To Surmount the Gender Gap

The financial adviser management industry has a well-known gender gap. In 2018, of the 537,000 financial advisers accounted for by the Bureau of Labor Statistics’ Current Population Survey (CPS), 33.5% were women.

According to J.D. Power researchers, the average age of financial advisers is 55, and advisers under age 40 account for just 11% of the whole adviser population. Couple these two statistics and it seems there is a distinct opportunity for firms to contemplate—and start working on—plans to recruit recent college graduates who are women.

Jania Stout, practice leader and co-founder of Fiduciary Plan Advisors in Baltimore, says there have always been more men in financial services and adviser roles, while traditionally women have gravitated toward the operations and relationship management side of the business. Although people recognize the male domination in advising, how to make the field more gender-balanced has not been clear.

“I think women in general think that path’s what they have to take, so inertia seems to keep the status quo,” Stout says.

A Good Fit if You Can Find Them

The advisory business seems a good potential fit for many women. A 2018 survey of rookie advisers by Cerulli Associates identified that an interest in financial planning and a desire to help people reach their financial goals were two values somewhat more important to women than men.

Women might also appreciate the flexibility. Offering the ability to work remotely has been very successful at Atlanta Retirement Partners in Atlanta, said Stephanie Hunt, a retirement plan consultant at the firm, who spoke at the PLANADVISER National Conference (PANC) in September.  “Young folks don’t want to sit at a desk all day and commute.”

“The problem,” says Stout, “is finding someone. There’s not a big pool. There aren’t a lot of female advisers to whom you can say, ‘Why don’t you come over into the 401(k) space.’ We need an event or something to happen to pull women into the retirement plan adviser side.”

One means she suggests is being a mentor: a proactive female, or male, who will notice a woman’s potential and say, “We think you’ve got something that would really be of value over here. Would you consider being an adviser?”

Stout herself was mentored into the field by such a man. “He saw the success I was having as a payroll representative at ADP, and he tapped me on the shoulder and asked if I wanted to join our firm,” she recalls. “I hadn’t thought of it before. I was a philosophy major in college.”

Her point is important to keep in mind. “Students don’t ordinarily come out of school saying they specifically want to be an adviser,” Hunt agreed. And though more women are in the business than 10 years ago, they need support, she added. Both men and women need to be mindful to share opportunities with newcomer women.

Making it even harder to attract women, no obvious career path leads to the adviser job, Stout says. Therefore, “we can’t just sit and wait for someone to knock on our door. We’ve got to go find them.”

She recently used this approach to hire a new female adviser. “I went to the University of Maryland’s women’s lacrosse team and reached out to them for new graduates because I wanted a female and a go-getter,” Stout says. “That school won the national championship, so I went for the best.”

Bringing women into the business is more than being be fair. When asked if having too few women is a problem in the industry, Vince Morris, president of Bukaty Companies Financial Services and Resources Investment Advisors, in Leawood, Kansas, responds affirmatively. “I think anytime you lack diversity in race or gender it’s a problem. Most studies say that if you have more diversity in whatever service you deliver in a marketplace, you actually excel above or outperform averages in that industry.” Bukaty has 24 female advisers and, of the firm’s leadership team of eight, four are women.

Having women advisers also enables the company to think in a more varied way, approach challenges and decisions from new angles, and build relationships, Morris says. “It’s sometimes difficult for men to get into certain relationships and programs, for instance, while women have experience in these areas. The women advisers we have continually outperform in the marketplace.”

Morris, too, looks for new women advisers among recent graduates. Historically for women, the gender gap became set careerwise in college, where few of them majored in economics or similar subjects. Today, at Kansas State University, where students can earn a degree in personal financial planning entitling them to sit for Certified Financial Planner (CFP) exam, half the enrollees are female. Morris recruits from this program.

While the gap may be narrowing in colleges, it traces back into women’s years before that,  he suggests. “From my perspective, you’ve got to get people interested early on, whether you’re talking minorities or gender, so you can get them exposed to the education programs that will lead to more robust career paths.”

He recognizes, too, that some women, though otherwise qualified, may shy away from the adviser profession. Compensation that is based on sales and production has been considered “a high-risk model for women to enter into, especially if they’re responsible for child care,” Morris observes. “From a behavioral standpoint, women tend to be more risk averse, and so that model is not always conducive to them.”

Retention ‘How-to’s

The challenge is not just about getting women into the industry, but giving them reason to stay.

According to findings from Oliver Wyman, female executives in financial services are 20% to 30% more likely to leave, mid-career, than women in any other industry.

And Mercer found that financial services executive women leave at a rate of 15.8% a year compared with 7.7% for executive men.

Bucking the statistics is advisory firm Edward Jones, the No. 1-ranked company in the J.D. Powers study. Last year, both the increase and retention rates for female financial advisers outpaced those for males. At the end of the year, more than 20% of financial advisers at the firm were women.

Edward Jones leads the industry in number of female advisers, says Kellie Wise, principal, firm inclusion and diversity, at the company in Tempe, Arizona. Wise has been with Edward Jones for 20 years and knows first-hand about women advisers. She started her own practice as a single mother and worked as a financial adviser for 18 years, plus as a regional manager over 60 offices for 10 years.

“Where we put effort is into having women’s recognition conferences, having the Women Helping Other Women (WHOW) conferences, mentorship programs to make sure that if a woman comes to Edward Jones and wants to be an adviser, she’ll have full support; also diversity summits, which offer an opportunity into a network of support.” Wise says. “We had 44 diversity summits across the country last year, and we invite local professionals who might be interested in learning about a career with Edward Jones. Inclusion means looking at every individual,” she stresses, “at the very best candidates regardless of gender, race, background, etc.” The point is that each can contribute something important.

Men and women each bring specific strengths, skills and attitudes, echoes Stout. “I’d say that the best scenario is a team that has both.”

Art by Wesley Allsbrook