About 150 investment advisors from the greater metropolitan area were gathered for a presentation and cocktails in midtown Manhattan at the invitation of Charles Schwab Institutional. The three successful financial advisors on the stage had finished discussing best practices, and as the lights went up in the small auditorium, they invited questions from the audience. A figure seated on the left aisle stood. "Where," she asked, "are the women?"
The speaker was Karen Altfest, CFP, PhD, and certainly one of the most prominent female wealth managers in the business. And it was a question she has been asking for years. The panelists were men, and the audience, typical of industry gatherings, was almost exclusively white and male.
"It's a great question, a question we've been asking for a long time and have been trying to solve," says Diahann Lassus, CFP, CPA/PFS, a well-known fee-only practitioner whose firm, Lassus Wherley, is located in the Wall Street bedroom community of New Providence, N.J.
L.J.Altfest in Manhattan, where Karen Altfest is vice president and practices with her near-legendary husband, Lou, is celebrating its 25th anniversary this year. "When I go to conferences and I look around, it used to be about 25 percent women; now I think it's closer to 20 percent," she says regretfully. "I thought it would be going the other way."
In fact, the numbers are not declining, but without an increase in visible role models, they're just not growing either. The FPA claims that 27 percent of its membership is female, but admits that 30 percent of its members have not disclosed their sex. Ellen Turf, who has been CEO of NAPFA for seven years, says female membership tends to teeter between 27 percent and 25 percent. According to the CFP Board, 23.26 percent of certificants are women--a figure that confirms a report from the American College that 24 percent of those currently pursuing CFP certification there are female.
"One of the issues is how people are practicing," suggests Deena Katz, CFP, chair of Evensky & Katz in Coral Gables, Fla. These days, Katz spends a great deal of her time at the firm's office in Lubbock, Texas, where she is an associate professor of personal financial planning at Texas Tech University. "The proportion of women in fee-only financial planning is higher, more prevalent, than among brokers who are basically salespeople," she points out.
But it is the lingering image of the sales-pitching stockbroker that many blame for the dearth of women in planning. "The biggest obstacle to women coming into the profession is the public perception that a financial planner is a man in a suit and tie," says Barbara Charal, a CFP and CPA who runs Barbara E. Charal and Associates, affiliated with Genworth Financial Securities Corporation, in Northbrook, Ill.
"The industry hasn't kept up with the demographics. It has historically been men, because that's where the sales were, and the business was men selling to men," agrees Susan Sweetser, Mass Mutual vice president of Focus Markets, whose specific focus is recruiting and supporting female advisors. The demographics Sweetser refers to hold that more than 80 percent of financial decisions are already made by women. And partly because women will outlive men by an estimated seven years, at some point in their lifetime 90 percent of women will control their own money. Sweetser cites findings by Securian Financial Group that 30 percent of women surveyed want to work with a woman advisor, while 70 percent are gender neutral on the subject.
"By 2010, 60 percent of all the wealth in America will be controlled by women, many of them wealthy widows," says retirement guru Ken Dychtwald, who has a PhD in psychology. "Imagine 15 million single women over 50; and by and large, older single women have been overlooked by the financial services industry. There's going to be an extraordinary shift to women with power and money." For male advisors to earn and retain these clients, Dychtwald says there must be "feminization of the industry."
While men in the business get in touch with their softer side, the need to attract more women to financial planning becomes even more pressing. In February 2007, The American College appointed Eileen C. McDonnell as the first State Farm Chair in Women and Financial Services. One of the endowment's major goals, says McDonnell, was to "come to understand what would be required to attract more females into financial services and how we would educate them and ensure their success."
McDonnell recently left the college to become executive vice president and chief marketing officer at Penn Mutual Life Insurance Co.--but not before arriving at some serious conclusions about how to attract more women to the business. And they involve physiology. "I'm not talking about Mars/Venus," says McDonnell, a 20-year veteran of the male-dominated insurance industry. "There is actually scientific evidence through MRIs and CT Scans that the electronic impulses in the brains of men and women are different. So when we're training advisors, or when advisors are looking at clients, we're taking a male-oriented approach. Now we know how to prepare them."
McDonnell believes one major problem in attracting women is related to rigorous credentialing programs. "Women have proven that they will go through the rigor of higher education to get an MBA--61 percent of advanced degrees were projected to go to women in the 2006-07 school year," she points out. Ironically, while financial service jobs generally don't require an advanced degree, the existing credentialing programs don't acknowledge a woman's need for flexibility. "We're not taking into account the fact that women spend an average of 12 years out of their working life taking care of children or aging parents. We have to start training at 9:30 a.m. instead of 8:00; we cannot be so inflexible that we can't allow a woman to pick up her kids at school and drop them off for an activity and then come back to the office.
