From the October 2014 issue of Investment Advisor • Subscribe!

Seen and Heard: Get the Word Out to Get Women in the Industry

Replacing thousands of retiring advisors is just one of many important reasons to add more women

The industry needs to raise awareness about financial services as a profession to attract more women and young people to keep it going. (Illustration: Yarek Waszul/© The industry needs to raise awareness about financial services as a profession to attract more women and young people to keep it going. (Illustration: Yarek Waszul/©

A 2012 report by the European Commission found companies with a gender-diverse board had a 42% higher return in sales, 66% greater return on invested capital and 53% higher return on equity. A 2010 study by McKinsey and Co. found that companies in the top quartile for gender diversity had a 47% better average return on equity and 55% better average earnings before interest and tax.

And yet the industry struggles to attract women to the profession, even as it wrestles with finding successors to firms whose leaders—most of whom are male—are on the edge of retirement.

Women and the industry in general benefit when firms are more diverse. So why are so few women choosing to become financial professionals? We interviewed 10 female executives and entrepreneurs to learn more about the state of women in the industry, why the relatively low number of women in the industry needs to change, and what having a more gender-diverse advisor force means for the end client.

The State of Women in the Industry

First of all, are there enough women in the industry? The people we interviewed agreed unanimously, “No.”

“Of course there aren't enough women,” Janet Stanzak, 2014 FPA president, said. “Twenty-five percent of our members are women, and it's the same thing for the industry—grossly underrepresented. Diversity in general is grossly underrepresented. It's the 50ish-year-old male who is the typical planner.”

Liz Davidson, founder and CEO of financial wellness firm Financial Finesse, agreed. “I think the last stat that came from the CFP Board was 23% of CFPs are women,” she said, even though women are getting college degrees at a faster rate than men. (Provisional data released by the Institute of Education Sciences National Center for Education Statistics found 58% of degrees conferred at four-year institutions in 2013 went for women, and there were more women enrolled in both undergraduate and graduate programs.) “We know it's not an education issue,” Davidson said. “I think it's probably a legacy issue. This is how it's been for so long so women may not look at it as a career option.”

Angie Herbers agreed that there were not enough women in the industry and added that where planning programs are placed in universities might be a problem.

“To attract women depends on where the financial planning program is placed in the university,” the founder and senior consultant of Angie Herbers Inc. said. “If it's in the college of business, it tends to attract men; my program [at Kansas State University, or KSU,] was in the school of human services.”

She continued, “The courses of study that tend to attract more women—nutrition, fashion, psychology, nursing—all of them are in the college of human services. A student might start [studying] marriage and family therapy, but would find financial planning. What I saw at KSU is that everybody gets confused between corporate finance and personal finance. Corporate finance is in the business school. I know a lot of women who get general business degrees who are attracted to human resources or marketing; in the college of human services, they’re attracted to financial planning as a second [course of study].”

Kristen Luke, president and CEO of Wealth Management Marketing, which is merging with Angie Herbers Inc., added that the tendency to view financial planning as a technical career without emphasizing the opportunity to work with people is also keeping women from signing up.

“Women go through a financial program in college and have specific ideas [on what being an advisor will be like], and then they’re cold calling; they’re not using the skills they learned in college,” she said.

Kim Dellarocca agreed that the industry needs more women, but “maybe not for the reasons some people would think.” The managing director for Pershing told IA, “Organizations that are more diverse are more innovative and successful—you get the best minds. If you’re managing money, for example, it's good that not everybody agrees with you. So beyond quotas or other reasons, diverse companies are better companies.”

Dellarocca added that familiarity doesn't make the old way of doing business right. “The way out isn't to hunker down, but to try different things, to innovate. Women make compelling and thoughtful leaders, but in a different way. They want to know what people want, and they tend to manage more from the bottom up,” she said.

