In this new retirement era, with more Americans relying on self-managed savings vehicles to finance their retirements, the need for financial advisory services will only grow as consumers look to transfer savings into retirement income. The Bureau of Labor Statistics projects the financial advising field to grow 32 percent from 2010 to 2020. But presently this is still a predominantly man’s world. There is an “advisor gap” as only three in 10 advisors are women. Yet 70 percent of women would prefer to consult with a woman advisor.
This presents a significant opportunity for female advisors as women continue to own more financial assets and take greater control of financial decision making. At the same time, firms’ ability to recruit and retain female advisors is going to become more critical as this women’s market continues to flourish. Given this emerging need for more women advisors, as a first step in an effort to attract women to the profession, the Insured Retirement Institute (IRI) commissioned a survey of college-educated women aged 25 to 49 to gauge interest in a career as a financial advisor, to understand what they value in a job, and identify ways to recruit and retain women advisors.
With women now owning a greater share of financial assets and taking greater control of financial decision making, the women’s market is here and growing. Today it is estimated that women control roughly two-thirds of annual spending in the United States, accounting for $12 trillion annually. And a 2012 study by Prudential found the majority of women are now primary household breadwinners. This women’s market – though diverse in its own right – has its own needs and will require advisors and firms to adapt to fulfill them.
What women want
Women’s financial priorities are different than men’s. Women tend to focus more on checkbook items –that is budgeting and household expenses. When it comes to investing, they are more risk adverse than men, selecting retirement products based on guaranteed monthly income and financial advisor recommendation as opposed to past performance and rate of return. When looking ahead to retirement, they focus on their ability to save and are concerned with being a burden on loved ones later in life.
Their varying needs are not limited to their approach to financial planning, but also extend to what they require and value from a financial professional. A recent study by Allianz Life found that to better serve this women’s market, financial professionals need to understand that for many women, service-related issues are as important as concerns about returns on investments. Women place a high value on interpersonal skills and personal care, and are deterred by a lack of responsiveness and the sense they are simply getting cookie-cutter solutions.
Recruiting and retaining women advisors
Considering that the overwhelming majority of women would prefer to work with a female advisor and only 31 percent of advisors are women, the ability to recruit women to careers as financial advisors will grow in importance as the women’s market continues to expand. While IRI’s study found that women with an interest in becoming a financial advisor were primarily enticed by salary considerations and growth of the field, job-training provisions would increase the likelihood of women pursuing careers as financial advisors. On-the-job training would be the most effective, followed by online training or training through a local college or university.
Firms serious about meeting the retirement income needs of the women’s market would also be well advised to review their practices for recruiting and retaining advisors to ensure they are adequately meeting the workplace needs of women. When evaluating a job, 94 percent of college-educated women value work/life balance. Firms should develop programs and emphasize its efforts to improve work/life balance when recruiting women advisors. They can also enhance their appeal to women by providing affinity groups and mentoring programs to enhance on-the-job training.
Firms looking for a model to fashion such a program, should look no further than Advisor Group’s “Generation I” initiative. Recognizing the need for gender diversification, Advisor Group’s initiative includes a mentoring program connecting the independent broker-dealer network’s seasoned female advisors with advisors wanting to grow their practices. It also includes an internship program to provide female college students with experience working in the financial services industry. As more companies recognize the value of diversification efforts, more will affirm their commitment to building a female advisory force by instituting programs similar to Advisor Group’s.
Of course this is just the beginning of our work in this area and IRI’s research is only an initial step. As this market continues to grow, firms’ ability to recruit and retain women advisors will only grow in importance. At the same time, the industry will need to close the advisor gap so that the demographics of the ranks of financial advisors begin to match those of their clients. This will mean recruiting more women to the profession. IRI will continue to explore ways to attract women to the financial advisory field and to provide thought leadership on both the women’s market and opportunities for female advisors. This is a conversation that needs to continue, and we hope that you will join us as we study the flourishing women’s market and serving their retirement income needs.