The clock is ticking for the wealth management industry.
The average age of a financial advisor has been steadily increasing and now stands above 50, with nearly one-quarter planning to retire in the next 10 years. The challenges created by this pending retirement wave quickly come into focus when this attrition is contrasted against data showing that just 5% of financial advisors are younger than 30.
Against this backdrop, it is no surprise that a significant amount of industry resources are dedicated to strategies designed to attract and retain younger talent. While the results of these efforts won’t be known for years, it’s a safe bet they will fail to adequately leverage the opportunity ahead (as $40 trillion moves from baby boomers to their heirs in the great wealth transfer) without a more concerted focus on another underrepresented demographic in the industry – women.
Using the Certified Financial Planner professional designation as a proxy, just 23 percent of CFPs are women – a number that has remained virtually unchanged for the last decade. Given the length of this plateau and the rate at which women are underrepresented, the challenge of attracting women to the financial advisory profession can’t be solved without addressing the root causes.
What Your Peers Are Reading
For firms willing to accept that diversity and inclusion are more than just buzzwords, the path toward better gender parity in wealth management starts with 1. dispelling misperceptions that the profession is mainly about selling data-driven stock stories and 2. disrupting the existing apprenticeship model.
More Than Math
As an industry, we could all do a better job of explaining what we actually do.
A lack of familiarity with the breadth and depth of services provided by advisors has helped fuel misconceptions that that the industry is primarily made up of number crunchers. This confusion, coupled with studies showing that girls begin steering away from math and science as early as middle school, could shed light on why there aren’t more women in wealth management. And while biology is not destiny, the reality is that financial advisors are not mathematicians in disguise.
An advisor’s role in helping clients live better lives by strengthening their financial futures with holistic planning that brings long-term goals within reach extends far beyond addition, price-to-earnings ratios and compounded interest. Similarly, the skills and tools needed to gain investors’ trust and loyalty (empathy, strong interpersonal skills and candor) have little to do with numbers.