February 1, 2017 • FA Staff
Here’s the problem: Nearly 40% of the roughly 310,500 financial advisors plan to retire within the next 10 years, and the industry is worried about where the reinforcements will come from. The potential fix is hidden in plain view, according to a recent report from research analytics firm Cerulli Associates. “Women present an untapped talent pool that offers a solution to the industry’s recruiting problems,” said Cerulli analyst Marina Shtyrkov. Writing in the first quarter 2017 issue of The Cerulli Edge–Advisor Edition, she noted that broker-dealers and RIA custodians can help fill the gaps left by retiring advisors by expanding their focus and altering their recruiting strategies to appeal directly to female candidates. Women currently represent just 15.7% of the financial advisor community, Shtyrkov said. That amounts to about 48,600 female advisors. Taking a page from the “Men Are from Mars, Women Are from Venus” school of understanding the opposite sex, the male-dominated advisor industry needs to take into account the reasons women want to become advisors, which can differ from the reasons that motivate men to join the profession. “Nearly all female rookie advisors consider the desire to help people reach their goals to be a major factor for becoming an advisor,” Shtyrkov said. “B-Ds and custodians will have better success recruiting prospective women advisors and safeguarding against a future head count shortage if they accentuate the social impact that an advisor has when working with people to achieve their financial goals.” According to the Cerulli report, 94% of new female advisors cite the desire to help people reach their goals as a major reason for becoming an advisor. That number is 10 percentage points greater than it is for male advisors. Furthermore, female advisors are less turned on by the technical aspects of investment management. Cerulli says that only 59% of women, as opposed to 81% of men, cite an interest in investment topics as a prime motivating factor for joining the financial advising profession. With digital advice commoditizing parts of the investment management business model, Cerulli says, advisory firms increasingly need to emphasize the so-called soft skills embodied by the comprehensive, holistic planning model. “Softer services, such as evaluating personal objectives and explaining trade-offs, will become more important than ever in this technology-enabled environment,” Shtyrkov wrote in the report. “Women’s interest in a goals-based approach engenders a proclivity for holistic advice and development of the necessary soft skills implicit in a planning process.” Among the tidbits in the Cerulli report: • A lack of familiarity, coupled with misconceptions about the industry, deters young women from exploring financial advising as a potential career path. • The majority of women advisors see work-life imbalance as an obstacle and close to half (51%) consider it a major factor hindering women from entering the industry. • Women advisors identify inconsistent compensation and a lack of familiarity with the industry as barriers to entry for young women considering the profession. The industry’s variable compensation structures present risks for women who seek security and stability from their careers, and they find these structures prohibitive. • Engaging established women advisors creates advocates for a firm. These successful women can then dispel popular misconceptions about the benefits and challenges of being an advisor.
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