Jocelyn Wright, an advisor who now holds the endowed State Farm Chair for Women, part of The State Farm Center for Women & Financial Services at the American College, said the industry “has to be creative in getting women into the business.” The founder and managing partner of The Ascension Group advisory firm in Philadelphia noted that “younger, newer advisors create teams” and “you can be successful in leveraging” those partnerships, where “one plus one equals three or more.”

“We have to look at creative ways” to get more women into the industry. “I work with an independent broker-dealer [H. Beck] that helps older advisors partner with younger advisors. This is an opportunity, but a challenging one, because it makes good business sense to do so. The numbers indicate the need, but we need to do more in the way of education.”

Wright added, “As women become more comfortable with their finances,” they can be asked “‘Have you ever thought of this as a career opportunity?’ We need a bottom-up approach.”

She noted, “I’ve been in the business for over 12 years. I was interested from a very young age, finished graduate school then worked for a larger company, getting experience on someone else's dime. For younger people, for women, it's a great opportunity.

“Retention is a big issue. We get them in, but because of a lack of mentoring, they’ll fall off, especially in a commission business. Fortunately I was in a position where it was just myself—if I had a husband or children it would have been different—but it took time to build a book. Twelve years in, I still struggle—it's a constant building and tweaking. If we can take some of the angst out of that ‘How do I make money?’ we’d attract more women.”

Since 2013, Cambridge Investment Research has tracked how many female advisors with the firm were earning over $200,000, according to Amy Webber, president of the broker-dealer. There's “no magic to the number,” she said, but measuring women's success in the industry requires a look not just at how many female advisors there are, but “whether or not they are growing and being successful and satisfied in their careers.”

In 2013, just 1% of female advisors were making more than $200,000—it's now at 3.5%, Webber said—but she argues that such a relatively low number wasn't necessarily because they couldn't achieve more. Rather, it was because they chose to “because they were only working part time or they had flexible hours or they only wanted to serve 50 clients while they were raising their children. This career certainly offers the ability, if your personal situation allows for it, to be highly flexible and move in and out of the phases so you can prioritize raising a family should that be your option.”

Not only does the industry not have enough women, it doesn't have enough people to sustain it, according to Carrie Coghill, president and CEO of Coghill Investment Strategies. The industry in general is struggling to attract talent, she said, and to attract women in particular, it needs a culture shift.

“The biggest challenge that we have, No. 1 in attracting women but also in attracting that next generation, is that this is a business that is used to that 9-to-5 type of environment,” Coghill said.

There's a perception of the industry that planners are stuck behind a desk all day making cold calls, she said. Part of the problem is that “the wealth management industry wasn't an industry that stood on its own; it morphed itself out of the brokerage industry.”

She continued, “That's something that I don't think has been appealing to women. Women haven't considered this industry as a career because the perception is that it's very demanding—which it is—but it's more the lack of flexibility, which has changed. We just need to get that word out.”

Get the Word Out

Many of our interviewees agreed that increasing awareness of what the financial planning profession really is and what it offers women is a big part of improving the level of diversity in financial planning firms.

“We are working very hard to ensure that we have a presence with students going through our programs and give them insight into the profession and why the industry really lends itself to women in this career,” Stanzak of FPA said. “With only 25% to 26% of women in the profession, there aren't as many role models and mentors.”

Cambridge has been working on recruiting female advisors for about four years, according to the firm's president, Webber. “We’ve had a lot of success, but like anything it's a slow process. You’re changing perceptions and behaviors, and I think that's one of the No. 1 limitations in the industry,” she said.

Webber agreed that making women more aware of the opportunities the industry could provide them is an important step, and one on which the industry is making slow progress. “I started when I was 18 years old, and that was 26 years ago, and it was far harder to be a woman in our industry then than it is now. […] I suspect that the momentum is going to keep going, we just need more firms like ours to embrace the future of the female advisors.”

There are four overarching problems keeping women out of the profession, according to Marilyn Mohrman-Gillis, managing director of public policy for the CFP Board of Standards. First is the lack of awareness of financial planning as a “viable/good profession for women; women harbor misperceptions about the profession itself; third, there is a reluctance for women to take a risk versus men; and fourth, there is a very strong finding of gender discrimination and bias within the financial planning profession and financial services at large.”

