In the aftermath of the financial crisis and the ensuing recession, the only businesses that have provided a net increase in employment in the U.S. over the past six years are large, publicly traded corporations and privately held majority women-owned firms, according to the “2013 State of Women-Owned Businesses Report” commissioned by American Express OPEN (the leading payment card issuer for small businesses).
That’s quite a milestone and a testament to the progress of female enterprise since the Women’s Business Ownership Act, H.R. 5050, was signed into law 25 years ago on Oct. 25, 1988. Today, the growth and dynamism of women-owned businesses in the U.S. serves as both inspiration and a model to emulate for other countries.
In the traditionally male-dominated financial advisory business, things aren’t so bad either.
Many firms in the industry have started women initiative programs aimed at recruiting and retaining more women and supporting women advisors in developing leadership skills, says Kathleen Kingsbury, founder of consulting and training firm KBK Wealth Connection.
“This really speaks to the shift in the industry in the last 25 years with women clients holding the majority of the wealth in the U.S. and female advisors being well positioned to tap into those affluent clients,” she says. Firms started by women are more common and I think a trend to be on the lookout for.”
Today, it’s no more or less difficult for a woman to open an advisory business, given that regulation and general competition poses the same challenges to both genders, says Angie Herbers, founder and senior consultant at Angie Herbers Inc.
However, women are not opening as many advisory firms as one might expect because as a woman advisor, going to work for another is very lucrative today, says Herbers, who’s also a ThinkAdvisor blogger and Investment Advisor columnist.
“I find many women opting for a career in an existing firm with a partnership track over opening their own,” she says. “Moreover, women are in demand within firms… and the economics of starting a business vs. working for another firm don't match, since women advisors make a lot more, with less risk, taking a position in a firm than starting their own.”
Herbers also believes that the CFP programs in universities all over the country are still male dominated. She estimates that 50% of CFP candidates are women and less that 25% of total CFPs are women.
“If we want to get women opening new advisory firms, we need to attract more undergraduate and graduate women to the profession through CFP schools,” Hebers says. “As a result, the level of pay-- simply because of demand--will level out from the high pay women employees currently receive in the profession.”
To their advantage, many women advisors are natural connectors, “as females are socialized at a very early age to nurture relationships,” Kingsbury adds.
This gives them a competitive edge in selling services that are relationship-based. However, when women advisors are placed in a transactional environment, they often struggle as selling a product to make a quota often goes against their caretaking instincts, she says.
“Women advisory firms tend to succeed when they can offer fee-only services that they believe in and that are in the best interest of the client,” Kingsbury says. “As the entire industry is moving in the direction of being more client-centric, I believe this is a great time to be a female advisor.”
According to the American Express OPEN survey, there are currently around 8.6 million women-owned businesses in the U.S. that generate over $1.3 trillion in revenues and employ nearly 7.8 million people.
Between 1997 and 2013, when the number of businesses in the U.S. increased by 41%, the number of women-owned firms increased by 59%, a rate that significantly topped the national average.
“Indeed, the growth in the number (up 59%), employment (up 10%) and revenues (up 63%) of women-owned firms over the past 16 years exceeds the growth rates of all but the largest, publicly traded firms, topping the growth rates in number, employment and revenue of all privately held businesses over this period,” the survey found.