The firms that will be able to best serve the next generation of clients will be diverse and collaborative, said a panel of female advisors at the 2017 Invest in Women’s conference in Dallas.
The challenge for advisors will be to find that diversity and to establish strong collaborations, they added.
“There is a lot of work being done to create a path where there is not just diversity by gender, but diversity in general,” said Melissa Joy, a partner at the Southfield, Mich.-based Center for Financial Planning. “We need to know what are the best-in-breed firms doing when it comes to diversity to get to a place where we know what a diverse firm looks like where we know what needs to be done to embrace diversity ourselves.”
Joy said that diversity should be multifaceted, including gender, race, background, sexuality and age.
Sheryl Garrett, author and founder of the Garrett Planning Network, said that a diverse practice creates an environment with a lot of intersecting specialization and expertise, especially when advisors and staff of different generations are brought under one roof.
“I’ll repeat a piece of my father’s wisdom. ... Surround yourself with people smarter than you,” said Garrett. “The younger entrants into this industry are some of those smarter people.”
Lynn Ballou, regional director at EP Wealth Advisors, said that a diverse mix of clients helps create a more sustainable practice.
The panelists recommended establishing internships—not just for college students and young advisors, but also for older individuals interested in a career change—to help find and cultivate a diverse workforce. To help young advisors gain assets and rise through the firm, ample opportunity for professional development should be offered, she added.
All three women shared stories of setting out in the financial services industry as pioneering women, establishing their own firms, then growing to success. In Ballou’s case, success led to a transition of her boutique firm, Ballou-Plum, last year to Torrance, Calif.-based EP Wealth.
Ballou found her way to financial planning via tax preparation, which remained an important element of her firm’s success.
“Being a financial planner who was also a tax expert was a killer combination,” said Ballou. “To this day we have a refined process for how we collaborate with CPAs and enrolled agents.”
While working at a broker-dealer, Garrett discovered an affinity for financial planning, but struggled to go off on her own, failing three times to found an advisory practice.
“I just needed to keep hammering at it,” said Garrett. “So of course that tenacity, passion and ignorant bliss, sometimes when you don’t know any better, were essential to my eventual success.”
Garrett set off with a business partner whose values and work style contrasted with her own, believing that their different approaches would be complimentary—but they weren’t.
Ballou founded her firm with a like-minded business partner. “I listened to her on the phone, and she listened to me, and we realized that we were saying the same things," she said. "We shared the same values, and that made it so much fun.”
Joy also emphasized the importance of like-minded business partners. Her business shifted from siloed advisory practices to an ensemble, which would have been impossible without aligning the partners’ values.
“Having a clear vision for the firm is important, but you have to make sure it’s a shared vision,” said Joy.
Garrett also said that advisors should work with clients that they can relate to, and offer services that they are passionate about providing. Since Garrett early on was able to identify a love for financial planning, she realized her passion was providing goals-based advice to everyday working people.
Thus, upon starting out on her own, Garrett targeted clients who were underserved, or unserved, by the planning industry.
“I wanted to work with regular people,” said Garrett. “There were already great outlets for those with lots of assets. I wanted to fill the void where there wasn’t a lot of options. I wanted to go under the minimums that I had seen in the fee-only, independent space.”
Ballou entered the business with the same rationale, but found that she could not afford to help a large base of low asset, non-revenue generating clients.
Ballou said that she has been told anecdotally that her firm was the first ensemble, all-women planning practice.
That practice almost failed, said Ballou, over issues of compensation.
“We had one partner who was working 80 hours a week, and another trying to work a different lifestyle,” said Ballou. “That’s a huge challenge. We couldn’t even talk to each other about it.”
Eventually, Ballou and her partner sought the help of a business consultant to settle the issue.
As their business started to grow, Ballou and her partner realized that they did not have the expertise to manage a larger firm.
“We found that neither of us was particularly adept at running our own business,” said Ballou. “I think you have to be brave about bringing in consultants at key times: It’s OK if you don’t know anything.”
Over time, the partners realized that they had to transition their business to new management. Ballou’s co-founder decided to retire, but putting together a succession plan turned out to be difficult. Eventually, they chose to tuck into EP Wealth, where Ballou remains today.
All three women mentioned experiences with not just sexism, but a pessimism from others in the industry regarding their interest in financial planning.
Early in her career, Garrett was told that financial planning would not be a profitable business line by a male colleague.
“There was truth in what he was saying, but it wasn’t me,” said Garrett. “On that note, he inspired me so immensely to kick butt and take names. I wanted to make it succeed because he told me I was going down the wrong path.”