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Schwab Finds Women Hold Almost Half of RIA Jobs but Have Little Equity

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At its annual Impact conference last November, Schwab Advisor Services launched RIA Talent Advantage, a LinkedIn-based networking program to promote diversity in the RIA space as measured first by gender and age, but next year focusing on racial and ethnic diversity.

Neesha Hathi, co-chair of Schwab’s Diversity Program, noted that the genesis of RIA Talent Advantage came from the custodian’s Women Advisory Council, whose members suggested that Schwab should first focus on the “business case” for diversity. The intent was to show the benefits of having a diverse work force, though Schwab also hoped to develop more women who already worked in the industry as advisors, and to work on ways to “fill the pipeline” with women who could enter the industry.

But Hathi said in an interview Thursday that absent reliable data on the size and participation rate of women in the industry, Schwab first had to baseline the numbers. So as part of its RIA Benchmarking study, it surveyed the industry. It found that women comprised 46% of the RIA work force, with 21% in “C-suite roles” at RIA firms, and with about 40% of client-facing roles held by women. While those numbers sound good, she pointed out that while 25% of firms in the Benchmarking study said they offered equity ownership to employees, “less than 20% of that equity goes to women” in RIA firms.

On the good-news-for-diversity side, Hathi said that Schwab’s RIA Outlook Study this year found that 50% of firm principals said they planned on making diversity in hiring a priority, though she admitted that such a statistic could be interpreted in different ways, since “diversity” could mean different things to different people.

To help advisory firms attract top talent, especially among younger people, Schwab successfully piloted and is now rolling out to its RIA firms a ‘templated’ PowerPoint slideshow called “Being an RIA.” The deck presents the benefits of working at an RIA firm instead of a bigger Wall Street, or “traditional” firm, as Schwab likes to put it, and quotes (anonymously) many RIA firm owners who love what they do for a living.

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It also allows advisors to customize the presentation, providing prompts to advisors to come up with lists of how they have enjoyed their careers and how they’ve helped clients, as seen in the slide below.

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Hathi said that at Impact 2015, to be held in Boston in November, Schwab will expand on its diversity offerings by rolling out a “Recruitment Playbook,” a 40-page, “step-by-step guide on how to recruit.”

The Playbook will address when and how to recruit new employees for an advisory firm, with “lost of callouts on diversity, including “how to manage for unconscious bias” in the recruiting process. The last chapter of the Playbook, Hathi said, will address how to develop talent, including how to offer equity to employees. A preconference Impact session for women only will feature author and consultant Peggy Klaus on how women can build their own brand, since women “need help touting themselves and networking.” Since Hathi’s day job revolves around RIA technology (she is senior vice president of Advisor Services Technology Solutions) we asked about the role technology might play in bringing in more women to the industry.

“Some RIAs are using technology to develop and train” employees, she said, but then brought up digital advice platforms as an opportunity to let younger advisors and women advisors shine. If an RIA firm has decided to incorporate digital advice either in-house or through a partnership, she said, “why not let a junior advisor run it?” That will give a firm’s principals insight into whether said younger advisor has the tools for a leadership position, but also allow that younger advisor to “build muscles around how you get more clients” to the firm at a lower asset level.

Hathi also mentioned that Schwab Advisor Services’ “client base is embracing digital advice,” with RIAs using Schwab’s Institutional Intelligent Portfolios offering “in very different ways,” leading them to determine how they can best leverage both traditional financial planning services and digital advice to build their firms in their own way.

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