To counter those misperceptions, successful women need to be more visible to women and girls who might be interested in pursuing financial planning as a career. Mohrman-Gillis suggested reaching out to “confidence-building clubs like the Girl Scouts” or “guidance counselors and placement officers at high schools and colleges.”

Regarding the last problem—gender discrimination and bias within the industry at large—Mohrman-Gillis referred to a recent survey conducted by the CFP Board and its Women's Initiative (WIN), which found 41% of respondents said men were more likely to have the characteristics of a successful financial planner. However, when asked about the specific qualifications, respondents rated women higher than men. “For instance, women were deemed to be more ethical than men and were said to know more about financial planning. Yet the firm hiring deems men to be more successful.” The findings, she said, “summarize and really shine a spotlight on that overall bias within firms.”

Interestingly, the CFP Board's survey also found male and female respondents agreeing that office cultures were typically more welcoming to men, but both overstated how welcoming the culture was to the other gender. Sixty percent of women said the office culture was welcoming to men, compared to 54% of men, Mohrman-Gillis said. Nearly half of men—48%—said the culture was welcoming to women, but just 29% of women agreed.

Davidson of Financial Finesse pointed to the old stereotype that girls are bad at math as another obstacle. “Whether it's a myth or it's the way math is taught, there's this stereotype that women aren't as good as men at numbers, and I think that leads women toward other professions,” she said. However, she pointed out, the most important thing about financial planning is the end client. “There are all sorts of software to back into what is the right plan for that person. While numbers are necessary, they’re only a tool.” The skills required to reach that client are “listening skills, relationship skills, things that I think women are naturally very good at.”

Just focusing on financial literacy at a younger age could go a long way toward attracting women to the profession, she added. Early financial education won't teach students the nuances of being a financial planner, but “there could be more light bulbs that go off [so people say,] ‘This is a really cool thing. It's empowering and important for people to know, and I want to be part of this field.’”

“We could be doing a much better job of promoting all of the reasons why this industry is great for women,” Coghill of Coghill Investments said. “My daughter is now 25, and I got divorced when she was 3. I’m so thankful for this industry because I’ve been able to create my own schedule. Yes, I work a lot, but in this industry, if you’re in the right environment—and I’ve always been associated with an independent model, so I’ve not really had a firm telling me what to do—I’ve had the flexibility that when she was a teenager I could get home and be with her after school and then get back to work once she went to bed.”

Where Are the Role Models?

A lack of role models was a common reason given in our interviews for the low number of female professionals.

Women “need to see that there are other women” who are succeeding in the industry, Dellarocca of Pershing said, citing a personal example. “My manager [Caroline O’Connell, Chief Strategy Officer of Pershing] has three children; she models every day, and that keeps me inspired.”

Wright of The Ascension Group shared a personal experience of her own. After she lost her job at a large financial services firm when her group was transferred from Houston to New York, Wright said she was introduced to another woman with her own practice.

“That was the best thing that ever happened to me. She mentored me. I was able to go with a black woman and learn more sophisticated approaches. I wouldn't have learned that at a larger firm—especially as a young, black woman. She advised me early on: Female advisors need credibility. I had all the education, and an MBA in finance was helpful, but I wanted a CFP to get the extra level of credibility.”

Wright's mentor told her, “‘Wait three years to get the experience, then get the education’” for her CFP. “It was great advice. I could see the difference between myself and those just starting out. I dedicated the time needed to study—and passed the first time.”

Addressing the question of role models and mentors, Wright said that “having mentors would be great; it would be great to have a female mentor, but also a black female mentor”—there were so few black female advisors in her hometown of Philadelphia compared to Houston, she recalled. “There's an opportunity” for younger advisors since older advisors are “looking for succession planning. If you’re a talented women working with clients, you can work with an older advisor with an established client base. It takes away a lot of anxiety.”

