Whenever I walk into a networking event for financial advisors, reality hits. I am usually still only one of two, maybe three, women among all my male colleagues. According to Cerulli Associates, a little over 14% of financial advisors in the United States were female in 2017. That statistic should not come as a surprise since we are such a small portion of the industry, but it still catches me off guard.
There are many reasons why it is mission critical that the future face of the industry is female. The big one is that in the next 10 to 25 years, $60 trillion in wealth is expected to transfer from baby boomers to their Generation-X and millennial children, according to Cerulli Associates. That’s a whole lot of advising to do. And that’s not all. During the same period, nearly 40% of financial advisors are expected to retire.
There is a huge need for advisors, especially female ones. Female advisors will be in extremely high demand not only because women in the United States will control roughly $30 trillion by 2030, according to McKinsey & Company, but also female investors prefer to work with female advisors. According to a 2013 Insured Retirement Institute study, 70% of women seeking a financial advisor would prefer to work with a female one. They want advisors they can identify with and trust.
But it is not easy to find a female advisor, and here’s why:
• Young women don’t go into the profession. Girls and young women tend to avoid finance as a career path. I frequently speak to female high school students in my community to educate them about what a career in wealth management entails, and what education and skills are needed to rise within the industry. At many of these career events, a lot of the female students I speak with still want to become teachers or nurses. While these are certainly worthy professions, finance suffers an unequal ratio, likely because young women have not thought about becoming financial professionals and advisors, and they cannot imagine themselves in these roles.
The real problem is representation. It’s difficult as a young adult to figure out what you’re supposed to be doing with your life, and many choose professions where they have role models and visible representation. The wealth management profession is lacking in a female presence, and the industry will fail to meet client needs if this is not corrected soon. Much like other sectors, I believe our industry will benefit from more female perspectives, especially on risk and strategy. Since there is no single solution for clients to achieve their long-term financial goals, they must rely on their advisors to recommend strategies in their best interest. These recommendations require not a leap of faith but trust. What better way to establish trust than through emotionally intelligent decision-making, which women excel at; fresh perspectives; and visibly strong representation? Letting this concept sink in, we should wonder why in the world we would not have more female advisors. Advisors are not supposed to guarantee things, but I can guarantee (from personal experience) that more diverse perspectives lead to a better client experience.
• Female advisors don’t stay in the profession. Female students who choose to go into wealth management often don’t last very long in the profession. I recently spoke with a representative from Texas Tech University’s financial planning program who told me that their research shows most females leave the wealth management industry seven to 10 years after entering. One reason for their exit is that they want to start families and feel the hours and commute are not conducive to motherhood. I, however, have experienced great flexibility in this profession as I entered parenthood, and have been able to adjust my schedule to accommodate my needs as a mother. Another reason is that women are often passed over for promotions in an industry that older men continue to lead. It is common for older men, surrounded by mostly male co-workers and having spent years in a traditionally male-dominated industry, to (even subconsciously) overlook female professionals when considering delegation and promotion within their organizations.
What We Can Do As An Industry
Ultimately, the solution to an industry-wide problem emanates from the will of its members to act. Here are some basic steps we can take to resolve this imbalance:
• Consciously and proactively recruit women. Those in leadership and C-suite roles in wealth management organizations must make a concerted effort to interview more female candidates when filling jobs and internships. If not enough women apply, call local schools or chapters of women’s industry organizations to find potential applicants.
At my firm, we hold out and wait for qualified women candidates to apply before hiring someone. We never throw up our hands and say, “Well, we couldn’t find anybody.” We call female professionals in our network and ask them if they know of someone they could recommend. We also regularly engage with business schools. And if we interview a qualified male candidate, we will hire him alongside a qualified female, so that both associates can be hired to do the same role.
• Offer remote work options. The Covid-19 pandemic has shown us that it is possible to complete work responsibilities and engage with clients remotely. As our offices open back up, our industry should offer women, especially those with children or looking to start a family, hybrid work options that can simplify the work/life balance for working mothers.