"Women are not lazy," she continues. "They're not looking for an out. They just need to have flexibility, which has not been an option in financial services." She takes issue, moreover, with men who generally get nothing but support from colleagues when they leave the office to coach soccer or Little League. And she admits that in some ways, women self-inflict pain by being embarrassed to request time to take a child from point A to point B and "go back to their training at the end of the day with a clear mind."
Cheryl Holland, CFP, whose $500 million AUM Abacus Planning Group in Columbia, S.C., received the Charles Schwab Pacesetter Award at Impact 2007, agrees. "It's about the on and off ramps," she says. "In business, it's more difficult to get back on the on ramp. In law and medicine, they feel that you're serving the community [when you take time off]. Women in business don't have that feeling."
But others cite obstacles to attracting women that arise long before arriving at the on ramp. "There are two stumbling blocks," says Nancy Hradsky, NAPFA's Special Projects Manager. "There's the math block, which especially affected women in the 1950s, and the perception that this was primarily a sales job." There is a responsibility, therefore, to educate young women and even career changers that financial planning--particularly when it is fee-only as NAPFA membership requires--is not about selling.
As for the math block? "Many women don't realize that the math they need is just a skill set that can be filled in; even getting the CFP teaches you so much about the process," says Michelle Smith, CFP and a Certified Divorce Financial Analyst. Smith is director and co-founder with longtime friend Alexandra Lebenthal (of the municipal bond Lebenthals) of Family Wealth Management, a division of the recently formed Alexandra & James Co. in New York.
Karen Altfest also finds "math phobia...which some women develop as far back as the third grade," to be a misperceived obstacle. "Of course you need to understand the basics," says Altfest, "but you can always get someone to run the numbers. It's not the math; it's the problem solving that should be attractive to women. Women are fabulous problem solvers," she adds, laughing. "What else are we doing when we're at home with our kids, for instance!"
In fact, perceptions--or rather misperceptions--about the business seem to be the root of the remarkably slow growth in numbers of women advisors. "The figure is growing, but not as fast as we'd like it to," admits Lee Baker, who sits on the FPA national board and the organization's Diversity Task Force, which he formerly chaired.
An African-American who founded Apex Financial Services in Atlanta, Baker is, in fact, remarkably candid about the subject of diversity in the profession. "You know you feel funny when the lights go on at one of these conferences, and it's a sea of middle-aged white men. Where are the women? Where are the people of color?" he asks. "The problems of gender and ethnicity are basically the same. There's nothing to indicate racism or sexism [in the industry]," he adds, "but it's hard for white males to initiate a conversation about this, so it's hard to move our conversation from the hallways to the conference room."
The task force, created just a year-and-half ago, has been reaching out to colleges and universities through FPA's 100 chapters throughout the country. A scholarship program is in the planning stage. "We're trying to reach out to people when they're young; there's an absolute need for competent financial planners of all races and genders." Also on the task force agenda is a mentoring program to match new advisors with experienced "'buddy-mentors'...so when you come to a meeting, you don't have to walk into a room where you don't know anyone and where no one looks like you," Baker explains.
NAPFA is also tackling the problem. Its second Women's Initiative is on the pre-conference agenda for next month's 25th national meeting in Long Beach, Calif. "We've had other sessions, too," says Hradsky. "We want to gain a better understanding of how we can help women become successful." One solution has been to present panels of women representing all stages of a financial planning career.
"We have a strategic plan, but we're a small organization, and it's difficult," says CEO Turf. "We invite the directors of academic CFP programs to our conferences. We comp them and encourage them to bring students with them." To further encourage young people of both sexes to enter the industry, NAPFA offers scholarships, encourages internships and posts job listings. "The real issue is how to create a career path for students coming out of colleges and universities," she says. Or, as Mary Malgoire, MBA and CFP in Bethesda, Md. and an early NAPFA board member puts it: "What's missing is the school-to-work bridge."
And that's not an easy journey: "Fee-only is not the best way to start out.," Turf admits. "It's very difficult to hang out a shingle; it's much easier to go to Merrill Lynch."
That is exactly what 34-year-old CFP Tara L. Scottino did. Past-president and outgoing chair of FPA's NexGen group (for members 36 and younger), Scottino was a psychology major at Texas A & M "with no interest in finance," when Merrill Lynch recruited her into its broker training program.
While she values her time there, "I often felt like the lone woman out there," she says. "Nowadays, I don't feel outnumbered." Scottino is already a senior vice president at Carter Advisory Services, Carter Financial Management (affiliated with Raymond James Financial Services) in Dallas.
