From the April 2008 issue of Wealth Manager Web • Subscribe!

Giving Women a Break

At close to 51 percent, women make up more than half of the U.S. population, yet a significantly smaller percentage works in the front lines of financial services. Women may account for 43 percent of the industry's total workforce, but according to the latest figures from SIFMA (the Securities Industry and Financial Markets Association) the number of actual female brokers is only 16.3 percent.

The numbers increase as the provider-client relationships deepen: Based on sketchy calculations from the Financial Planning Association, 27 percent of 70 percent of its members are women (30 percent of responders did not disclose their gender), and the distaff members of NAPFA have remained fairly steady at from 25 percent to 27 percent over the last several years.

But if programs initiated by some major broker/dealers and custodians succeed, that percentage will rise, The AIG Advisor Network, Raymond James Financial and Charles Schwab Institutional are among the major firms with formal programs to attract and retain women as financial advisors--or at least to broaden the candidate pool.

Attracting and Retaining Women: Good for Business

The leaders of these programs are not starry-eyed idealists. Of course they'd like to help women break through the glass ceiling, but they also figure their programs are good for business.

AIG Advisor Network--umbrella for Royal Alliance Assocs., Advantage Capital Corp. and FSC Securities Corp.-- began its program after President Joby Gruber noticed two years ago that women accounted for three out of his firm's top five producers, six of the top 10 producers and 15 of the top 100. Overall, women account for 25 percent of AIG's population across its three broker/dealers--higher than the industry norm. "They're not just showing up. They're posting staggering [production] numbers," he says. Gruber wanted to find a way "to capture that energy and give something back to those female financial advisors."

At Raymond James, women have also grown their production. "This is really what hits home--certainly with senior management," Karen Schultz, director of the firm's Network for Women Advisors told attendees at RJ's annual Women's Symposium last year. However, Schultz attributes the founding of the network to a desire to boost female representation among advisors and to help the firm capitalize on the shift of wealth to the burgeoning number of women business owners as well as to women who--statistically--outlive their husbands.

Kelli Cruz, director of institutional practice management at Schwab Institutional, adds that for many independent advisors, "The changing demographics of their client base are forcing them to look at how they staff." As a result, they're trying to hire more women to mirror the growth of wealth in female hands. (According to figures from The American College, women control 89 percent of all bank accounts in the U.S., purchase 83 percent of all products and services and account for more than half of all Americans with assets exceeding $600,000.) And there is definite evidence that some--not all--women are more comfortable dealing with a woman advisor.

Another reason that motivates firms to target women planners is the growing sentiment that in some ways, women may be better suited than men to careers as financial advisors. "Women tend to be better listeners," says AIG's Gruber. "If we can put women in listening positions, caring positions... it works really, really well." It pays off, not only in profitability, but also in the superior longevity of their client relationships. Another non-monetary benefit: Women give back to the organization through their tendency to be better teachers and mentors than men.

Schwab's Cruz hits a similar note. "Women are really about relationships," she says. "It plays to women's strengths--to be a trusted advisor."

Women's relationships with their broker/dealers also tend to last longer. "The loyalty factor is very high with women," says Gruber. They're the "sticky assets" of the brokerage world. Schultz adds, "It does seem to take women a longer time to make the decision to move firms."

AIG Advisor Network: Formal Conference and Informal Efforts

AIG held its first annual "Why Women Are Winning" conference in 2007 to give female affiliates opportunities to network with their peers and to learn from women in non-financial fields about how they broke through the glass ceiling. Speakers included veteran financial advisors like Alexandra Armstrong, CFP, who spoke on "Working with Widows Effectively." Gruber says he's fascinated by how women like Armstrong thrived despite men telling them they couldn't make it. This has made him wonder: "If [women] can be successful in a man's world, how successful can they be in a more conducive environment?"

