In Practice March 24, 2016

Confidence Key to Advancing Female Advisers' Careers

Confidence is in short supply among women in the profession, say female advisers.
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At a February conference by Edward Jones for female advisers, nearly 80% of the attendees said confidence is among the biggest factors impacting leadership, success and fulfilment in a career.

Half of those surveyed also say confidence is the single most important tool in career advancement. For women in the industry, confidence levels are a critical issue. According to data from Cerulli, just 14% of financial advisers are female.

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The attendees were split on what’s most helpful for advancing a career, with having a mentor or sponsor cited as the most important tool (25%), hard work and accomplishments (15%), a professional network (9%) and an advanced degree (1%) as critical factors.

The age of the advisers played a part in their views on confidence. A majority (66%) of the advisers older than 64 believe confidence is the most empowering tool for career advancement, compared with roughly half of those ages 45 to 63 or those ages 29 to 44. All women in the youngest group, ages 18 to 28, instead choose mentorship/sponsorship.

In recent years, many studies have pointed to the disparity in confidence among men and women. For example, Edward Jones cites previous research that surveyed British managers about how confident they feel in their professions. Half the female respondents reported self-doubt about job performance, compared with fewer than one-third of male respondents. This relative lack of confidence has caused some women to decline career advancement opportunities and delay their promotions. Of those who admitted to declining a career advancement opportunity because of a lack of confidence, 44% say that it took longer for them to get promoted.

The Edward Jones survey also reveals inconsistencies in views on female representation and advancement opportunities in financial services. While 85% of individuals agree or strongly agree that strides have been made to advance women in their careers, 77% also agree or strongly agree that barriers to career advancement continue exist for women in the field, suggesting a continued industry challenge. 

“The financial services industry as a whole has been working to increase female representation,” says Katherine Mauzy, principal of Financial Advisor Talent Acquisition at Edward Jones. “However, a lot more can be done to ensure that women are backed with the tools and resources to promote and instill confidence.” At some firms, including Edward Jones, dedicated training programs and women’s networks have been established to support and encourage female financial advisers.

The survey of 100 female financial advisers was conducted on the grounds of Edward Jones’ 2016 annual Women’s Conference, February 17 to 19.

Compliance March 24, 2016

Court Approves Settlement in Fifth Third Stock Drop Suit

The case reached the Supreme Court, and set new standards of pleading for lawsuits against retirement plans that hold on to company stock.
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A federal district court has preliminarily approved a settlement in the case of Dudenhoeffer v. Fifth Third Bancorp. 

The settlement agreement calls for $6 million to be placed into an account to be distributed to all class members in the case, minus certain fees. 

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In addition, the agreement calls for Fifth Third to make design changes to its retirement plan, including freezing the Fifth Third Stock Fund, so that no new money will be put into the fund. However, plan participants are allowed to transfer out of the fund if they wish. The recordkeeper of the plan will send an annual notice to participants that have more than 20% of their account invested in Fifth Third Stock Fund and educate them about the benefits of asset allocation and diversification. 

According to the settlement agreement, Fifth Third currently funds plan contributions in the form of cash (not shares) and agrees not to change this for at least the next eight years. The Fifth Third Bancorp Pension, Profit Sharing, and Medical Plan Committee members will receive annual fiduciary training, and Fifth Third agrees to increase this training to be conducted at least twice annually. 

NEXT: Long case history, ultimately achieving fame

The case was filed in 2008 when John Dudenhoefer, a Fifth Third employee, charged that the bank hid its true financial picture leading to its stock price to be artificially inflated. Then the stock suffered a major plunge in its share price when the company's financial problems were revealed. The suit alleges the bank's action caused the plan to lose millions of dollars.

In 2010, a federal judge in Ohio turned aside arguments that Fifth Third Bancorp committed a fiduciary breach when it continued to include company stock in its profit-sharing plan. Senior U.S. District Judge Sandra S. Beckwith of the U.S. District Court for the Southern District of Ohio based her decision on the presumption of prudence established in a 1995 decision in Moench v. Robertson.

However, the 6th U.S. Circuit Court of Appeals reversed the decision, saying that the “legislative history combined with a natural and clear reading of Section 404 [of the Employee Retirement Income Security Act (ERISA)] [led] to the inexorable conclusion that ESOP fiduciaries are subject to the same fiduciary standards as any other fiduciary except to the extent that the standards require diversification of investments.” 

The U.S. Supreme Court agreed to rule on the presumption of prudence issue, and in June 2014, decided fiduciaries of employee stock ownership plans (ESOPs) are not entitled to any special presumption of prudence under ERISA. The high court’s decision also set new standards of pleading for lawsuits against retirement plans that hold on to company stock, that have been used in many such lawsuits since the decision.

 

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