While women are the primary decisionmaker at almost 70% of all U.S. retirement plans, they make up a far smaller percentage of the advisory and consulting resources contracted by those plans, the IRI says. In fact, only about 30% of practicing financial advisers are women, according to IRI estimates, suggesting advisory firms still have a lot of ground to cover to ensure the composition of advice staff meets the diversity and fairness expectations of modern investors.
But it’s not just an ethical shortfall financial firms face in failing to recruit more women advisers, the IRI says. Seventy percent of women say they would prefer to work with a woman financial adviser, yet only 21% of Baby Boomer and Generation X women who use an adviser say that their current adviser is a woman. Additionally, more than half of women surveyed felt that wealth managers could do a better job of meeting the needs of their female clients, and nearly a quarter think that wealth managers could significantly improve how they serve women.
The IRI says this suggests a major opportunity for financial services firms to improve their client services by bringing more women into the fold. And the diversity problem will only grow more serious as demand for financial advisers expands during the coming decade, the IRI says. The survey suggests demand for advisers is growing at twice the rate of all other professionals and should continue to do so well beyond 2020, boosting competition between firms in attracting top talent and building skilled and experienced advisory teams.
Challenges in recruiting women to the advising field include a general lack of interest and current job satisfaction, the IRI says. In addition, women may not be “connecting the dots” about a career as a financial adviser, and they may not recognize that many aspects of the job directly appeal to their own work-values.
Interestingly, women who are Baby Boomers and members of Generation X feel that they do a good job managing regular day-to-day financial matters, such as banking, credit and expense management tasks, the IRI says. But even with a solid appreciation of financial matters, many women feel they don’t do a good job keeping up with economic and financial news, with just 35% reporting that they regularly keep up with economic and financial publications.
This is consistent with adviser earlier research that finds 40% of women of all ages express little or no interest in financial advising as a career because they find the subject boring or not interesting, the IRI says.
One encouraging result from the survey shows many broker/dealers and other financial services organizations are aggressively trying to recruit women to the advising profession, recognizing that women are uniquely suited to the highly personal, consultative adviser role that other women seek.
IRI researchers say there are a few main challenges in recruiting women as advisors, namely:
- Nearly seven in 10 women (67%) are currently highly satisfied with their current jobs, and 58% say they are very unlikely to be looking for a new job within the next 12 months;
- One-third (32%) are unfamiliar with the financial advising industry, with just 13% saying they are “very familiar” with the function of financial advisers; and
- Very few (9%) have ever thought about a career as a financial adviser.
Beyond these factors, the IRI finds women may not realize how closely aligned their own priorities are with a career in financial advising. The opportunity for work/life balance, meaningful work, flexibility and good relationships are all cited by women as important factors in choosing a profession, and the IRI says these are all an integral part of a successful advising career. Even lesser-ranked features, such as autonomy, variety, training, mentoring and the ability to be one’s boss are all characteristic of a career as a financial adviser, the IRI says.
The biggest challenges may be in overcoming the “boring bias” women feel towards becoming a financial adviser, the IRI says, and adequately communicating how closely such a career can meet their own priorities.
The survey report also discusses how women’s retirement readiness has been damaged by the economic downturn (see “Economy Affected Retirement Security for Women”). Those interested can download the full survey results here.