By some standards, the financial advisory business is still largely a male domain. For example, the CFP Board reports that as of July 31, 2015, 23 percent of certificate holders were women. The American College of Financial Services notes that over the past five years, women earned 27.5 percent of the professional designations and 22 percent of the graduate degrees awarded.
Mentoring can help women entering the financial advisory business increase their odds of success. Working with an experienced advisor can help the new advisor climb the learning curve more quickly from both a business and technical perspective, maintain a positive outlook, and reduce the risk of early-career blunders.
Mentoring benefits the mentor, as well. According to the Million Dollar Round Table (MDRT), which sponsors a mentoring program for its members, participating mentors in the United States experienced on average a 9 percent increase in their qualifying commissions for the 2013 to 2014 period.
Retirement Advisor asked three women who have succeeded as agents, wealth managers and mentors for their insights into forming mutually beneficial mentoring relationships.
Succeeding by joining
“It was really a boys’ club when I started 30 years ago.” That’s how Jo Ann Favia, CLU, ChFC, owner of the Favia Group in Villa Park, Illinois, describes her early years as a financial advisor working for a captive agency.
Today, Favia (photo, left) runs a successful independent retirement planning and wealth management firm, but she notes that there just weren’t many female advisors when she started. She didn’t encounter any prospective mentors until she had been in the business for about four years, at which time she qualified for and started attending Million Dollar Round Table (MDRT) meetings. Her MDRT membership and active participation in the organization introduced Favia to some successful women advisors who were willing to mentor her. “They were really the ones that were mentoring to me where we became friends and kind of contacted each other on an ongoing basis versus day-to-day,” she says. “We would share sales ideas, business practices. It was just call them up and talk to them for an hour and say, ‘Hey, how are you doing this?’ Nothing on a formal basis, but just knowing that we had other women to call and have access to and discuss issues of being a woman in the business.”
Favia started mentoring other MDRT members when she served as a member and chair of the organization’s mentoring program. That program works to connect new members with seasoned professionals in their local areas around the globe.
Mentoring benefits both parties, Favia emphasizes. She cites her purchase of another advisor’s business, which was owned by a 70-year-old fellow MDRT member. The experience of mentoring Favia about his business reenergized him.
“He was almost ready to retire and we had talked about me purchasing his business but through working together, he got excited again about contacting people,” she says. “You get set in your ways of how you’re doing things and then there’s a renewed energy and renewed life and different ways of looking at things. You get excited about it again because now you’re doing what you like to do — going out and seeing people.”
But mentoring relationships aren’t guaranteed to succeed, she cautions. While there needs to be a personal chemistry between the parties, she believes it’s a good practice to have a written agreement in place at the start.
“Have the end in mind — knowing how you’re going to unwrap an issue if things don’t work or even if things do work — you need to have the end in mind,” she advises. “Think it all through. Like in any type of buy-sell arrangement, you need to talk through worst-case scenarios.”
As Favia advises, it’s vital to discuss the following issues up front:
Whose clients are they?
Who buys the business?
What if things don’t work out, who’s responsible for the assets?
How is the transition put in place?
What is the commission split on new business?
“I think you have to open up communication,” says Favia. “It’s so important to the success of the transition.”