Wealth firms need more women advisors … so what’s holding them back?

New report offers clues into recruitment and succession roadblocks that hinder progress in gender parity

Wealth firms need more women advisors … so what’s holding them back?

Against a broad backdrop of market and industry challenges, asset consolidation and acquisition continue to be a theme in the Canadian wealth space. But as wealth firms pursue their growth ambitions, they still have work to do on one critical front.

According to a recent report by ISS Market Intelligence, women represented 18% of advisors in Canada’s full-service brokerage channel in 2022 – a positive but nevertheless small step forward from 15% in 2015.

“I think a lot of firms are still targeting the bigger-asset books, and that's a short-term sort of approach,” says Vince Linsley, associate director at Investor Economics, which is part of ISS Market Intelligence. “But they also realize we need to do more to attract women into the industry … longer-term, we need to be building diverse teams.”

Wanted: more diverse advisory teams

Among its key findings, the report found many firms are using a teaming approach to recruit more women into the industry. That’s part of a broader strategy of creating advisory teams and enterprises that mirror the increasingly diverse client population.

Associates are one potential pool of talent to tap, Linsley says. With some having more than 10 years of experience in the practice, he says many firms are taking the opportunity to help transition women associates – who represented 68% of associates in the full-service brokerage space as of 2022 – into advisory roles.

Firms are striving for more diverse representation, but it’s not always possible to set specific targets.

“Some firms have a specific percentage of female advisors they would like to achieve within the business – most do not,” he says. “I believe a lot of firms start at the grassroots, highlighting to branch managers and advisors that ‘This is the demographic that you're going to be serving along with other diverse groups.’”

Edward Jones is doing its part for women in the wealth space, targeting 30% representation among financial advisors across the organization, as well as gender parity in its leadership, by 2025. By that time, Sun Life wants to hit 50% women representation across its global organization; as of 2021, it had 44% female representation, including 40% at the senior vice president level and 51% at the director and VP level.

Is the succession-planning deck stacked against women?

According to the research, the average Canadian woman advisor is 52.5 years old, compared to 51.9 years old for male advisors. But at the same time, women advisors seem to be exiting earlier than their male peers; based on conversations with survey respondents, Linsley says men appeared more likely to stay in the industry past their sixties, and work into their seventies and eighties.

“It’s not uncommon for men to say ‘I don't know what to do with myself in retirement.’ They like being productive, having a role, and being in charge of something,” Linsley says. “We did not see that as much from women. They were more likely to say, ‘I know what I'm going to do … I'm going to fill my days with other things rather than being an advisor.”

Creating a stream of female advisor succession can be critical to boost representation, but that can be limited by advisors’ personal preferences. While all respondents to the research agreed women and men have the same potential to be great advisors, Linsley maintains there are other unavoidable biases that come into play.

“At the end of the day, advisors are going to choose who they like, with a similar philosophy and someone they know their clients can trust,” he says. “There’s probably a number of advisors, whether male or female, who’ll have a particular view of who’s best to handle their book, especially if clients have gotten accustomed to a person from one gender looking after them.”

Many firms have strategies in place to help boost the number of women through succession. Richardson Wealth, for instance, recently launched a financing program allowing advisors to buy a book and pay for it over seven years, with the option to pause payments if they take time off – potentially a huge benefit to those going on maternity leave. But as advisors retire, the existing lack of women advisors means most books are still being handed over to men.

“To help offset that risk, some firms are looking into buying books from advisors, and then decide who gets to take over,” Linsley says. “But that’s potentially controversial too, as advisors would like to have more direction and choice over who takes over their book from a succession point of view.”