Over 50% of Americans are female—157 million people. Women are the key decision makers in 60% of client relationships, they’re the main source of income in 53% of households and they’re expected to hold two-thirds of wealth in America by 2030. The numbers should be compelling, but the financial industry frequently serves men first and women as an afterthought.
Women who work in the industry have to fight to be represented too. Maybe it’s not surprising that advisory firms struggle to serve female clients when they don’t even have women represented in their offices. Naureen Hassan, senior vice president of client experience and strategic integration at Schwab Advisor Services, said half of all advisors surveyed by Schwab say there are no female advisors working in their firm. “Across the industry, only 30% of financial advisors are women. In the RIA space, it’s more dramatic. Half of all advisors we surveyed don’t have any female advisors at their firm. I don’t believe you need to be a woman to serve a woman—I have an advisor and he’s a man—but I do think your firm needs to reflect the diversity of your client base.”
Neesha Hathi, Schwab’s senior vice president of advisor technology solutions, agreed. She said that a firm might send a female advisor to meet with a female prospect by default when gender is the only similarity they’re aware of, but “what’s much more important is finding a match with regard to chemistry.” That prospect might not stay with that advisor and might not even pick a female advisor, Hathi said. “What is important is if she walks into that office and she doesn’t see another female face, except for maybe the admin assistant sitting at the front of the office, she might wonder whether or not this is a firm that understands who she is.”
Where are all the women? Schwab has been working hard to answer that question. The firm organized a study group late last year of the top female RIAs: women who either founded their own firms or are successful second-generation advisors in leadership positions. “They’re not just providing us with advice, but participating and helping us address the issues,” Hassan said. “It is really a joint partnership because they are the ones who are the role models.”
And that’s the crux of the problem: There aren’t enough female advisors in the industry to serve as role models and bring in more female advisors to help serve the firm’s female clients.
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That’s unfortunate because, as Hassan said, the RIA industry could serve female advisors very well.
“It’s a hidden gem,” she said. “I don’t think many women know this opportunity is out there because there are thousands of small businesses as opposed to people knowing a large name and saying, ‘I’ll go work for Charles Schwab or JP Morgan Chase.’”
Hassan described her former classmates’ relatively easy transition back into the industry after they left it to have families. “A large percentage of my female classmates off-ramped to be full-time mothers. They didn’t struggle to say, ‘OK, how do I get back into a career?’ It’s hard to come back into corporate America because of the structure of the ladder, but the RIA industry is great for women who are smart and successful but took some time off. At the end of the day this is about your competence, your knowledge, your credibility, your ability to build trust with clients and not about where are you on the corporate hierarchy.”
The study group is one way Schwab is getting the word out to women who might be interested in working as advisors. “What we’re trying to do is figure out how to get that message to all these women out there more broadly: to the colleges, to the universities in their local networks. We’re pulling together talking points for them to use in their local communities,” Hassan said. “Then what we’re doing with the universities we work with, UC Irvine and Texas Tech, is getting that word out through our internship program, making sure we get that female participation.”
Regardless of gender, Hathi said the best advisors are the best listeners. “The RIAs that we find are most successful in our industry—forget serving women or men for a second—they often are very good listeners. They often think about the whole picture, and they often think about the goals a client is trying to reach: what’s the performance versus the goal, not performance versus some arbitrary benchmark.”
Hassan agreed and recounted a story about the struggle to find an appropriate advisor for her mother. Following her parents’ divorce, Hassan’s mother inherited her father’s Merrill Lynch advisor along with a lump sum alimony settlement. “My mother, very insecure about money, calls me in. I get on the phone with the advisor, trying to understand what she’s invested in and all the associated fees, and he won’t give me the loads on the mutual funds when I ask him—which I told him is ridiculous because I have Morningstar access and can just look it up—but his lack of transparency was incredible.” After a round of unsuccessful interviews with other advisors, they finally found an advisor who was a good fit. “The third one was a home run,” Hassan said. “They listened. They took her portfolio and statements and did a full analysis of what she was paying at Merrill and what she would then be paying fully loaded with them. They talked her through the financial planning process. Then they talked about the relationship and service model, what their ongoing role would be in helping her make decisions. We’ve had a successful relationship with that advisor since 2006, and I can’t tell you what a relief it’s been.”
