There’s a gender gap between demographic trends and the financial advisory business. Women have an increasing share of income and wealth in the United States and globally, but they are underrepresented among financial advisors in the U.S.
BMO Financial Group’s 2015 report, “Financial Concerns of Women,” reports that women currently control 51 percent of personal wealth in the U.S. In addition, they are the primary breadwinners in more than 40 percent of American households, which is an almost fourfold increase since 1960.
In contrast, women comprise only 15 to 20 percent of financial advisors in the U.S. (Some sources cite a higher percentage but those results can include securities-licensed sales assistants.) Just 23 percent of Certified Financial Planner licensees are women, a figure that hasn’t changed in years, and women comprise only 12.9 percent of the Million Dollar Round Table’s (MDRT) early-2016 roster. These comparatively lower numbers raise several questions: Why do fewer women work as financial advisors? And for advisory firms that wish to recruit, hire and retain women, what steps can they take to find the right candidates and improve their hires’ chances for success?
The business case
An advisor’s gender is not top of mind for most clients. A 2012 study from the Family Wealth Advisors Council, “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them?” reports that among married and single women respondents, more than 90 percent did “not have a preference about the gender of their advisor.” That finding changed among divorced and widowed respondents, however, with about 25 percent of those groups citing a strong advisor-gender preference, most frequently for women.
But other sources believe there is a legitimate business risk from ignoring gender disparity. Most Americans have become more sensitive to situations that lack representative diversity. While clients might be unconcerned about a male-dominated advisory staff, will prospects feel the same way? Staff diversity can help prospects identify with a firm more readily. Several years ago, an advisor told me how he works successfully with clients of different races and his observation applies to gender. People are most comfortable with their “own tribe,” he says, and having a diverse staff can help foster relationships with a wider range of clients.
Persistent gender discriminaiton is just one reason that men significantly outnumber women in financial services. (Photo: iStock)
The stumbling blocks
So what’s behind the low participation rate? In April 2014, the CFP Board in Washington, D.C., released a study, “Making More Room for Women in the Financial Planning Profession,” as part of its Women’s Initiative. Among the findings from the women surveyed:
- Women lack awareness of financial planning as a career path.
- Women harbor misperceptions about financial planning.
- Women’s reluctance to take professional risks may be keeping them from entering the financial planning profession.
- Gender discrimination and bias exist within the financial planning profession, likely resulting in women feeling unwelcome and unsupported.
Other organizations are also studying and promoting the role of women in financial services. At the Bryn Mawr, Pennsylvania-based American College State Farm Center for Women and Financial Services, the “mission is to advance women in financial services and we do it through research, education and other awareness-building efforts,” says Director Jocelyn Wright, CFP. Among its research projects, the center is currently completing a study of female advisors’ experience in the financial services industry.
Katherine Mauzy, a principal in branch development with Edward Jones in St. Louis notes that about 20 percent of the firm’s financial advisors are women, with recent hires in the 20 to 25 percent range. In her experience, women do not gravitate to financial advisory careers. She cites comments from her daughter, a college student: “She said that a lot of the kids who are getting majors in finance, etc., are thinking more along lines of investment banking, asset management. They’re not thinking of wealth management. And, so, I think we, as an industry, just have a great opportunity to get more women to understand the role.”
Michelle Lynch, vice president of the Network for Women Advisors with Raymond James in St. Petersburg, Florida, voices a similar opinion. “I think there’s a huge awareness issue particularly as it relates to women about financial services and particularly the advisory role being a viable career option for women,” she says. “If you look across the industry, there’s not a whole lot of strong female role models for women to identify with. It’s just really not something that a lot of women are exposed to unless they have somebody or know somebody in the business or happen to stumble across it.”