While the debate continues about whether women investors prefer women advisors, some women—and firms—are taking the initiative by leading the way to what might someday become a female-dominated financial industry.
Women already are the majority inheritors from the great wealth transfer and some women financial leaders feel they can better advise female clients, and that they are looked at more favorably by female prospects.
According to recent census data, about 31% of financial advisors are women, but this estimate varies depending on who is doing the data gathering and what the definitions are that control the data. Other estimates set the percentage at much lower levels.
According to Zippia, a jobs research and resource firm, the percentage of women financial advisors has hovered between 26% and 28% for a decade and closed out 2021 at 27.8%, even as more firms add diversity, equity and inclusion programs to their practices. Women are the majority of the population at about 51%.
Financial leaders throughout the industry admit the disparity can be a problem.
Karen Glassman, an ultra-high-net-worth advisor who serves as a managing director with NewEdge Wealth, a wealth management firm based in Stamford, Conn., recently won a $100 million account for NewEdge after making a presentation to the family. The fact that the firm sent a woman to make the pitch was a significant factor in the family’s decision making, she said.
“Women who are coming into money or who are selling their own businesses want someone who has experiences similar to them,” Glassman says. “Firms in this male-dominated industry have to get their heads around that fact.
“Women are more likely to put planning over performance. Firms that do not realize this difference, and do not recognize that some potential clients value it, are going to miss out on the wealth transfer that is coming,” she added. “It was pretty stunning for this particular family that none of our competitors sent a women to talk with them.”
NewEdge, which focuses on high-net-worth and ultra-high-net-worth clients, is leading by example, with Glassman serving as a mentor to other women. Glassman said she has been hearing from more clients lately that they want to work with a firm that has strong female leadership.
Whether women clients want women advisors is still being debated. A Spectrum study done in 2020 showed that 89% of women and 88% of men do not care about the gender of their financial advisor. “In fact, investors are more likely to care about the political affiliation of their advisor (31%) than their gender,” Spectrem said in its research summary.
However, it is important for firms to comprehend that women will be the major beneficiaries of the coming $30 trillion wealth transfer, said Sara Wendt, managing director at Miracle Mile Advisor, a $4.5 billion, independent RIA based in Los Angeles and New York City.
“What women are looking for is not just a female advisor, but someone who will take the time to evaluate their goals and their value systems. Women approach money differently,” she said.
Wendt says one of her new clients is a 72-year-old women from an ultra-high-net-worth family who inherited a great deal of wealth. Her previous advisors wanted her to leave everything as it was when she inherited it, but Wendt and the Miracle Mile Advisor team developed a new plan that catered to her needs.
“She told us her other male advisors were not taking the time to learn what she wanted,” Wendt explained. “Advisors who do not do that are missing out on a huge amount of wallet share. They will be left behind.”
Miracle Mile Advisors invests heavily in recruiting next gen advisors, particular young females.
“Women want advisors to dig a little further into their situations and solve their problems through their portfolios. I’m not saying women clients do not care about returns, just that they want their new wealth to support things they care about,” Wendt said.
To be effective in any industry, female participation has to start at the top of a firm, explained Cecile Munoz, president of U.S. Executive Search & Consulting, a national executive search firm based in New York City and Los Angeles.
“Women are becoming the breadwinners and are leading in purchasing power,” Munoz said. “It is critical for all businesses to have female leadership. Clients and customers need to see that leadership in order to believe the firm is serious” about meeting women’s needs.
In the last 10 years, the reality of women controlling the majority of wealth has come into being, but the financial industry has lagged in accepting that fact. “Businesses are not going to be as competitive in the future if they are not hiring, promoting women, and providing the appropriate training for women,” she says.
It has been shown in several studies that revenue and profitability increase in businesses, including financial firms, with women in leadership roles.
“There are plenty of talented women available, but firms have to create a pathway to success for them,” Munoz adds. “Success for a financial firm, and others, means supporting women in a multigenerational setting.”
Coldstream Wealth Management, an employee-owned independent RIA based in Washington State, is one of the firms that has invested in women advisors and leaders, said Anne Marie Stonich, chief wealth strategist and a member of the board of directors at Coldstream. The firm has 52% female advisors and half of the leadership team the firm is female. Nearly 54% of the firm’s clients are female.
But industry-wide, the tide is slow to change, she acknowledged.
To try to counter that lethargic trend, Coldstream has launched Women in Wealth, a networking and mentoring program that fosters advisory talent within the firm. The goal is to ensure that more women will be ready to lead the firm. Coldstream is working with their internal teams and clients to develop the network, presentations and mentorship partners, Stonich said.
Women in Wealth was designed to build community, develop leaders and retain women within the firm and the industry through mentorships. In a unique turn, the program engages the firm’s clients as resources to further develop Coldstream’s talent.
“Our women’s advisory group started out by wanting to talk about our women clients, but we decided to turn our thoughts inward to look at ourselves first,” Stonich says. “We wanted to create a culture that would support women internally, as well as train all advisors to serve the unique needs of female clients.
“Going forward we are looking to the marketing and communication aspects” of attracting women clients, Stonich said. “Some of these kinds of efforts were being made in the past, but there is a new energy about them today. It is driven by a desire to support the unique needs of women advisors and clients, which in turn leads to more inclusivity.”