Why are there so few female advisors?

White paper authors tell WP there is huge disconnect between head offices and the front line

Why are there so few female advisors?

Female investors are not only a growing niche but quality female advisors are finally now being recognized for skills and relationship-building. So why are there still so relatively few female advisors in the business and what does the wealth industry have to do to increase those numbers?

They are questions that StrategyMarketing.ca gets to the heart of in its new white paper, a project that began more than a year ago when its two business partners, Judy Paradi and Paulette Filion, started noticing more and more women attending their sessions. They reached out directly to female advisors for first-hand accounts and brought the results together in a white paper.

According to Barron’s, “female financial advisors represent just 15% to 20% of all advisors”, a number that increases slightly in Canada (23%). Why is this an issue? There’s the obvious lack of equality but the issue runs deeper.

The investor landscape is rapidly changing. On a human level, the paper explained that female investors want more from an advisor than just someone who knows how to manage money. They want great communication, interpersonal and listening skills, and an advisor who wants to establish a relationship, not just get an account.

It’s also a cold-blooded business opportunity. Women are set to control $93 trillion in wealth globally and reach almost 40% of all wealth in North America by 2023. Over the next 40 years, there will be an unsurpassed wealth transfer of more than $59 trillion, according to Boston College’s Center on Wealth and Philanthropy, and women will inherit 70% of estates.

StrategyMarketing.ca makes it clear: organizations that don’t pay heed stand to lose out on the most lucrative market in history – female investors.

Filion said: “Gone are the days when every purchase was just transactional, especially when it relates to money, or your future. Female advisors are very good at building trust and building relationships that are sound, and are more than just ‘how do I invest my money?’

“Female advisors tend to have a more holistic view of their clients; they want to understand their life, their life journey, where they came from and what they value in order to make the appropriate recommendations.

“That's what women do exceptionally well. It doesn't mean that men can't do it but male advisors have tended to be money managers as opposed to relationship managers. One is not necessarily more effective than the other; it's just a different way.”

Why so few female advisors?
The white paper reveals a number of misconceptions among women about the financial advice industry. Many assumed it was “all about math” and stock picking, full of aggressive men and not suitable to family life or ensuring a steady income. The number one reason given by recent graduates for not pursuing a career in the industry was that they didn’t think they had the skills required.

Deep bias persists despite many head offices thinking otherwise. The paper stated that “the low numbers of female financial advisors has more to do with archaic gender biases than any lack of talent or will on the part of women”. It also said that a lack of C-suite role models makes success seem less possible.

Paradi said: “There's some good people in the marketing areas working at representing women and trying to attract more women to financial organizations not just as advisors but more senior positions, and they put women on their websites and brochures and so on.

“The breakdown happens between that and where the rubber hits the road at the branch level. The head offices put a lot of material on their websites that are supposed to help the branch managers, but they leave it at that. The material may be there but the advisors, unless there's some sort of hands-on training, have to implement those suggestions themselves.

She added: “One of the reasons these numbers aren't growing is because at branch manager level, they’re not accommodating women, not looking for the right women in the right places and not hiring as they could be.”

Filion added that many branch managers end up looking for “men in skirts” who are aggressive, tenacious and want to make a lot of money. Women investors, however, are not motivated by those things. She said: “One of the reasons the industry wants to hire more women is because of their skills in relationship building and understanding their clients beyond the portfolio.”

Hiring often involves looking for a big Rolodex rather than skills that could lead to future success. It means many in the industry are missing female advisors that are “staring them right in the face”.

Both Filion and Paradi recognize that the industry is working hard to hire more women but that managers are struggling to attract and retain them and create female-friendly environments. The white paper highlights a lack of mentorship and communication when new female advisors enter the profession.

What needs to happen?
The paper stated that the industry needs to re-evaluate how it communicates with and supports the front lines to achieve greater success, adding that while branches and branch managers are pivotal to growing and retaining more female financial advisors, they need help to find more women, to eliminate biases in their branch and to provide more personalized support to the women they hire.

All but two of the female financial advisors interviewed came from within the financial services industry, a statistic that rang alarm bells for Filion, who said organizations need to look hard at how they welcome female advisors into the profession.

She said: “The days of just throwing people in at the deep end of the pool and hoping they survive is why we have 90-95% failure rates, and it's the only industry that does it that way. We need to rethink how we launch careers.

“Because of these failure rates, the branch manager, who is busy, won’t help an advisor until they can prove they've got the wherewithal to succeed. We've got to rethink how we do this and how we launch these careers because I don't think people fail simply because they're incapable of succeeding, I think they fail because there's just no support for them.

“We’ve got to decide that if we want more women, we’re going to listen to what makes sense for them.”

Thankfully, the appetite for change appears to be there, if nothing else because of bottom-line pressures.

Paradi said: “Money drives everything and as female investors grow and express their displeasure with the industry, they will start taking their money elsewhere. Female advisors will do better and better because of this relationship.”

She added: “There is definitely an understanding in the industry that it’s a necessity, it’s not just a ‘it would be nice’. It's not just the right thing to do politically, it's a must from an economic perspective. The appetite is there because [firms] are spending a lot of money and making a huge effort to get more female advisors but it’s stopping short.

“There’s a bridge that needs to be built. It's not that huge a leap but it's a slightly different way of thinking. Maybe it's just realigning where those resources are being spent.”

StrategyMarketing.ca's white paper is titled: Why there are so few female financial advisors: and what needs to happen to grow the numbers