That emphasis on relationship building serves male and female clients well, but Hathi said it’s a big part of what female investors focus on. “They want to talk to an advisor that they trust, that they feel understands them. While the language is important to ensure that there’s a connection, it really has more to do with the trust in the relationship.”
Hathi was hesitant to oversimplify how female clients’ priorities differ from male clients’. She said, “There’s a lot of generalization that women are less competitive or that women care less about whether they beat the benchmark. What they care about is whether you’re going to get them to their goal. Actually, many of your male clients care about that too.”
Women are more collaborative too, which makes relationship building that much more important. Hathi referred to research that shows women don’t necessarily feel they need to make decisions on their own, but they want to be involved in the process. “One of the pitfalls that we see advisors fall into is that they don’t necessarily involve the woman [in a client couple] as much,” she said. “They make sure she’s available or that they’re paying attention to her, but they don’t involve her in the decision making.”
Hassan had her own example of being left out of an important decision—in this case, despite being the only decision maker. “I was looking to buy a house and I had brought a male friend with me for a second opinion,” she said. “The real estate agent was talking the whole time to him. I’m the one buying the house! You’ve got to create an environment where you talk to both parts of a couple equally so you maintain the relationship with both of them and not have it be just with the man.”
Even when they are treating women as decision makers, it’s important for advisors to recognize that not all women are the same. Hassan referred again to her mother. “What she wants as somebody who’s insecure about her ability to earn is very different from what I want as a female executive who needs complex options analysis. I’m in a different segment than she is because our needs are very different. I have more in common with my male colleague down the hall than I do with my mother.”
Advisors can have successful businesses by focusing on a single segment regardless of what that segment might be, Hassan said, but it’s important not to treat it as the only segment.
“We have advisors who focus on airline pilots as an example, and we have very successful advisors who focus on women,” she said. “Those who do focus on women are successful because even within that, they subsegment. You can be successful focusing on a segment and women as a segment, but when [advisors] are successful, they are more nuanced around subsegmenting and tailoring and building that trusted relationship.”
It’s easy to write off the dearth of women in the industry as a women’s issue, but Hassan and Hathi stressed that it’s more than that.
Hathi referred to research from Catalyst that found Fortune 500 companies with the most female board members between 2004 and 2008 outperformed those with the fewest by 16% when looking at return on sales. When comparing return on invested capital, companies with more women on the board outperformed by 26%.
“There’s a reason to do it because it feels good, because it feels right that we should have more women as advisors. Then there’s just hard evidence in terms of dollars,” Hathi said. “There’s a segment of the population that’s going to do it because they think it’s the right thing to do, and then there’s a segment of the population that’s going to do it because they look at the stats.”
“It is not a woman’s problem to solve. We have to include the men in the conversation in order to change the dial,” Hassan said.
So an advisor has seen the stats and wants to reap the benefits of a more diverse firm. How does he go about adding more female advisors?
“I was at a conference, and there was a group of advisors who were talking about what you need to appeal more to female clients,” Hathi said. “Of the 10 people, maybe eight of them were male. One gentleman was saying, ‘We’ve been trying to get a woman advisor in here forever, but we’ve had no luck.’ Firms are very well-intentioned about wanting to bring women into the firm, but they really don’t know how to go about doing it. They aren’t necessarily thinking about it as, ‘I want to bring in the most qualified women to the most appropriate position, and I’m willing to think about what the culture of my firm should be to be appealing to those individuals.’ You’re not going to get a high-quality candidate, regardless of if it’s a man or a woman, if you’re not appealing to that candidate and creating opportunity for them. As he was describing his firm, I was sitting there thinking that maybe he needs to work on that before he can really think about attracting a female advisor.”
We invite you to read all the articles and opinions in Investment Advisor's special report on Women in Wealth Management.