The conference is complemented by other, more informal efforts throughout the year. For example, AIG has an email thread that allows women to ask questions of their female peers. There, Gruber finds that women are more open to sharing business-building ideas than their male peers. AIG also meets with R. J. Shook's Winner's Circle organization, which recognizes top financial advisors in various niches in Barron's, to make sure their best female financial advisors are known. There is also informal mentoring.

These efforts, plus the fact that women account for a good 50 percent of AIG's senior officer roles, are attracting more women to the network. "When women come in to kick the tires...we don't look like the good ol' boy network," says Gruber. And once they join AIG, women tend to stay. "The rate of female advisor retention at our broker/dealers is well north of 95 percent."

Raymond James: A Plethora of Programs

The Network for Women Advisors at Raymond James is probably the granny of industry programs to attract and retain women. Founded 14 years ago, it has given birth to many initiatives that help women to network and learn. The two-and-a-half day annual symposium, which drew 120 attendees in 2007, is its most visible event, and advisors--all women--must qualify to be invited. Then there's the Women's Advisory Council, made up of 12 experienced women with varying degrees of tenure at Raymond James, who act as a steering committee for Network Director Karen Schultz and as mentors to women trainees. An intranet, with information about women investors is accessible to both women and men. The Network for Women Advisors has introduced two fairly new programs: a year-long coaching group offered with Federer Performance Management Group LLC, which is in its fourth year, and a series of quarterly meetings called Working Smarter--in its first year--to help women whose businesses have hit a plateau.

Schultz likes the results she sees, although she cautions that it's hard to attribute everything positive to the Network's programs. For example, 10 out of the 12 women in the 2007 coaching group increased their production by more than their peer group of all other women at the firm. Eight out of 12 increased their assets under management by more than their peer group. In terms of recruiting, women accounted for 11 percent of financial advisors hired in 2007, but for 23 percent of Raymond James' hires so far in 2008. "Women are looking at us," says Schultz.

Schwab Institutional: Putting Recruiting Basics in Place

Schwab Institutional has no formal programs aimed specifically at women. That may be partly because they serve a different population than broker/dealers like AIG and Raymond James. For Schwab's independent advisors, one job opening a year is a big deal. As a result, Schwab can't afford to be as proactive as broker/dealers in their efforts to achieve diversity. They're too busy keeping up with their most basic staffing needs. That's why Schwab launched its Human Capital Solutions Web site in 2007. The site provides resources to help advisors in "finding new talent, retaining and rewarding existing employees, structuring their organization more strategically and efficiently, and developing sound succession plans." Once firms have formal processes in place, then they may have the leeway to pursue diversity more aggressively, says Schwab's Cruz.

Schwab is also trying to make women more aware of the profession, so the candidate pool itself becomes more diverse. "How do you broaden the search and create awareness that it's a great career for women and people of color?" asks Cruz rhetorically. To address that issue, the firm is reaching out to undergraduate and graduate students. Educational grants made last autumn will fund a financial planning teaching lab and a researcher at Texas Tech University's Division of Personal Financial Planning and two graduate student fellowships at the University of California at Irvine's Center for Investment and Wealth Management.

Women-centered initiatives are starting within Schwab at the grassroots level with regional managers, says Cruz, and the firm is looking at how to develop those further.

Formal Commitment to Women:

a Powerful Tool

Unfortunately, the programs described above seem to be the exception--rather than the rule--in the industry. Some other firms contacted by Wealth Manager for this story declined to participate, in fact. For example, a Fidelity Investments spokeswoman says the firm would be open to starting programs aimed at women, but their clients have not asked for them. Other firms claim they are considering such programs. However, Mindy Diamond, president of Diamond Consultants, a Chester, N.J.-based executive search firm specializing in placements of financial advisors nationwide, points out that "when a firm has a dedicated department to make the lives of women employees better, it speaks volumes about their commitment to women."

Susan B. Weiner, CFA, is a Massachusetts-based writer specializing in investment and wealth management topics.

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