The lack of role models for women has an impact on their ability to connect with each other, Stanzak of FPA said. Although “it has been 10 years since we have had a woman as president—the last woman president was Elizabeth Jetton in 2004”—she said women have an increasing presence in FPA's leadership. FPA announced in August that Pamela Sandy, the founder and CEO of Cleveland-based Confiance LLC, was elected FPA's 2015 president-elect. With Lauren Schadle, executive director, on the FPA's board, “there will be three women representing our executive committee for the FPA. […] This speaks to the fact that women have a very important role in this profession and in leadership. Part of it is getting the story out.”

“The majority of my graduation class was women,” Herbers said. “They all started in client services, and now none of them is in financial services.” I was lucky to have Sheryl Garrett [as a mentor]. Her passion fueled me. That's a key point: What there needs to be in our industry is women's groups, societies, study groups—if we did for women what NexGen [the next generation subgroup of the FPA] did, we’d solve the problem.” (See sidebar, page 34.)

“Having someone who believes in you early in your career is really important,” Luke added. “Women who are coming up right now don't have the same roadblocks; they’ve grown up thinking they can get it done.”

Can Women Be Entrepreneurs?

Caregiving responsibilities, whether for children or elderly family members, frequently fall to women. A 2012 study by MetLife found two-thirds of caregivers are women over 50. With that in mind, are women well-suited to entrepreneurship?

Webber of Cambridge said it depends on what a woman's family life looks like. “If you’re a single mom, it probably is a little difficult to not have a steady paycheck coming in.”

However, “the statistics show that female entrepreneurs are starting businesses more than ever,” she added. “Why our meaningful, honorable profession is not getting its fair share of those entrepreneurs, I’m not entirely sure, but I think it's an awareness issue.”

Davidson, who started Financial Finesse in 1999 and now has a five-year-old son, noted that it's the stage the business is in that matters. “Certainly you don't want to start a company the day after you have a baby. I would say it's all about the stage of the business, but if the business is healthy and profitable, I think running a business as a woman with a child is a very viable option.”

Coghill said another stereotype about women—that they’re good multitaskers—might have some truth to it that makes them good entrepreneurs. “I think women have an inherent ability to see the big picture,” she said. “As a business owner myself, I see that all the time. I understand the connection between what we’re doing with our clients and how that affects the business, not just from a money management perspective but even from a client service perspective. When I’m looking at ‘What are the needs of the team?’ ‘What are the needs of my clients?’ ‘Who do I need to hire?’ that's something that women in general have a much better perspective on making those decisions, which ultimately help the client.”

Women's informal role as the unofficial “CFO, CEO, COO of the household” translate well to being an advisor, Wright said. “It really comes down to relationships; we can use our ‘Rolodex’ to our advantage. Those relationships we’ve developed can be an advantage in building a book of business.”

Dellarocca said that when Pershing “looked at women who dropped out of Wall Street [the primary reasons were] they did not have strong mentors and sponsors, but they’re often the ones saying ‘I want to do this my way,’” so they start their own businesses. “Women who want to be successful in this business are resilient and ready to do what they have to. Women are prepared to work really hard, to do the things others don't want to do. They’re used to hearing ‘No.’ They’re the traits you need to be a successful entrepreneur.”

She added that while flexibility and work-life balance is often highlighted as important to women, it's important not only to women. “Flexibility is more a generational than a gender thing,” she said.

Luke and Herbers noted women have access to tools like women-owned-business loans and targeted networking opportunities to help them when they start a business.

One of the questions the CFP Board asked in its WIN study was about whether women are more likely to leave the workplace because of children, said Eleanor Blayney, the CFP Board's consumer advocate and a veteran financial planner. CFP professionals “say the profession affords a good degree of work-life balance and we picked up on this in the focus groups with young women,” she said. “They talked about a lot of things, but never once did they say financial planning was a tough profession to be a woman, wife and mother. […] We heard this a lot, but then when [we] asked to put it in the context of the profession, firms felt that women were far more likely to leave because having children was an issue.”

