The Department of Labor’s efforts to impose a fiduciary standard on retirement advice has consumed the industry’s attention over the last 18-24 months. And with good reason, as the potential fallout has framed so many important decisions that firms, advisors and even clients have been forced to make.
All the while, many of the troubling demographic issues impacting the financial service industry have yet to recede. Chief among those is the disproportionate number of men in the financial advisor population.
According to Cerulli & Associates, women account for a mere 16% of all advisors, an alarming statistic when you consider the benefits of diversity, along with the fact that women also control a significant portion of the nation’s wealth – a trend that will likely strengthen as baby boomers age and more women enter the professional workforce.
On the surface, whether an advisor is a man or woman should be immaterial. If either provides sound advice and excellent service, then that should be enough.
But looking deeper, it’s important to recognize that a greater level of industry diversity will bring different perspectives to the table, which should allow advisory firms to better innovate and grow, especially with supporting women clients.
Encouraging the entry and success of more women in the financial advisor profession is a long-term endeavor requiring a commitment from the entire industry.
In reviewing research results to be discussed at this week’s Ladenburg Institute of Women & Finance Symposium, which is an annual event focused on supporting women financial advisors, the following three action items emerged as key steps firms should consider:
1. Facilitate a structured and durable mentoring program.
Mentoring programs pairing junior advisor entering the profession with more senior, industry veterans are hardly a novel concept. Firms have been facilitating mentorships for years.
Often, however, such programs haven’t produced the desired results, thanks mostly to a lack of formalized structure and a lukewarm commitment from leadership. Indeed, after meeting for the first time and a few loosely organized meetings, many mentorships fizzle out completely.
To change this dynamic, it’s important to empower mentees them to outline specific, quantifiable goals and to take ownership of the engagement with their mentor. Encourage them to request weekly calls and frequent in-person meetings.
This fosters accountability on both sides and ensures that mentors can ask questions, discuss challenges or opportunities, and, together with their mentor, determine appropriate action steps. When there are clear expectations and plan to monitor progress, mentorships are far more likely to endure and succeed.
2. Sponsor annual, in-person women-focused events.
Reflecting broader demographics, large industry events are typically male-dominated. The dynamic at women-only events is uniquely different, with participants more likely to cultivate professional camaraderie. Many women are reassured when they walk into a room and see successful advisors who look just like them.
When organizing this type of event, firms should include a cross-section of top-producers, industry trailblazers and younger advisors. These events should be small enough to allow for meaningful interactions, while at the same time large enough to include a diversity of viewpoints.
3. Emphasize how being an entrepreneur in this industry can provide more flexibility for family responsibilities.
There is no doubt the average independent advisor wears many hats, including the management of client interactions, business development, staff, compliance, and more. At the same time, in contrast to many other professionals, independent advisors aren’t necessarily tethered to a desk for ten hours a day working under a corporate brand.
Indeed, because independent advisors make their own schedules, they have a greater chance of achieving true work/life balance.
Few job seekers, whether they are fresh out of college or career changers, fully appreciate how flexible a career in the independent financial advice space can be. And this means our industry needs to do a better job of underscoring this message with potential women advisors.
The industry is rightfully increasingly concerned about diversifying advisor ranks to include more women, as the income and wealth levels of women clients across the country increase over each year.
And while efforts in this area have made small inroads, it’s clear they have not yet produced the desired results. By taking more measured, thoughtful steps, firms can begin to more effectively bring women into our industry.