But she rues the fact that many young people simply "stumble" into financial planning because, "It's not offered through their business schools but through Life Sciences, so it's not like deciding you want to become a CPA."
Diahann Lassus believes that outreach should come from the profession, and start even earlier. "Somehow," she says, "we have to figure out how to reach the adults in high schools--the guidance counselors and teachers."
To be fair, comprehensive financial planning is only about 20 years old--a relatively new profession, notes Peggy Cabannis, CFP and president of HC Financial advisors in Lafayette, Calif. Cabannis actually did major in math at the University of Arizona and earned a master's in information science from UCLA. She was analyzing stocks part-time for a CPA when she heard about "a new certificate called the CFP" that seemed to offer "a perfect combination of math, analytical skills, computer programming and my own interest in families and interrelations."
A past chairman of NAPFA's national board, Cabannis remains proactive in the organization's efforts to attract more women. She was on her soapbox one day, she recalls, talking about how women are naturals for financial planning because it takes multi-planning, multi-tasking and a multi-faceted person "which is what women do all the time!" when someone asked her why, then, there are so few women in the field. The result has been the workshops at regional and national meetings, all aimed at identifying the relevant issues. And one amusing upshot that has emerged: Whenever a few interested men have wandered into these sessions, their presence clearly dampens the flow of ideas.
"The NAPFA panels remind us that we have roots with our sisters, that younger women have to struggle, and we need to be sensitive to that," says Malgoire, president of The Family Firm in Bethesda, Md. which she established when she moved from California to the D.C. area in 1981 and could find no fee-only planner to work for. "Even prominent [women] like Karen [Altfest] and myself have been through the pains, so we all have to support the younger women coming into the business," she says.
While NAPFA and the FPA struggle with limited resources to attract women, a few profit-making firms with deeper pockets are digging into them to retain their women advisors. Raymond James Financial, headquartered in St. Petersburg, Fla., is easily the pioneer, having held the 14th annual symposium for its Network of Women Advisors in 2007. [See related story on page 38.]
Karen Schultz, vice president and director of the Women's Network for the last year-and-a-half, jokes that it didn't take a lawsuit or a human resources initiative to create the network and symposium. Instead, they grew out of a simple request from some women who attended an annual meeting and said they wanted a turn to participate. (Altfest notes that even today, women at NAPFA meetings have told her they often feel shouted down by their male counterparts.) The firm puts an emphasis on recruiting and training young women and linking them to experienced mentors, star producers like Judith McGee, Sherri Stephens and Kathleen Muldoon--all members of RJ's Women's Advisory Council.)
"We don't see this as a competition," says Schultz. "Men and women advisors have the same goals and needs, but women have different demands on their time."
The annual Woodbury Women's Forum--only in its second year--was initiated by Mary Sterk, CFP and president of Sterk Financial Services, Inc. in Sioux City, Iowa, after she received Woodbury's Lewis & Clark Explorer award for demonstrated business success and growth as well as excellent client care and service. As the award's first recipient, she found herself the center of attention from female colleagues, eager for the secrets of her successful rise from a single mother on food stamps to a $1.5 million producer with three acquisitions in 15 years. The forum brings together new advisors with seasoned vets to hear speakers like Quincy Crosby, The Hartford's chief investment strategist, and experts on topics that include business transition, niche marketing to women and the power of teamwork.
What are some of the results? "I thought about becoming independent even before the Women 's Forum," says 25-year-old Anna Choi, "but I was struggling with my niche." After the first forum, Choi established her business, InsideOut Investing in Bellevue, Wash. After the second forum, she felt ready to hire an assistant. And when she needs support, she contacts her "mentors," two women colleagues she met through the forum.
At Mass Mutual, the mandate to attract and support women financial advisors comes right from the top. "My CEO and his predecessor have been on board with this Women's Initiative from the beginning," says Susan Sweetser, adding that she prefers "markets" to "initiative," which, she laughs, "sounds like the project du jour. [The CEO] has sent a loud and clear message that we have to reflect the population we're trying to serve."
Sweetser continues: "In part, we've sold this career as hard work: Persevere and you'll be one of the 12 percent that makes it after five years. I don't want to downplay the hard work, but the rewards in this industry are more than money. They're also in the lives you change."
NAPFA's Ellen Turf sums up the rationale for more women financial planners this way: "We're so incredibly blessed with the strongest women financial advisors in the profession. The up-and-comers are lucky because of the sharing and nurturing that goes on. More and more," she says, "I see that willingness to share among our advisors."
Nancy R. Mandell is the managing editor of Wealth Manager.