13 ]
Women and Wealth: Niche Market or Gold Rush?
Notes
[ 14 ]
Women and Wealth: Niche Market or Gold Rush?
Notes
[ 15 ]
Women and Wealth: Niche Market or Gold Rush?
Notes
[ 16 ]
Women and Wealth: Niche Market or Gold Rush?
Notes
89
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1
1012-03315
For Broker-Dealer Use Only – Not to be Distributed to the General Public
This material was written by Cannon Financial Institute. It has been prepared and distributed solely for information purposes. First Clearing, LLC, has not verified the information and opinions in this report, nor does it make any representations as to their accuracy or completeness.
First Clearing, LLC is a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. ©2012 First Clearing, LLC. All rights reserved.