3 Ways to Close the Gender Gap Among Advisors
A decade ago, I met two young women at an industry conference who were just starting out in the independent financial advice industry. Both were in administrative roles at large independent advisory practices, and both wanted to advance. Each seemed to have qualities necessary to get ahead as independent advisors someday — technical knowledge, personal charisma and, perhaps most important, a desire to help other people achieve their life goals.
Some years later, our paths crossed again at another industry event. One of the women had become a successful independent advisor with an impressive book of business she had grown organically, and she was about to acquire a thriving practice from a retiring male advisor. The other woman was on the verge of leaving the industry after a long stretch in a junior role.
What drove these opposite outcomes? And what can independent broker-dealers do to address the lack of female representation among successful independent advisors?
It’s noteworthy that female advisors still constitute a very small percentage of the total advisor population. According to the report “Advisor Metrics 2014: Capitalizing on Transitions and Consolidation” by Cerulli Associates, an industry research group, women make up just 12% of the total advisor pool.
That’s unfortunate. There are a number of reasons that it is crucial to increase the number of female independent advisors.
- The financial advice industry as a whole is losing human capital each day. Fewer people are choosing to become advisors, even as more and more experienced advisors are retiring.
- The complexity of financial planning is intensifying for mass affluent Americans. By generating greater enthusiasm among women to enter the advice industry, we are filling an increasingly dire need for more advisors. Furthermore, we are also ensuring that mass affluent Americans — defined as having net investible assets of $100,000 to $1 million — continue to enjoy access to the professional financial guidance they want and need.
- The mass affluent and high-net-worth retail investor segments of this country will be increasingly represented by women in years to come. The fact that women now outnumber men on most college campuses means that, logically, in the not-too-distant future, women will be the sole or primary decision makers over a greater proportion of the nation’s wealth. Independent broker-dealers that do not find ways to increase their roster of experienced female advisors may find themselves at a disadvantage when it comes to acquiring and retaining retail client assets.
With that said, what should independent broker-dealers be doing to drive greater female representation among advisors? There are three key steps:
- Educate women in junior roles about why being an independent advisor is a viable long-term career for them. While women are well represented in junior roles at independent practices, their numbers wane dramatically among owners or senior partners. One big problem is that women frequently don’t believe it’s possible to achieve the work-life balance needed to raise a family while building a thriving business.
Educational support on this topic can take a number of forms. Consider developing and providing educational materials to advisory practices to help coach women in junior roles on achieving a work-life balance. It’s also worth organizing regular webinars led by female broker-dealer executives and successful female advisors targeting women in more junior roles. Finally, across the industry, we are starting to see an increase in sessions at conferences and meetings dedicated to educating women on how to advance. No single tactic can fully address this education gap, but all of these vehicles can help enormously.
In my conversations with the two women who experienced such opposite outcomes, the one who advanced as an advisor repeatedly stressed the benefits of being coached by advisors within her practice on building a book of business and on balancing that with her desire to raise a family. On the other hand, the woman who ultimately left the industry said, “I felt like I needed to choose between having a family and trying to move up in this business.”
- Establish and invest in mentoring networks that align experienced women advisors with ones who are more junior. Ultimately, one of the most effective ways to inspire women in more junior roles to become successful advisors is by showing them real-life examples of women who have risen to the top.
Independent broker-dealers should actively build up mentoring programs that enable interactions between successful female advisors and women who aspire to that role. In particular, such programs should be geared at starting and maintaining an open dialogue around the following questions for the mentor: What were your big breakthrough moments? What obstacles did you feel you had to overcome? What were the victories that were most important to you?
As for the two women who took divergent paths, the one who succeeded repeatedly emphasized how she was “lucky” in stumbling upon mentor relationships with established female advisors. By contrast, the other woman pointed out that “it’s hard to see what my career path would have been without interacting with potential role models ... and I never really had those opportunities.”
So, what’s the lesson? Let’s not leave it to luck for these mentoring interactions to happen.
- Systematically encourage and facilitate more seller transactions with female buyers. There’s no question that education, coaching and mentoring are critical for women to learn more about why being an advisor can be a terrific career path for them, as well as actually going about building up a book of business organically. All of these initiatives need to be complemented with systematic efforts to encourage and facilitate the purchase of independent practices by experienced female advisors from advisors exiting the profession.
From providing easier access to financing for such transactions to actively aligning potential practices that can be purchased with experienced female advisors, there is a great deal that an independent broker-dealer can do. Cumulatively, these efforts will allow women who are gaining momentum within the industry to accelerate the growth of their businesses and increase female representation among advisors.
I understand that there is a different path for every person. But when the same theme continues to surface around underrepresented segments in a professional field that is vital to the well-being of this country, it should be of concern for all of us.
Erinn Ford is president of Cetera Advisors, an independent broker-dealer within the Cetera Financial Group network of independent firms. To read the original featured article, please click here.