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.”