Something’s amiss in the financial advice business, and the data confirms it: Women account for only about 15% of the financial advisor population, according to McKinsey & Co. They account for only 23% of CFPs.
Since research has shown that diversity on our teams, just like diversity in a client’s portfolio, produces better results, why is the needle moving so slowly? Why is it taking so long for firms to attract and retain more female advisors, and what can be done about it?
The industry has made great strides in recent years in recognizing this imbalance and trying to change it. As those industry-wide efforts continue, firm owners and partners can also do their part. We’ve come up with some steps at our own firm, Merit Financial Advisors, that we would like to pass along to you to help make your firm more appealing and rewarding to women.
Rethink Advisor Compensation By ‘Teaming’
Women, I’ve found, are turned off by the financial advice industry’s compensation structure. In most cases, comp plans are tied directly to business development and production. While an advisor’s ability to bring in business is important to a firm, it’s not the only thing that should measure her success.
It’s also important to realize that while an advisor’s job has many dimensions, nobody can be outstanding at everything. If you expect an advisor to be terrific at all the many diverse tasks involved in her job, your expectations might be unrealistic—and that’s why the attrition rate among new advisors has been so high.
That awareness has prompted us to make changes at Merit Financial to improve our efficiency, growth, client and employee satisfaction, and profitability and—at the same time and most importantly—attract more women to our firm and get them to stay.
The idea is that people are most satisfied and productive when they do what they do best.
Advisors have traditionally been expected to prospect for new business, hold client and prospect events, maintain contact with existing clients, prepare and review financial plans and create portfolio allocations.
At Merit, we have created specific jobs for many of those tasks. They are all handled by someone working as an “advisor,” but each person works as part of a team, doing the thing for which they are best suited.
Take prospecting. Many advisors dislike marketing themselves and many don’t do it well. We’ve taken that burden off the shoulders of our advisors by creating a dedicated marketing group to handle our social media activity, email campaigns, content creation and promotion, direct mail, sponsorships and events. We invest 20% of our revenues in marketing, freeing advisors’ time and energy, all while delivering them qualified leads.