It’s no secret that women account for only 23.7% of CFP professionals (up just 0.01% in 2023 from the year before) despite women making up 50.4% of the U.S. population. Underrepresentation is even more pronounced at the top of the industry, where women represent just 18% of partners at wealth management firms.
Now two women executives at the Carson Group, an Omaha, Neb.-based RIA that manages $35.5 billion in assets for about 50,000 families, think they may have cracked the code on recruiting, retaining and promoting women advisors. For this they used insights from the firm’s second annual survey of women advisors—the “State of Women in Wealth Management Report 2023.”
The study is a “call to action” for firms that want to shift practices and mindsets “that hinder women who have chosen to enter the industry. It also identifies better ways to empower and elevate women,” said Dr. Julie Ragatz, vice president of next gen and advisor development programs at the Carson Group. She made the comments during Financial Advisor magazine’s recent “Invest In Women” conference.
The study is also designed to “explore more aspects of the persistent problem of the underrepresentation of women in our industry,” Ragatz said in a separate interview.
These were the takeaways from the survey:
Women are under-sponsored and over-mentored. Mentorship has helped women rise in the ranks, but female leaders are still critically under-sponsored, said the respondents to the Carson survey. While mentors give mentees tools to find opportunities for themselves, sponsors actively advocate for women and provide them with actual opportunities.
A good sponsor is “someone who is creating opportunities for me and saying my name in rooms I may not be allowed in,” Ragatz said. Ensuring your firm has a culture that encourages active sponsorship of women is critical to changing underrepresentation, she added.
Women are still struggling against their second shift. Women are still providing a disproportionate amount of time to home duties and caregiving. The only time this is different is in marriages where the female is the primary breadwinner, and in that case, they provide a roughly equal amount of time on home duties and caregiving, Carson found.
Such responsibilities can stymie a woman advisor’s ascendance within a firm if her managers are the sort of timekeepers who reward attendance over performance, said Samantha Allen, senior vice president of marketing strategy at Carson.
“Women in the study rejected performative culture, where supervisors do bed checks,” Allen said. Instead, firms need to disrupt this mindset and retrain managers to look for and reward women advisors who hit or exceed their benchmarks and deliver extra value, she added.
The problem of queen bees, finance bros, and the old boys’ network. All of these cultural phenomena create threats to the inclusion and retention of women in the industry, Carson found. Because finance has been male-dominated, women who climb the ladder tend to “kick the ladder out” after they’ve risen, effectively undermining up-and-coming leaders instead of helping them grow. This is a trait the British Journal of Social Psychology dubbed the “Queen Bee Phenomenon.”
Ragatz said the trait is a product of sexism and an extension of the old boys’ club, which leads to male-dominant traits becoming exaggerated in women, who “can be exclusive and undermine and discriminate against other women without being aware they’re doing it,” Ragatz said.
In reality, “the old boys’ network is really the sponsorship network. The common identity they share is influence, and we need to shift this to include women,” Ragatz said.
Gender inequality is still rampant. Gender biases, stereotypes and bad behavior remain prominent at wealth management firms, which leads to unequal opportunities for women. This bias is reinforced by the all-too-common scenario where women are pigeonholed into administrative roles—and left there—instead of being recognized as successful advisors and leaders.
Firms should create a well-structured training program that shifts all rookie advisors into an advisory role and provides a natural progression of their roles and responsibilities without boxing them into an operational or support role, said Cerulli Associates in a recent report.
Forcing women to linger too long in support roles “leads to forced entrepreneurship, where women feel the only escape is starting their own firm. While there can be great benefits to this, we don’t love it as the only option,” Allen said.
What would women advisors tell their younger selves? Cerulli noted that the failure rate for advisors is 72%. Considering the advisor shortage at hand, it’s never been more important to grow the ranks of women in these roles, especially since female clients will control $30 trillion in wealth by 2030 and increasingly prefer working with women advisors.
In its survey, Carson asked female respondents what they would tell their younger selves. The respondents answered that younger advisors should learn from people who inspire them, get their licensing done, network and find the right business model for themselves … and they shouldn’t settle for a role that doesn’t give them what they need.
As one woman advisor in the survey put it: “What I find with a lot of women is that they find a bad cultural fit of a firm and they assume that they’re a bad cultural fit for the industry. But that’s not the case. You can always shift and find something that works.”