“As I think about women raising families,” Stanzak of FPA said, “women multitask. We have to manage our home, family, so in terms of managing a business, the skills that we bring in managing a family are the same skills we bring to being entrepreneurs.”

She said women's tendency to juggle different kinds of relationships—family, friends, teachers, colleagues—and their ability to set priorities and manage schedules for the family translate well to running a business. “As a mom, I think we know what things we need to outsource—we know what things we do well and where we need to get help. Smart entrepreneurs do the very same thing. They know what to keep in-house and what to outsource.”

Is Having More Female Advisors Better for Clients?

With a lot of people still smarting from the financial crisis, it's easy to be glib about how an industry that is roughly 80% men led us to financial ruin. However, would more female advisors be better for the end client?

“I just heard [a story] this week on NPR on political trust—so many men dominate Congress and look at the trouble we’re in,” Stanzak joked. “Of course I believe the industry will be better off as we integrate more women. If you think about the 2008-2009 crisis and how to avert that, you have to be able to manage difficult conversations. You have to be empathetic, you have to be able to lead your clients. Those are all traits that we spoke to that are inherent in many women.”

“It's not about fewer men, it's about more women,” Webber said. “It's about the diversity, and some end clients would be well-served to have more female advisors so they would have more choices.”

She pointed out that some clients, including men, “would just prefer to work with a female advisor and they’re hard to find. The industry can only benefit from it, and many end clients, depending on their preferences, could definitely benefit from it.”

Davidson agreed that the benefit is in the balance. “There's something about gender balance that I think has a yin-yang kind of effect. We can't completely stereotype and say all men are one way and all women are another way, but in general, I think women tend to look at things more holistically. Women tend to be more relationship-oriented. Men tend to be more transaction-oriented and more analytical and scientific about things. But if you look at financial planning, it incorporates both.”

She described how her firm's dynamics changed with the gender balance. When there were more women, “it was very collaborative, but sometimes too much so. People would almost help each other too much and not get their own projects done, or get overwhelmed and overworked because they were giving so much.” There was also a lack of “healthy competition. Obviously you want coworkers to support each other, but you also want them to continually raise the bar for each other.”

When there were more men, competition improved, but people weren't working together when they needed to. She described asking employees, “‘Well, have you talked to so and so about this project since they’re the ones that have to program it?’ [They’d say], ‘No, I’m just designing.’ You can't just look at it in a box or a compartment and [say] ‘This is my piece.’ You’re one team; you’re not a group of individuals competing.”

Blayney pointed to the changing demographics of wealth. As women control more and more wealth, “everyone is absolutely scrambling to appeal to the female client more effectively.” Female psychologists like Kathleen Kingsbury, a wealth psychology expert and founder of KBK Wealth Connection, have made their names “working with financial advisory firms on what they can do to attract the new holders of wealth—women,” Blayney said. “Any major firm knows that if your management and leaders within don't look like your clients you’re serving on the outside, until those are well-aligned, you’re not going to be as successful.”

The financial crisis might have “had a different trajectory if there were more diversity in the industry,” Coghill said. “Our industry has suffered because of the lack of diversity that we’ve seen throughout the corporate structure. It's not to the exclusion of men by any stretch, it's just diversity in general.”

The problems that have led to low diversity are hard to overcome, Dellarocca said, but it's an important challenge for firms that want to be the best.

“We’re addicted to our sameness—we want to be with people who look like us, but the best leaders are self-aware. It's good to know what your blind spots are, and they support that kind of dialogue. So if your strengths are in the details, hire somebody who's more creative. Be aware of the skills you bring to the table, and get comfortable with people who bring different opinions and skills to that table.”


Correction: The print version of this article incorrectly said Financial Finesse was started in 2007. The firm was launched in 1999. This article has been corrected to reflect that change.

--- Check out  Run (Your Business) Like a Girl on ThinkAdvisor.

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